States With No Income Tax
· USDataDesk
Nine US states levy no tax on wage income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. In those states, the “state income tax” line on a pay stub is simply $0, and residents file no state income-tax return.
The edge cases
- New Hampshire never taxed wages, but it did tax interest and dividends through 2024. That tax has been fully phased out, so New Hampshire now has no personal income tax of any kind.
- Washington has no wage income tax, but since 2022 it taxes long-term capital gains above an annual exemption (a little over $250,000 of gains) at 7%. That reaches large investment and business-sale gains, not salaries.
- Tennessee finished phasing out its “Hall tax” on investment income in 2021.
- The remaining six — Alaska, Florida, Nevada, South Dakota, Texas, Wyoming — tax no personal income at all.
How they raise revenue instead
Government costs the same whether or not there is an income tax, so no-income-tax states lean harder on other levers:
| Lever | States that rely on it heavily |
|---|---|
| Higher and broader sales tax | Tennessee, Washington, Nevada (all above the national average combined rate) |
| High property tax | Texas and New Hampshire have among the highest effective property tax rates in the country |
| Severance taxes on oil, gas, and mineral extraction | Alaska and Wyoming (also North Dakota, which does have an income tax) |
| Tourism, hotel, and gaming taxes | Nevada (casino revenue), Florida and Nevada (hotel and visitor taxes) |
Alaska is the extreme case. Oil revenue has historically been large enough that the state has no statewide sales tax and no income tax, and even pays residents an annual Permanent Fund Dividend. That model depends on oil prices and production, so Alaska’s fiscal situation swings more than most.
“No income tax” is not the same as “low total tax”
The number that matters for a household is total state and local taxes — income, sales, property, and excise combined — as a share of income. By that measure, several no-income-tax states (Alaska, Wyoming, Tennessee, Florida) do rank among the lower-burden states, while others (Washington, Texas) land closer to the middle once high sales or property taxes are counted. Studies that compute total burden generally find the states cluster within a few percentage points of one another — the mix of taxes differs far more than the total.
Who tends to gain and lose by living in a no-income-tax state:
| Profile | Likely outcome |
|---|---|
| High salary, modest spender, renter | Clear win — skips a large income tax, avoids high property tax, sales tax hits only what you spend |
| Middle income, homeowner | Often close to a wash — a high property tax (e.g. Texas) can offset the income-tax saving |
| High spender on taxable goods | Partial claw-back through a high combined sales tax |
| Retiree on Social Security and modest withdrawals | Smaller benefit — many income-tax states already exempt Social Security and some retirement income |
Cost of living, housing prices, home and auto insurance rates, and the local job market usually move the needle more than the tax structure. Tax should be one input to a relocation decision, not the whole case.
A side-by-side: three earners, two states
Comparing Texas (no income tax, high property tax) with Oregon (income tax, no sales tax) — two states that sit at opposite corners of the trade-off — for a rough sense of how profile changes the answer:
| Household | Texas | Oregon |
|---|---|---|
| $60k earner, renter, modest spender | No income tax saves ~$2,500/yr; low sales tax exposure; wins in TX | Pays ~$3,500 state income tax; wins nothing here |
| $120k earner, owns a $450k home | Saves ~$6,000 in income tax but pays ~$9,000+ in property tax | Pays ~$9,000 income tax, ~$4,500 property tax — roughly a wash overall |
| Retiree, $45k from Social Security + IRA | No income tax, but Social Security was already largely untaxed by most states; property tax on a paid-off home still bites | Taxes some retirement income but exempts Social Security; property tax lower |
The pattern holds across most no-income-tax states: renters and high W-2 earners who do not own expensive property benefit most; homeowners and people with lower wage income often find it close to neutral once every tax is counted.
Practical points if you are considering a move
- Residency is about where you actually live, not just a mailing address. States that lose high earners (California, New York) audit claimed moves — keep evidence: where you spend your days, your driver’s licence, voter registration, doctors, where your family is.
- Part-year returns apply in the year of the move.
- Remote workers are generally taxed where the work is physically performed; a few states have “convenience of the employer” rules that can tax you where the company is based even if you never go there.
- Trailing income — a bonus, RSUs, or deferred comp earned while you lived in the old state can still be taxable there when it pays out.
- Property and sales taxes are local; two addresses in the same no-income-tax state can have very different total burdens.
Common misconceptions
- “No income tax means I keep more of everything.” You keep more of your wages, but you may pay more in sales and property tax depending on how you live.
- “These states must have worse services.” Service levels vary widely and do not map neatly onto tax structure; resource-rich states in particular fund a lot from severance revenue.
- “The tax savings are huge.” For a homeowner or heavy spender, the net saving is often modest once all taxes are counted.
The bottom line
Nine states do not tax wages, and your take-home pay is straightforwardly higher in them. They recover the revenue through sales, property, severance, or tourism taxes, so “no income tax” translates to “lower total taxes” mainly for higher earners who rent and do not spend heavily. Compare the full state-and-local burden, not the income-tax line alone. See how the pieces play out using the sales tax and minimum wage data for these states against the rest.