For the full state income tax comparison and relocation planning framework, see the State Taxes hub.
Nine U.S. states charge no income tax on wages. But the full picture is more complicated — these states fund services through other taxes that may or may not save you money depending on your situation.
The 9 States With No Income Tax
| State | Income Tax | Sales Tax | Avg. Property Tax Rate | Overall Tax Burden Rank |
|---|---|---|---|---|
| Alaska | 0% | 0% (local varies) | 1.04% | Very Low |
| Florida | 0% | 6.00% | 0.80% | Low |
| Nevada | 0% | 6.85% | 0.53% | Moderate |
| New Hampshire | 0% | 0% | 1.86% | Moderate |
| South Dakota | 0% | 4.50% | 1.08% | Low |
| Tennessee | 0% | 7.00% | 0.56% | Low |
| Texas | 0% | 6.25% | 1.60% | Moderate |
| Washington | 0% | 6.50% | 0.87% | Moderate |
| Wyoming | 0% | 4.00% | 0.55% | Very Low |
How No-Income-Tax States Fund Their Budgets
Without income tax revenue, these states rely on alternative funding sources:
Sales Tax
Most no-income-tax states have above-average sales taxes. Tennessee’s combined state and local sales tax rate averages 9.55%, one of the highest in the nation. Texas averages 8.20%.
Property Tax
Texas and New Hampshire have notably high property taxes. A $400,000 home in Texas can cost $6,400+ per year in property taxes alone, compared to about $2,000 in Hawaii.
Natural Resources
Alaska and Wyoming benefit from oil, gas, and mineral extraction revenues. Alaska even pays residents an annual dividend from its Permanent Fund (about $1,300–$3,200 per year).
Tourism and Other Revenue
Nevada and Florida benefit from tourism-related taxes and fees. Nevada generates significant revenue from gaming taxes.
Tax Savings Comparison by Income Level
The actual savings from living in a no-income-tax state depend heavily on your income:
$50,000 Salary
| State | State Income Tax | Property Tax (on $250k home) | Sales Tax (~$25k spending) | Total State/Local Taxes |
|---|---|---|---|---|
| Texas | $0 | $4,000 | $2,050 | $6,050 |
| Florida | $0 | $2,000 | $1,500 | $3,500 |
| California | ~$1,500 | $1,750 | $1,913 | $5,163 |
| New York | ~$2,400 | $3,250 | $2,000 | $7,650 |
$150,000 Salary
| State | State Income Tax | Property Tax (on $500k home) | Sales Tax (~$60k spending) | Total State/Local Taxes |
|---|---|---|---|---|
| Texas | $0 | $8,000 | $4,950 | $12,950 |
| Florida | $0 | $4,000 | $3,600 | $7,600 |
| California | ~$10,500 | $3,500 | $4,590 | $18,590 |
| New York | ~$8,900 | $6,500 | $4,800 | $20,200 |
At higher income levels, the savings from no income tax become more significant, which is why many high earners and retirees relocate to states like Florida and Texas.
Best No-Income-Tax State for You
If You’re a High Earner
Florida or Wyoming offer the best combination of no income tax with relatively low property and sales taxes.
If You’re a Retiree
Florida and Tennessee are popular for retirees because they have no income tax on retirement income, relatively low property taxes, and warm climates.
If You’re a Homeowner
Nevada, Wyoming, and Tennessee have low property tax rates, making them attractive for homeowners.
If You Value Low Overall Costs
Wyoming, Alaska, and South Dakota tend to have the lowest overall tax burdens.
Establishing Domicile: Why the Move Has to Be Real
High-income earners from California and New York who move to Florida or Texas to avoid state income tax face aggressive auditing from their former states. California in particular has a dedicated residency audit program that scrutinizes high-earner departures.
What California and New York look for:
- Where you sleep most nights (>183 days in the new state is the standard, but not the only factor)
- Where your primary physician, dentist, and accountant are located
- Where your vehicle is registered and where you get your hair cut
- Cell phone location data, credit card transaction locations, and social media check-ins
- Where your children attend school
- Where your closest friends and family live (“closest connections” test)
What you actually need to do to complete a domicile change:
- Spend more than 183 days in the new state annually (document it)
- Change your driver’s license, vehicle registration, and voter registration
- Update your primary bank, accountant, attorney, and doctors to the new state
- File a final part-year resident return in the old state and a non-resident return for any remaining income sourced there
- Notify your employer to update payroll withholding to the new state
Half-moves — keeping the California home and “moving” to Florida on paper — are exactly what residency auditors look for. A successful domicile change for tax purposes requires a genuine lifestyle change, not just a change of address form.
