States With No Income Tax
By Personal Finance DeskUpdated Nov 10, 2026
Key takeaways
- Washington taxes no wages but levies a tax on long-term capital gains above an annual threshold.
- Tennessee's 7% state sales tax is the highest base rate of the nine, about 9.61% with local add-ons.
- Texas has an effective property tax rate of about 1.40%, compared with about 0.50% in Nevada.
- Living in one of these states does not shield wages earned in an income-tax state from that state's tax.
| # | State | Wage income tax | State sales tax | Notes |
|---|---|---|---|---|
| 1 |  Alaska | None | 0% | No state sales tax; local sales taxes apply |
| 2 | Florida | None | 6% | — |
| 3 | Nevada | None | 6.85% | — |
| 4 | New Hampshire | None | 0% | Interest and dividends tax repealed from 2025 |
| 5 | South Dakota | None | 4.2% | — |
| 6 | Tennessee | None | 7% | — |
| 7 | Texas | None | 6.25% | — |
| 8 | Washington | None on wages | 6.5% | Tax on long-term capital gains above an annual threshold |
| 9 | Wyoming | None | 4% | — |
State revenue departments
Nine U.S. states have no state income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Eight of them tax no personal income at all. Washington is the exception: it leaves wages untaxed but levies a tax on long-term capital gains above an annual threshold, which matters for investors and business owners selling appreciated assets. None of these states is tax-free. Residents still pay federal income tax, and the states raise revenue through sales, property, excise and business taxes instead.
How the List Is Ordered
The numbering in the table is alphabetical, not a score. All nine states share the defining trait, so there is no meaningful “first place” for an absence of income tax. The order does not rank how much tax a resident pays overall, how affordable a state is, or how good its services are.
Choosing Between Entries
All nine states tie on wage income tax, so the choice turns on four questions:
- What kind of income do you have? Wages and retirement income are untaxed in all nine. Large capital gains point away from Washington.
- Do you own or plan to buy a home? If so, compare local effective property tax rates, which separate Texas and New Hampshire from Nevada and Wyoming.
- How much of your income do you spend on taxable goods? Heavy spenders feel the gap between Tennessee or Washington and Alaska, New Hampshire or Wyoming.
- Where do you need to be? Location narrows the list quickly. Readers looking for a no-income-tax state in the East have Florida, Tennessee and New Hampshire, with New Hampshire the closest to New York and the Boston area.
Where the Nine States Differ
All nine states are identical on wage income tax, so the useful differences lie in the exceptions and in how each state replaces the missing revenue.
Washington: Capital Gains Are Taxed
Washington is on the list because it does not tax wages, salaries or retirement income. It does tax long-term capital gains, such as profits from selling stocks or certain other assets, once a resident’s gains for the year exceed an annual threshold. A salaried employee who rarely sells investments may never owe it. Someone planning to sell a business stake or a large stock position could face a meaningful bill.
New Hampshire: Investment Income Tax Repealed
New Hampshire never taxed wages, but for decades it taxed interest and dividend income. That tax was repealed from 2025, so New Hampshire now sits alongside the states that tax no personal income. It also has no general sales tax, though it charges a tax on meals, rooms and rental cars. The trade-off is property tax: New Hampshire’s effective property tax rate is about 1.50%, according to Tax Foundation figures, among the highest of the nine.
Tennessee: Highest Sales Tax Rate
Tennessee taxed interest and dividends under the Hall income tax until its full repeal in 2021. Today its 7% state sales tax is the highest base rate of the nine, and local add-ons push the combined rate higher still. Its effective property tax rate is low, around 0.52%.
Alaska: No State Sales Tax, but Local Ones
Alaska has no state sales tax, but many local governments levy their own sales taxes, so the rate at the register depends on where you live. Alaska also pays an annual Permanent Fund Dividend to eligible residents, funded by the state’s oil-revenue investment fund. That is a payment to residents rather than a tax break, and the amount changes each year.
