The 9 States with No Income Tax
No state income tax does not mean no state taxes. Here is what each of the nine charges instead, and how the math actually shakes out at different income levels.
The short answer
Nine states levy no tax on wage income, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. But every one of them funds itself another way, so “no income tax” rarely means “lowest total tax”: property and sales taxes often more than make up the difference.
2026 tax year. Substitute-tax mixes vary widely by state and lifestyle.
Nine US jurisdictions impose no broad-based personal income tax on wages, salary, or self-employment income. Every one of them still funds itself somehow, there is no free lunch in state finance, and the substitution mix tells a more interesting story than the headline. Some lean on sales tax, others on severance taxes from oil and gas, others on property tax, and one (Washington) imposes a separate capital gains tax that bites high-income founders. Choosing where to live based on this list requires knowing which substitute taxes hit your particular income and lifestyle pattern.
The Nine States, Alphabetically
What Each State Taxes Instead
Alaska
No state income tax and no state sales tax, one of the few US jurisdictions with neither. State revenue comes overwhelmingly from oil and gas severance taxes paid by producers, which historically funded both the general budget and the Alaska Permanent Fund. Local sales taxes vary by borough, ranging from about 1.5% to 7.5%. The Alaska Permanent Fund Dividend distributes a share of oil revenue to residents annually, taxable federally but not by Alaska itself.
Florida
Constitutionally prohibited from imposing a state income tax. Funded by a 6% statewide sales tax (local additions push effective rates to 7-8% in most counties), corporate income tax (5.5%), property tax (collected by counties, among the higher rates in the southeast), and tourism-related fees. The combination of high property tax and full sales tax means Florida's total tax burden lands closer to the middle of the pack than the no-income-tax label suggests.
Nevada
No state income tax. Heavy reliance on gaming taxes from casinos, the Modified Business Tax (a payroll tax on employers above a threshold), and a 6.85% statewide sales tax. Property tax rates run below the national average, partly because Nevada's population and property base have grown rapidly enough to support lower millage. Tourism revenue also subsidizes the general fund significantly.
New Hampshire
No tax on wage income. Historically taxed interest and dividends at 5%, but the Interest and Dividends Tax was fully repealed effective January 1, 2025. No general sales tax, making New Hampshire one of just five states without one. Funded primarily by property tax (among the highest per capita in the US) and a Business Profits Tax (7.5% on net business income above $50,000). The high property tax has been a long-running political issue but remains the price of the no-sales-tax/no-wage-tax equilibrium.
South Dakota
No state income tax. Funded by a 4.5% statewide sales tax (low for the region), a Bank Franchise Tax (which has long made South Dakota a credit card industry hub), and tourism revenue. Often ranks among the lowest overall tax burdens in the country thanks to a small population, low service-delivery costs, and significant federal land ownership reducing property-tax service demands.
Tennessee
No state income tax on wages. The Hall Income Tax on interest and dividends was phased out completely by 2021. Funded by a seven-percent statewide sales tax (one of the highest in the US, with local additions reaching 9.75%) and a Franchise & Excise Tax on businesses. The tax mix is regressive in distributional incidence, sales taxes hit lower-income spenders disproportionately, but produces a low burden for high-income filers, contributing to the recent corporate-relocation trend toward Nashville and Knoxville.
Texas
Constitutionally requires voter approval for any state income tax. Funded by a 6.25% statewide sales tax (local additions cap at 8.25%), a Franchise Tax on businesses (formally a “margin tax”), oil and gas severance taxes, and notably high property taxes (effective property tax rate among the highest in the US). The trade-off is sharpest in Texas: a homeowner can easily pay more in annual property tax than the state income tax they avoided by leaving California, depending on home value and bracket.
Washington
No tax on wage income. However, since 2022 Washington imposes a seven-percent capital gains surtax on the sale or exchange of long-term capital assets above a $269,000 threshold (excluding real estate, retirement accounts, and small-business stock). The state Supreme Court upheld this in 2023; challenges continue but the tax remains in effect for the 2025 and 2026 tax years. Otherwise funded by a 6.5% statewide sales tax (local additions reach 10.4%) and a Business & Occupation tax on gross receipts. For founders and startup employees with significant equity events, that LTCG surtax can substantially erode the federal-tax-residence appeal of moving from California.
Wyoming
No state income tax. Funded primarily by mineral severance taxes (coal, oil, natural gas, trona) and a 4% statewide sales tax. Often ranks as the lowest overall state-and-local tax burden in the US, a function of its small population, vast natural-resource base, and minimal service-delivery infrastructure. Property tax rates are low, sales taxes are moderate, and the fossil-fuel sector underwrites a disproportionate share of state revenue.
