The 9 States With No Income Tax — And What They Charge You Instead

Nine US states levy no income tax on wages. It's the first fact anyone learns when they start comparing states, and it's also the fact most often misread — because a state that doesn't tax your salary still has to fund its schools, roads, and hospitals from somewhere, and that somewhere is your shopping receipts and your property tax bill.

The Full List

| State | Sales tax (avg. combined) | Property tax (avg. effective) | |---|---|---| | Alaska | 1.82% | 1.11% | | Florida | 7.00% | 0.76% | | Nevada | 8.24% | 0.47% | | New Hampshire | 0% | 1.66% | | South Dakota | 6.11% | 1.06% | | Tennessee | 9.55% | 0.50% | | Texas | 8.20% | 1.49% | | Washington | 9.38% | 0.81% | | Wyoming | 5.44% | 0.57% |

New Hampshire is the newest full entry on this list. It historically taxed interest and dividend income (not wages) at 3%; that tax was phased out and fully repealed starting in the 2025 tax year, leaving the state with no personal income tax of any kind.

Washington is a partial asterisk: wages are untaxed, but the state levies a 7% excise tax on long-term capital gains above roughly $262,000 per year. For a salaried worker that never applies. For someone selling a business or a large stock position, it very much does.

The Trade-Off Is Real, Not Rhetorical

Look at the table again and the pattern is obvious. The no-income-tax states cluster at the extremes of the other two columns rather than in the middle.

Texas funds itself on property tax. At an average effective rate of 1.49%, a $400,000 home costs about $5,960 a year in property tax — roughly what someone earning $85,000 would pay in state income tax in a mid-rate state. If you own an expensive home in Texas, you have not escaped the tax; you have changed which line it appears on.

Tennessee takes the opposite route, with the second-highest combined sales tax rate in the country at 9.55%. A household spending $50,000 a year on taxable goods hands over roughly $4,800 in sales tax. Tennessee's property tax, by contrast, is low at 0.50%.

Nevada and Florida sit in a genuinely favourable middle — moderate sales tax, low property tax — which is a large part of why both draw so much interstate migration. Both also lean heavily on tourism revenue that out-of-state visitors pay: hotel taxes, rental car surcharges, and in Nevada's case gaming taxes. When a meaningful share of the tax base is funded by people who don't live there, residents genuinely do come out ahead.

Alaska is the outlier in every direction: no state income tax, no statewide sales tax (only local ones averaging 1.82%), and a Permanent Fund Dividend that pays residents a share of oil revenue each year. The catch is cost of living, which absorbs the difference and then some in much of the state.

Who Actually Comes Out Ahead

The honest answer is that it depends on three things: how much you earn, how much you spend, and how much house you own.

High earner, modest spender, renter or small home. This is the profile that benefits most, and it isn't close. Income tax scales with earnings while sales tax scales with consumption, so someone earning $250,000 and living below their means in Nevada or Florida saves five figures a year against a high-rate state. This is the classic case for relocating.

Middle earner, family, large home. Much closer than people expect. A household earning $90,000 in Texas with a $450,000 home pays around $6,700 in property tax, which comfortably exceeds what most states would have charged in income tax at that income. The move can be neutral or negative.

Low earner. Frequently worse off. Sales tax is regressive — it takes a larger share of a small income than a large one, because low-income households spend nearly all of what they earn. Meanwhile most income tax states have standard deductions and low bottom brackets that shield low earners almost entirely. Someone earning $32,000 pays very little state income tax nearly anywhere, but pays full sales tax on everything they buy in Tennessee.

The Comparison Most People Get Wrong

The mistake is comparing your current state income tax bill against zero and stopping there. That number is the ceiling on your savings, not the savings themselves.

The comparison that actually works has four lines:

1. State income tax you pay today
2. Sales tax difference — your annual taxable spending multiplied by the rate difference between the two states
3. Property tax difference — the home you'd actually buy, multiplied by each state's effective rate
4. Cost of living difference — housing above all, then insurance, which runs high in Florida and Texas

Run all four before deciding. It is common for lines 2 through 4 to eat most of line 1, and not unusual for them to eat all of it.

One More Thing: You Can't Just Say You Moved

States with high income tax rates audit departing residents aggressively, and "I moved to Florida" is a claim they will test. Establishing domicile means genuinely relocating your life: driver's licence, voter registration, where your family lives, where your doctor and dentist are, where you spend your days. Several states apply a 183-day physical presence test and will ask for records.

Keeping a home in your old state while claiming residency in a new one is the fastest route to a dual-residency audit and a bill for the tax you thought you'd avoided, plus penalties. If the move is real, document it. If it isn't quite real, the savings are not yours to claim.

Check Your Own Numbers

Every state on the list above has its own calculator here, and so does every state that does tax income. Run your salary through your current state, then through the state you're considering, and compare the take-home figures directly — that's the number that matters, not the headline rate.