9 States With No Income Tax in 2026 (And the Real Trade-Offs)

If you've ever stared at a paycheck stub and wondered why a chunk labeled "state tax" disappears every two weeks, you're not alone. Nine U.S. states don't take any of it — they levy zero income tax on wage earnings. For 2025 (filed in 2026), they are:

1. Alaska
2. Florida
3. Nevada
4. New Hampshire (wages exempt; a residual 3% tax on interest and dividends applies through 2026 and is being phased out)
5. South Dakota
6. Tennessee
7. Texas
8. Washington (wages exempt; a separate 7% capital gains tax applies above ~$262K)
9. Wyoming

It's tempting to read that list and think, "Why doesn't everyone live in one of these states?" The reality is more interesting. State governments need revenue to operate, and if it doesn't come from income tax, it comes from somewhere else. Below are the trade-offs to consider.

How no-income-tax states fund themselves

Sales tax. Tennessee charges a 7% state sales tax — the highest in the country. Local sales tax pushes Memphis and Nashville above 9.5%. Texas and Washington also lean heavily on sales tax. Alaska, by contrast, has no state sales tax at all.

Property tax. Texas, New Hampshire, and Wyoming have some of the highest effective property tax rates in the U.S. New Hampshire's average is over 1.7% of home value annually — a $400K house carries roughly $7,000/year just in property tax.

Severance and resource taxes. Alaska, Wyoming, and Texas raise meaningful revenue from oil, gas, and mineral extraction. This is part of why Alaska can also send each resident an annual Permanent Fund Dividend.

Tourism taxes. Florida and Nevada lean on tourists — hotel taxes, rental car taxes, gaming revenue. If you're a resident, you indirectly benefit.

Business and excise taxes. Washington's Business & Occupation tax is levied on gross business receipts, which gets passed along to consumers in prices.

The result: there's no free lunch. The total state-and-local tax burden in no-income-tax states is often middle-of-the-pack, not the bottom.

Who benefits most

The relative win from moving to a no-income-tax state grows with your income. A single filer earning $50,000 saves a few hundred to a couple thousand dollars per year by skipping state income tax. Someone earning $300,000 may save $20,000+ per year — enough to fund a sizable portion of housing.

Remote workers, especially high earners, have realized this in recent years. Many tech workers leaving California for Texas or Tennessee saved more in state income tax in their first year than the cost of the entire move.

Retirees benefit too. A no-income-tax state typically also doesn't tax Social Security or 401(k) withdrawals at the state level. Even some states with income tax exclude retirement income — but the no-tax states are the simplest.

Take-home pay comparison: $100K single

Here's roughly what $100,000 in gross wages nets you across the no-income-tax states vs. a few high-tax states, for a single filer with no pre-tax deductions, tax year 2025:

That's about a $5,000 swing between Texas and high-tax states at this income — meaningful, but not life-altering for everyone. At $250K, the swing widens to $15K–$20K.

Hidden costs of moving

If you're seriously considering relocating for tax purposes, factor in:

• Housing. Austin and Miami have seen large price increases as workers moved in. A no-income-tax state with a $700K starter home may net you less than a state with income tax and a $400K starter home.
• Insurance. Florida hurricane insurance and Texas wind/hail insurance can run thousands per year more than in lower-risk states.
• Establishing residency. States like California and New York are aggressive about audit/clawback for high-net-worth individuals who move. You generally need to be physically present in the new state for more than 183 days, change voter registration, driver's license, primary doctor, and ideally sell or rent out (don't keep) your old home.
• Cost of services. Some no-income-tax states fund schools, roads, and parks at lower per-capita levels. The savings on income tax may show up as out-of-pocket costs (private school, gym memberships replacing public rec, etc.).

Picking the right one

If you've decided a no-income-tax state is worth investigating, the practical differences:

• Florida — Beaches, no state estate tax, big tourism economy, hurricanes, hot summers.
• Texas — Big cities (Houston, Austin, Dallas), high property tax, strong job markets, growing.
• Washington — Tech jobs (Seattle), capital gains tax to watch if you're an investor, mild summers.
• Tennessee — Lowest cost of living of the group, music/healthcare in Nashville, high sales tax.
• Nevada — Las Vegas, Reno; tourism-heavy economy; reasonable property tax.
• Alaska, Wyoming, South Dakota, New Hampshire — Sparser populations, distinct lifestyles. Alaska's PFD is a real perk; New Hampshire's "live free or die" attitude pairs with high property taxes.

Use our state-specific calculators to see your actual take-home in each:

• Texas salary calculator
• Florida salary calculator
• Nevada salary calculator
• Tennessee salary calculator
• Washington salary calculator

The benefit of skipping state income tax is real — but it's only one piece of a much larger financial picture. Run the numbers carefully before relocating.