Where the Substitute Taxes Land at $100K Income
To make the tradeoffs concrete, compare estimated combined state-and-local burden for a single filer earning $100,000 in 2026, owning a $400,000 home:
| State | Income Tax | Approx. Property Tax | Approx. Sales Tax (10% of disposable) | Approx. Total |
|---|---|---|---|---|
| Wyoming | none | $2,400 (0.6% effective) | $1,200 | ~$3,600 |
| Alaska | none | $4,400 (1.1%) | $300 (local only) | ~$4,700 |
| Tennessee | none | $2,800 (0.7%) | $2,400 (9.75% combined) | ~$5,200 |
| South Dakota | none | $4,400 (1.1%) | $1,300 (4.5%) | ~$5,700 |
| Florida | none | $3,600 (0.9%) | $1,800 (7%) | ~$5,400 |
| Nevada | none | $2,400 (0.6%) | $2,000 (8.4%) | ~$4,400 |
| Washington | none (no LTCG event assumed) | $3,600 (0.9%) | $2,500 (10%) | ~$6,100 |
| New Hampshire | none | $8,400 (2.1%) | none (no general sales tax) | ~$8,400 |
| Texas | none | $7,200 (1.8%) | $2,000 (8.25%) | ~$9,200 |
The wide spread tells the real story: Wyoming and Nevada come in lowest for a typical homeowner; Texas and New Hampshire produce some of the highest combined burdens despite zero income tax. Property tax, not income tax, dominates the ranking once you own a home.
Is “No Income Tax” Better?
Not unconditionally. The Tax Foundation's annual State and Local Tax Burden index typically ranks states like Wyoming, Florida, Tennessee, and Nevada among the lowest overall, but New Hampshire and Washington sit closer to the middle once property tax (NH) and B&O / capital gains tax (WA) are included. High-property-tax states like Texas can yield a higher total tax bill for a homeowner than a moderate-income-tax state with low property tax (e.g., Hawaii).
The right comparison for your situation depends on:
- Whether you own or rent (property tax matters only for owners and indirectly for renters)
- How much you earn (income-tax states penalize high earners; sales-tax states penalize high spenders)
- Capital gains realization patterns (Washington's LTCG surtax above $269K can hit founders / executives hard)
- Business structure (B&O, franchise, gross-receipts taxes vary)
- Spending patterns (high savers escape sales tax; high consumers escape income tax in income-tax-free states)
Domicile vs Residency: The Move That Doesn't Count
One frequent mistake among high earners trying to escape California or New York: changing legal address without actually establishing domicile. State revenue departments are aggressive about this. Owning property in the no-income-tax state, having mail forwarded, or filing a change-of-address with USPS is not enough. Most aggressive auditors look for:
- Days physically present in the new state (typically need 183+ to claim residency)
- Driver's license and voter registration in the new state
- Primary doctor, dentist, accountant, and clergy in the new state
- Family ties (school enrollment for children, spouse's residency)
- Bank accounts and primary credit cards based in the new state
- Disposition of the prior home (sale or rental, not just “mothballed”)
California, New York, New Jersey, and Massachusetts in particular pursue former residents who claim a new domicile but retain substantial ties. A multi-year audit can claw back income tax for years where the state argues domicile never actually shifted, often with penalties.
FAQ
Why is Tennessee on this list when it had an income tax until recently?
Tennessee never taxed wages, only interest and dividends, under the Hall Income Tax. That tax was phased out gradually and fully eliminated by 2021. The state is now firmly in the no-income-tax group for both wage and investment income (above-state-level), aside from federal tax which remains identical to all other states.
Does Washington's capital gains surtax apply to retirement-account withdrawals?
No. Distributions from qualified retirement accounts (401(k), IRA, pension) are explicitly excluded from Washington's capital gains tax. Real estate is also excluded. The tax primarily targets sales of stock, mutual funds, and certain business interests above the $269,000 threshold.
If I move from California to Texas mid-year, do I owe California tax on income earned after the move?
Generally no, provided you actually changed domicile. California will tax all income earned while you were a California resident, prorated by date of move. Income earned after establishing Texas domicile is not subject to California tax, but California may audit aggressively if they suspect you retained California domicile.
Are these nine the only no-income-tax jurisdictions in the US?
For the 50 states, yes. Puerto Rico has its own tax system that mostly excludes mainland US federal tax but imposes substantial local taxes. Some US territories (Guam, USVI) have unique mirror-tax systems. Within the 50 states, nine is the canonical count, though New Hampshire's recent I&D phaseout slightly redefined the boundary.
Sources
- Each state's Department of Revenue (verified 2026)
- Tax Foundation State and Local Tax Burden Rankings 2026
- Washington Department of Revenue, Capital Gains Tax FAQ
- New Hampshire HB 1097 (2021) - Interest and Dividends Tax repeal schedule