States Moving Toward No Income Tax
Several states are actively reducing or eliminating their income taxes:
- Iowa is phasing to a 3.9% flat rate
- Mississippi is reducing rates with the goal of eventual elimination
- Arkansas has lowered its top rate to 3.9%
The Catch: What No Income Tax Doesn’t Tell You
- Higher cost of living — Florida and Texas metros like Miami, Austin, and Dallas have seen dramatic cost-of-living increases
- Property tax surprises — A $500,000 home in Texas costs about $8,000/year in property taxes vs. $4,250 in California
- Fewer services — Some no-income-tax states spend less on education, infrastructure, and social services per capita
- SALT deduction impact — With the $10,000 SALT cap on federal returns, the federal tax benefit of living in a high-tax state is limited anyway
Total Tax Burden by State
Looking at income tax alone doesn’t tell the full story. Here are total effective tax rates combining income, sales, and property taxes for a median household:
| Rank | State (Lowest Total Burden) | Effective Total Rate |
|---|---|---|
| 1 | Alaska | 4.6% |
| 2 | Wyoming | 6.4% |
| 3 | Tennessee | 6.5% |
| 4 | South Dakota | 7.0% |
| 5 | Florida | 7.1% |
| … | … | … |
| 46 | Connecticut | 12.8% |
| 47 | New Jersey | 13.2% |
| 48 | Illinois | 13.4% |
| 49 | California | 13.5% |
| 50 | New York | 15.9% |
No-Income-Tax States for Retirees and Investors
Retirees and investors should look beyond wage income — retirement account distributions, pension income, and capital gains treatment vary significantly among the nine no-tax states.
| State | Taxes Pension Income? | Taxes 401(k)/IRA Withdrawals? | Capital Gains Treatment |
|---|---|---|---|
| Alaska | No | No | No state capital gains tax |
| Florida | No | No | No state capital gains tax |
| Nevada | No | No | No state capital gains tax |
| New Hampshire | No | No | 7% on gains over threshold removed (pre-2025 dividend tax gone) |
| South Dakota | No | No | No state capital gains tax |
| Tennessee | No | No | No state capital gains tax |
| Texas | No | No | No state capital gains tax |
| Washington | No | No | 7% on long-term gains above $270,000 |
| Wyoming | No | No | No state capital gains tax |
For retirees relying heavily on investment income, Washington’s capital gains tax makes it the weakest option among the nine. Alaska, Florida, Wyoming, and South Dakota offer the cleanest zero-tax environment for all income types.
The True Total Tax Burden: No-Income-Tax States Aren’t Always Cheaper
Eliminating income tax doesn’t mean low taxes — it means the revenue comes from somewhere else. Here’s the full picture for every no-income-tax state:
| State | Income Tax | Property Tax Rank | Sales Tax (avg with local) | Total Tax Burden Rank (1=lowest) |
|---|---|---|---|---|
| Wyoming | None | 11th lowest | 5.36% | 1st lowest |
| South Dakota | None | 15th lowest | 6.40% | 2nd lowest |
| Florida | None | 26th | 7.08% | 5th lowest |
| Nevada | None | 19th lowest | 8.28% | 7th |
| Texas | None | 7th highest | 8.20% | 13th |
| Washington | None | 21st | 9.38% | 21st |
| Alaska | None | 16th lowest | 1.76% (no state sales tax) | Varies by city |
| Tennessee | None | 25th | 9.55% | 15th |
| New Hampshire | None | 3rd highest | 0% | 10th |
The Texas vs. Wyoming comparison: Both have no income tax, but Texas homeowners pay among the highest property taxes in the country (averaging 1.60–1.80% of assessed value annually). A $400,000 home in Texas costs $6,400–$7,200/year in property taxes. The same home in Wyoming costs roughly $2,400/year. Texas’s no-income-tax benefit evaporates quickly for homeowners.
New Hampshire’s property tax trap: New Hampshire has no income tax and no sales tax, but funds its budget almost entirely through property taxes — the 3rd highest rates in the country. For renters, New Hampshire is genuinely low-tax. For homeowners, property taxes often exceed what they’d pay in income tax in neighboring states.
How Much You Actually Save by Moving to a No-Income-Tax State
The real savings depend on which state you’re leaving. Moving from a high-income-tax state to Florida is very different from moving from a low-tax state:
| Moving From | Annual Income | State Income Tax Saved | Typical Property Tax Increase | Net Savings (homeowner) |
|---|---|---|---|---|
| California (13.3%) | $150,000 | ~$15,000 | +$3,000–$5,000 | $10,000–$12,000/yr |
| New York (10.9%) | $150,000 | ~$11,000 | +$2,000–$4,000 | $7,000–$9,000/yr |
| Illinois (4.95%) | $150,000 | ~$5,500 | Varies widely | $1,000–$4,000/yr |
| Ohio (3.99%) | $150,000 | ~$4,000 | Small difference | $500–$2,500/yr |
| Pennsylvania (3.07%) | $150,000 | ~$3,100 | Small difference | Minimal |
High-income earners moving from California or New York to Florida or Texas can save $10,000–$20,000+ per year. The math gets much thinner for people moving from states with already-modest income taxes — particularly once property taxes, cost of living differences, and the one-time moving costs are factored in.
Moving to a No-Income-Tax State: What to Check First
Relocating solely for tax reasons can backfire if you overlook hidden costs. Before moving, verify:
- Property tax rate — Texas and New Hampshire average over 1.6% effective rate vs. under 0.6% in Nevada and Wyoming
- Sales tax — Tennessee averages 9.55% combined (one of the highest in the U.S.)
- Estate and inheritance taxes — none of the nine have them, which is a plus
- Healthcare access — rural Wyoming and South Dakota have fewer providers
- Homestead exemptions — Florida offers generous homestead protection that lowers effective property taxes for primary residents
Related: State Income Tax Rates
Related: State Income Tax Rates | Federal Income Tax Brackets | Cost of Living by State | Average Income by State
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