What states have no state income tax? — What it means for cost of living by US state

cost of living by us state: what ‘no state income tax’ actually means

The phrase cost of living by us state is often used when people ask whether a state without a wage tax will be cheaper to live in. In plain terms, trackers that list states with no broad-based individual income tax mean the state does not levy a general tax on wages and salaries, rather than that the state has no personal taxes of any kind Tax Foundation list.

That definition focuses on a broad-based tax applied to earned income. Some states may still apply targeted levies on investment income, local surtaxes, or other personal taxes that fall outside the conventional income tax base. Trackers such as the National Conference of State Legislatures use that distinction when they compile their lists NCSL overview.

Because the distinction matters for movers, it is important to know that “no income tax” in these lists usually refers specifically to wage and salary taxation. Investment income or narrowly targeted taxes can remain in place and change the effective tax outcome for some households.

Below is a short checklist of what to check when a source says a state has no income tax, including whether the listing counts state investment taxes or recent legislative changes, which can alter the set of states recognized as no-income-tax in a given year.

Definition: broad-based personal income tax versus targeted taxes

A broad-based personal income tax applies to most wage and salary income across tax filers in a state. When trackers report a state has no such tax, they mean the state does not apply that general levy to wages and salaries. For clarity on any given state, consult state tax agency pages or the Tax Foundation tracker, which explicitly distinguishes broad-based wage taxes from narrowly targeted levies Tax Foundation list.

Common exceptions and tax categories to watch

Common exceptions include taxes on interest and dividends, municipal surtaxes, and special resource or severance taxes that affect particular industries or households. New Hampshire and Tennessee historically taxed investment income in ways that complicated the binary label of having no income tax; recent legislative changes changed those treatments and how trackers count those states NCSL overview.

Which states are commonly listed as having no state income tax

Trackers updated for early 2026 commonly identify Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming as states that do not impose a broad-based individual income tax on wages and salaries Tax Foundation list. See Tax Foundation data for state rates Tax Foundation state income tax rates.

Because rules can change, lists vary slightly across publications when a state alters treatment of investment income or phases out targeted levies. For example, New Hampshire’s repeal of its interest and dividends tax in 2025 affected whether some trackers count it as having no personal income tax. When a state alters a narrow tax, trackers update their classifications accordingly NCSL overview.

When you see a short no state income tax list, treat it as a starting point. Consult the listed sources and the state tax agency for the current statutory text and any recent legislative actions that change the practical tax picture for residents. For a quick alternative overview see the NerdWallet summary NerdWallet guide. See recent items in the news index news.

The commonly listed states as of early 2026

The states most often cited in 2026 as having no broad-based wage income tax are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. This set reflects tracker criteria that exclude narrow levies and focus on broad wage taxation Investopedia summary.

Recent changes and borderline cases to watch

Two states illustrate common borderline issues. One had a narrow investment income tax until a recent repeal that removed the exception, and another phased out an interest and dividends levy during the prior decade. These changes show why readers should verify current law with state sources or trackers that note legislative updates NCSL overview.

How states replace income tax revenue and what that means for household costs

When a state does not tax wage income, it must still fund government services. States commonly replace foregone income-tax revenue with other sources such as higher sales taxes, larger reliance on property taxes, severance or resource taxes, or greater dependence on federal transfers, and those mixes affect who pays and how much they pay Tax Foundation list.

Those revenue choices have clear implications for households. Sales taxes tend to be more regressive because lower-income households spend a larger share of income on taxable goods, while property taxes affect homeowners more directly. Resource or severance taxes can reduce the need for other taxes but create revenue volatility tied to commodity prices U.S. Census state-local finance.

For a prospective mover, the key question is which revenue sources in the target state will affect your household most: sales taxes on consumption, property taxes if you plan to buy, or local fees and service charges that appear on utility or municipal bills.

To assess practical impact, consult state and local finance tables and the Tax Foundation summaries that describe typical revenue mixes and see the site about page for author context about.

Major alternative revenue sources: sales, property, severance, federal transfers

Sales taxes, sometimes combined with local option sales surcharges, shift revenue toward consumption. Property taxes shift burdens to owners, and severance taxes or resource royalties are concentrated in places with extractive industries. Federal transfers and grants can also play an outsized role in state budgets depending on the state composition Tax Foundation list.

How revenue mix changes who pays

The same level of state revenue can produce very different incidence depending on the mix. A state that raises more from sales taxes will tilt burdens toward consumers, while a state that leans on property taxes will place more relative burden on homeowners. For households comparing states, that incidence matters as much as headline tax presence U.S. Census state-local finance.

Why ‘no income tax’ does not automatically mean lower cost of living

Local price levels and tax burdens shape household costs separately from the presence of a state income tax. The Bureau of Economic Analysis Regional Price Parities measure relative price levels across states and metros and often shows meaningful differences among states that lack a wage tax BEA Regional Price Parities.

State and local tax burden measures, such as per-capita taxes or taxes as a share of personal income, can put some no-income-tax states near or above national averages once sales and property taxes are included. That is why headline absence of wage taxation is not a full measure of fiscal burden Tax Foundation tax-burden analysis.

Using Regional Price Parities to compare local price levels

Regional Price Parities are a standardized comparison of price levels for goods, services, and housing across states and metropolitan areas. These data help estimate how far a dollar goes in a given metro and should be paired with tax information when comparing locations BEA Regional Price Parities.

