Which States Have No Income Tax? A Complete Guide for 2026

The 9 States With No Income Tax

Nine states currently have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. These states rely on other revenue sources for government funding, including sales taxes, property taxes, corporate taxes, and excise taxes. For workers in these states, the lack of state income tax can result in significantly higher take-home pay compared to workers with identical jobs in high-tax states. Someone earning $75,000 in Texas keeps approximately $1,200 more annually in take-home pay compared to the same job in California.

These nine states are geographically and economically diverse. They include large states (Texas, Florida, Washington) and small states (Wyoming, South Dakota). Some are in the Southeast (Florida, Tennessee), some in the Mountain West (Nevada, Wyoming), some in the Great Plains (South Dakota, Texas), and some in the Pacific Northwest (Washington, Alaska). The absence of state income tax isn't correlated with any particular region.

To understand your true tax burden, examine each state's complete tax structure. Some no-income-tax states rely heavily on sales tax (Washington at 6.5-10.25%, Texas at 8.25%, Nevada at 6.85%), while others have lower sales taxes (Wyoming and South Dakota have no state sales tax, though local taxes apply). Others depend more on property taxes. New Hampshire uniquely has the lowest sales tax (5%) among the nine. Understanding which revenue sources your state uses helps you evaluate the full tax impact beyond state income tax.

How No-Income-Tax States Affect Your Pay Stub

Workers in no-income-tax states see a major advantage on their pay stubs: no state income tax deduction. If you compare pay stubs for identical jobs in two states, one with no income tax (Texas) and one with 5% state income tax (Colorado), the Texas worker's pay stub shows no state tax deduction while the Colorado worker's stub shows approximately 5% deducted for state taxes. On a $5,000 bi-weekly gross, this means a $250 difference in take-home pay per check, or $6,500 annually.

This advantage applies only to state income tax. Federal income tax withholding is identical in all states. FICA taxes (Social Security and Medicare) are also identical. Local income taxes in cities like New York City or Philadelphia still apply in those locations regardless of state law. The savings from no state income tax must be weighed against other taxes you'll pay in that state, particularly if it has high sales tax or property tax.

For salaried workers whose employment isn't tied to a specific location, moving to a no-income-tax state can result in substantial annual tax savings. A freelancer earning $100,000 annually would save approximately $5,000-$10,000 in state taxes by moving from a high-tax state (California at 9.3%, New York at 6.85%) to a no-income-tax state. Over a career, this compounds significantly. However, other factors like cost of living, job availability, and family considerations should drive the relocation decision, not just taxes.

Other Taxes in No-Income-Tax States

No-income-tax states compensate for lost income tax revenue through other taxes, primarily sales tax and property tax. Washington and Texas have no income tax but have sales taxes (Washington 6.5-10.25% depending on locality, Texas 8.25%). These sales taxes apply to most purchases, adding 6-10% to the cost of goods. Over time, this can offset the savings from no income tax, especially if you're a big spender. Someone saving and investing aggressively might come out ahead; someone spending most of their income might see no overall benefit.

Property taxes in no-income-tax states range from low to very high. Wyoming and South Dakota have relatively low property taxes, while Florida and Texas have moderate property taxes. Property tax rates are typically 0.5-1.5% of home value annually. In a no-income-tax state with moderate property taxes, a $300,000 home might cost $3,000-4,500 annually in property taxes. Compare this to a low-property-tax state with high income tax; you might pay the same total when combining both taxes.

Corporate taxes and business taxes in no-income-tax states vary widely. Texas and Florida have no corporate income tax, while some no-income-tax states have other business taxes. Excise taxes on specific items (fuel, alcohol, tobacco) are common in no-income-tax states to generate revenue. For individuals, these don't appear on pay stubs, but they affect the cost of specific purchases. Understanding the complete tax landscape of your state helps you make informed financial decisions.

Comparing No-Income-Tax States to High-Tax States

A worker earning $80,000 in Texas (no income tax, 8.25% sales tax) would pay no state income tax. If they're single with standard deductions, federal income tax might be $8,000, FICA $6,120, for total take-home of approximately $65,880. The same worker in California (9.3% state income tax) would pay state tax of approximately $6,000, federal tax of $8,000, FICA $6,120, for total take-home of approximately $59,880. The Texas worker keeps $6,000 annually more, or $500 monthly more.

However, this comparison is incomplete without considering cost of living. While no-income-tax states save on state taxes, housing, food, and services costs may be higher. Texas and Florida have experienced rapid population growth and housing price increases. Austin, Dallas, Miami, and Tampa have become expensive cities. A $300,000 home in Austin, Texas might cost $600,000 in San Francisco, California. The tax savings might be offset by higher housing and living costs. Your final financial position depends on the total package of taxes plus cost of living.

High-income workers (earning over $200,000) benefit most from no-income-tax states. At high income levels, state income taxes become substantial (9.3% California state tax on $300,000 income is $27,900 annually). No-income-tax states offer significant savings at these levels. Middle-income workers see moderate savings. Low-income workers might see no benefit if they claim significant tax credits that reduce or eliminate state income tax in high-tax states. Evaluate whether a potential move would actually benefit your specific situation.

Special Cases: New Hampshire's Unique Situation

New Hampshire has no income tax on wages or salaries, which is unusual and valuable. However, New Hampshire does tax interest and dividend income at 5%, plus 3.7% on any investment gains. New Hampshire residents who are primarily employees benefit from no income tax on their salary. However, those with significant investment income find New Hampshire less attractive. New Hampshire also has relatively high property taxes (around 1.0-1.2% of home value) to compensate for the lack of income tax revenue.

New Hampshire's approach makes it attractive for salaried workers and retirees living on Social Security (Social Security is exempt from the investment income tax). However, business owners, investors, and freelancers might prefer other no-income-tax states without the investment income tax. For W-2 employees, New Hampshire combines the benefit of no salary tax with a manageable property tax burden, making it competitive with other no-income-tax states.

New Hampshire also has lower sales tax (5%) than many no-income-tax states, providing an additional advantage for consumers. The combination of no income tax on salaries, lower sales tax, and reasonable property taxes makes New Hampshire competitive despite the tax on investment income. For someone working as a W-2 employee with minimal investment income, New Hampshire offers benefits similar to other no-income-tax states.

Is Moving to a No-Income-Tax State Right for You?

Consider moving to a no-income-tax state if you have high income, significant savings, or remote work opportunities. High-income earners (over $150,000) save the most in absolute dollars. If you work remotely and can move anywhere, a no-income-tax state is worth considering. Your potential annual tax savings justify any moving costs, and you might build additional wealth faster. However, ensure the job market supports your career and that you can maintain your income level in your chosen location.

Location-dependent workers should consider whether their industry is strong in their target state. A tech worker might prefer Seattle (Washington, no income tax) or Austin (Texas, no income tax) because of the strong tech industry. Creative professionals might prefer Nashville (Tennessee, no income tax). A nurse might find better opportunities in Florida (no income tax) than in her current state. The best decision combines tax advantages with job availability and career growth potential.

Evaluate the complete financial picture before moving. Compare not just state income taxes but also sales taxes, property taxes, cost of living, housing prices, and job opportunities. A remote worker earning $80,000 might save $4,000-5,000 annually in taxes by moving from California to Texas, but if housing costs are $1,000 higher monthly in your target Texas city, the overall benefit disappears. Use online cost-of-living calculators and research real estate prices to ensure the move makes financial sense. Tax savings are important, but they're only one factor in choosing where to live.