The Sales-Tax States
Florida (6%), Nevada (6.85%), South Dakota (4.2%), Texas (6.25%) and Wyoming (4%) all rely on a state sales tax, and most allow local sales taxes on top. The state rate is the floor, not the price you pay at checkout. Tax Foundation estimates of average combined state and local sales tax rates put Nevada around 8.24%, Texas around 8.19%, Florida around 7.02%, South Dakota around 6.11% and Wyoming around 5.36%. Tennessee (about 9.61%) and Washington (about 9.51%) are the highest combined rates in the group.
Property tax varies just as much. Texas has an effective rate of about 1.40%, while Nevada (about 0.50%) and Wyoming (about 0.53%) are among the lowest. A homeowner can find that a state with a moderate sales tax but high property tax costs more than one with the reverse.
How to Compare Your Total Tax Burden
The absence of an income tax is a single line item. To compare two states, add up the taxes you would actually pay in each.
- Estimate the income tax you would avoid. Look at your current state’s rate or brackets applied to your taxable income. This is the maximum benefit of moving.
- Estimate sales tax on your spending. Multiply your taxable spending (not your total spending, since groceries, rent and services are often exempt) by the combined state and local rate where you would live.
- Estimate property tax. Multiply the home’s value by the local effective property tax rate. Renters pay this indirectly through rent.
- Add other levies that apply to you: vehicle registration fees, excise taxes, Washington’s capital gains tax, or local taxes.
Hypothetical example. A household buys a $400,000 home and spends $30,000 a year on taxable goods. Using the approximate effective rates above, property tax would be about $5,600 a year at Texas’s 1.40% and about $2,000 at Nevada’s 0.50%. Sales tax on $30,000 would be about $2,460 at Texas’s 8.19% combined rate and about $2,470 at Nevada’s 8.24%. In this example, the two states differ by roughly $3,600 a year almost entirely because of property tax, even though neither taxes income. Actual figures depend on the county, the city, the assessed value and any homestead exemptions.
Cost of living sits on top of taxes. Housing, insurance, utilities and wages differ widely across these nine states. U.S. News affordability rankings illustrate the spread: South Dakota ranks 4th in affordability, while Washington ranks 46th and Florida 44th.
Who Gains the Most
High earners with wage or business income gain the most in direct dollars, because the income tax they avoid scales with what they earn. The benefit shrinks if they own an expensive home in a high property tax area or, in Washington, realize large capital gains.
Retirees often benefit because these states generally do not tax pensions, Social Security benefits, or withdrawals from IRAs and 401(k) plans. Many income-tax states already exempt Social Security and some exempt part of pension income, so the real saving depends on which state you are leaving and how much of your retirement income it taxes. Healthcare access, distance from family and senior services usually weigh as heavily as taxes in this decision.
Lower-income households may gain less than expected. Sales taxes take a larger share of income from people who spend most of what they earn, so a high combined sales tax rate can offset the missing income tax.
Residency, Domicile and Moving Mid-Year
You only get the benefit once you are a resident for tax purposes, and moving does not automatically end your old state’s claim. States look at two related ideas:
- Domicile is your permanent home, the place you intend to return to. Evidence includes where you hold a driver’s license, register to vote and vehicles, keep your primary home, see doctors and enroll children in school.
- Statutory residency is a day-count test. Many states treat you as a resident if you keep a home there and spend more than about half the year (often 183 days) in the state.
In the year you move, you typically file a part-year return in your old state covering income earned while you lived there. If you keep a house in your former state and spend substantial time there, that state may still treat you as a resident, and high-tax states do audit people who claim to have left. Being treated as a resident of two states can mean paying tax in both, so record your move date and cut ties deliberately.
Remote Work and Out-of-State Wages
Living in a no-income-tax state does not shield income earned elsewhere. If you commute into or regularly work in a state with an income tax, that state can tax the wages earned there as a nonresident. Remote workers face an extra wrinkle: a few states, including New York, apply a “convenience of the employer” rule that can tax a nonresident employee of an in-state employer on remote work done for personal convenience rather than because the employer required it. Before relocating while keeping a job based in an income-tax state, confirm how your employer’s state treats remote employees.
The Bottom Line
High earners, retirees and remote workers weighing a move gain the most from comparing these nine states line by line. The missing income tax is one item, and sales tax, property tax and cost of living can erase much of the saving. Add up the taxes you would actually pay in each state, then establish domicile clearly so your former state cannot keep taxing you.