How state and local tax burden measures change the picture

Measures that add sales and property taxes to the analysis often change rankings. A state with no wage tax but high property taxes or sales tax incidence can generate comparable or greater total tax burdens for many households compared with states that levy income taxes but keep other levies lower Tax Foundation tax-burden analysis.

A practical framework to compare cost of living by US state when income tax is absent

To compare states rigorously, use a consistent four-part checklist: (1) state total tax burden and major revenue sources, (2) local sales and property tax rates for your intended locality, (3) BEA Regional Price Parity for the metro area you are considering, and (4) an estimate of public services and recurring fees you expect to use. These four items together translate headline tax rules into likely household costs BEA Regional Price Parities.

Verify each checklist item at the relevant primary source: state tax agencies or the Tax Foundation for statutory rules, local governments or the Census state-local finance pages for local rates and revenue composition, and BEA for RPPs. That combination gives the most defensible view of net costs U.S. Census state-local finance.

Step-by-step relocation checklist

Step 1, confirm whether the state imposes a broad-based wage tax and whether any narrow investment taxes remain. Step 2, obtain local sales and property tax rates for the target city or county. Step 3, check BEA RPPs for the metro to estimate price level differences. Step 4, estimate likely public-service usage and potential municipal fees. Each step is verifiable using the sources above Tax Foundation list. You can also review policy context in the strength and security section strength and security.

How to combine tax and price data for household estimates

Combine tax incidence with BEA price levels by translating taxes into a per-household dollar estimate or effective rate for your household profile. For homeowners, include property tax exposure. For renters, emphasize sales tax incidence and RPP-adjusted rent expectations. Tailor the checklist items to your income and asset mix to see realistic net costs BEA Regional Price Parities.

Decision criteria: weighing taxes, prices, and public services for your move

When weighing states, prioritize metrics that matter for your household. Key metrics include the effective tax rate for your income and asset profile, housing costs informed by RPPs, local sales tax exposure, property tax vulnerability if buying, and expected public-service levels such as schools and emergency services Tax Foundation tax-burden analysis.

These criteria shift by household type. A single renter will weight sales tax incidence and rent levels more heavily, while a family homeowner must model property taxes and school quality. Retirees with investment income must check whether a state taxes interest or dividends, as those rules can affect the retiree budget differently than wage taxation U.S. Census state-local finance.

Key metrics to prioritize

Effective tax rate for your household is the first filter. Then add housing costs, local sales and utility fees, and property tax exposure. Finally, estimate likely public-service benefits tied to those taxes to see whether higher local taxes are exchanged for services that matter to you Tax Foundation tax-burden analysis.

How to interpret trade-offs for different household types

Compare scenarios rather than single indicators. For example, a state with no wage tax but high property taxes may still be preferable for renters. Conversely, homeowners might face higher long-run costs. Use the four-part checklist and local data to see how trade-offs play out for your household profile BEA Regional Price Parities.

Common mistakes and data pitfalls to avoid

A common mistake is assuming no state income tax means lower overall tax burden. Without checking sales and property taxes and local fees, a mover can be surprised by higher costs. Consult Tax Foundation or NCSL lists as starting points but verify local rates with state or municipal sources NCSL overview.

Another pitfall is relying on outdated lists. Legislative changes, such as repeals or phaseouts of narrow taxes, can change whether a state appears on a no-income-tax list. Always check the tracker note or the state tax agency for recent legislative updates Tax Foundation list.

Mistakes movers make when evaluating ‘no income tax’ states

Movers often overlook municipal surtaxes, utility fees, or special assessments that raise living costs locally. Local finance pages and Census government finance data are the right place to verify these items before deciding U.S. Census state-local finance.

How to check and update lists and figures

Check the Tax Foundation and NCSL trackers for national summaries, and consult the state tax agency and local finance pages for current rates. Those primary sources allow you to update a relocation estimate with minimal risk of relying on stale data Tax Foundation list.

Practical comparisons: scenarios across a few no-income-tax states

Scenario comparisons help illustrate how different mixes of taxes and prices affect households. When comparing two no-income-tax states, focus on local housing markets, sales-tax incidence, and property tax levels rather than the headline absence of a wage tax BEA Regional Price Parities.

For a renter deciding between Florida and Texas, the key contrasts will often be local rent levels, local sales tax rates and the incidence of municipal fees. Both states do not impose a broad-based wage tax, but local housing markets and sales tax mixes will likely drive the cost difference more than the absence of a state income tax Tax Foundation list.

For a prospective homebuyer comparing Washington and Wyoming, property tax exposure and local housing price levels are central. The absence of wage taxation in both states does not eliminate property tax responsibilities or variation in housing prices across metros, so use BEA RPPs and local property tax schedules to estimate net costs BEA Regional Price Parities.

These scenario notes are qualitative rather than prescriptive. The four-part checklist applied to the exact county or city will produce the specific estimates a household needs to decide.

Summary, trusted next sources, and how to verify changes

Quick takeaway: a headline that a state has no income tax is a useful starting point, but you must evaluate sales taxes, property taxes, local fees, and local price levels to understand net household costs. Combine tax information with BEA RPPs to translate taxes into living-cost implications BEA Regional Price Parities.

Primary sources to consult for updates are the Tax Foundation and NCSL trackers for national context, BEA for price parities, and U.S. Census state-local finance pages for detailed revenue and rate information. Verify any specific tax treatment with the state tax agency or local finance office before making a relocation decision Tax Foundation list.

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