Nine states levy no income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. For a worker on $100,000 the saving against California or New York runs to several thousand dollars a year, and it grows with income because those states tax the top of a salary hardest. The saving is real, but it is never the whole picture: states without an income tax raise the money elsewhere, and the two usual instruments are property tax and sales tax. Texas has among the highest property tax rates in the country, at roughly 1.7 per cent of home value, and Tennessee's combined sales tax averages 9.55 per cent. A homeowner can hand back the entire income tax saving in property tax alone, which is why the figure to compare between two states is total tax burden rather than the income tax line.
States With No Income Tax
| State | Notes |
|---|---|
| Alaska | No state income tax on wages or salary income. |
| Florida | No state income tax on wages or salary income. |
| Nevada | No state income tax on wages or salary income. |
| New Hampshire | NH taxes interest and dividends only at 3% (being phased out, 0% for 2026) |
| South Dakota | No state income tax on wages or salary income. |
| Tennessee | No state income tax on wages or salary income. |
| Texas | No state income tax on wages or salary income. |
| Washington | WA has a 7% capital gains tax on gains over $270,000 |
| Wyoming | No state income tax on wages or salary income. |
How Much Can You Save?
The savings from living in a no-income-tax state depend on your income level. Here's a comparison of take-home pay for a $100,000 salary:
| State | State Tax | Take-Home Pay | Savings vs. CA |
|---|---|---|---|
| Texas | $0 | $78,736 | +$5,438 |
| California | $5,438 | $73,298 | $0 |
| New York | $5,214 | $73,522 | +$224 |
| Florida | $0 | $78,736 | +$5,438 |
| Washington | $0 | $78,736 | +$5,438 |
| Illinois | $4,813 | $73,923 | +$625 |
| Pennsylvania | $3,070 | $75,666 | +$2,368 |
| Ohio | $2,030 | $76,706 | +$3,408 |
| Tennessee | $0 | $78,736 | +$5,438 |
| Nevada | $0 | $78,736 | +$5,438 |
Important Considerations
While no state income tax is attractive, consider these factors before relocating:
- Sales tax: Many no-income-tax states have higher sales taxes. Texas has a combined state and local rate averaging 8.2%, and Tennessee's averages 9.55%.
- Property tax: Texas has some of the highest property taxes in the nation, averaging about 1.7% of home value, which partially offsets the income tax savings.
- Cost of living: Some no-tax states like Washington and Nevada have high costs of living in major metro areas.
- Other taxes: Washington taxes capital gains at 7% on gains over $270,000. New Hampshire previously taxed interest and dividends.
How Each of the Nine Raises Its Revenue Instead
Alaska is the outlier: oil and mineral royalties fund much of the state budget, and residents receive an annual dividend from the Permanent Fund rather than paying an income tax. Florida and Nevada lean heavily on sales tax and on visitors, which shifts part of the burden away from residents. Texas relies on property tax collected locally, which is why its effective rate on a home is among the highest in the country. Washington taxes business gross receipts and, since 2022, capital gains above a high threshold. Wyoming and South Dakota have small populations and severance or sales taxes to match. Tennessee finished phasing out its tax on interest and dividends, and New Hampshire completed the same phase-out, which is why older comparison tables still list both as partial-tax states.
Who Actually Gains, and Who Does Not
A high earner who rents gains most: the income tax saving is large and no property tax bill offsets it. A median earner buying a house in a Texas suburb may gain nothing at all, because a property tax bill of eight or nine thousand dollars on a $500,000 home outweighs the state income tax they would have paid elsewhere. Retirees with investment income rather than wages are a special case, since several states with an income tax exempt pension or Social Security income anyway, which narrows the gap considerably.
The comparison also has to be made after housing. A no-tax state with expensive metropolitan housing, such as Washington around Seattle or Nevada around Las Vegas, can leave a household with less disposable income than a taxed state with cheaper housing. Income tax is a visible line on a pay slip; rent and property tax are larger numbers that simply do not appear there.
Moving Mid-Year and Residency Rules
Moving between states during a tax year means filing as a part-year resident in both, with income apportioned to the period you lived in each. Leaving a high-tax state does not end its claim on income earned while you were still resident, and some states scrutinise a change of domicile closely: where you vote, register a vehicle, hold a driving licence and spend your days all count. Remote workers face a further wrinkle, since a handful of states tax income sourced to an employer located there even when the employee works elsewhere. Anyone planning a move primarily for tax reasons should check both states' residency tests before the move rather than after, and should keep the evidence: lease or deed, utility accounts, licence and registration dates. A state that disputes a change of domicile will ask for exactly that paperwork, sometimes two or three years later, and the burden of proof sits with the taxpayer rather than with the revenue department.