Which states have no state income tax? A clear, up-to-date guide
Short answer: Eight U.S. states do not levy a broad-based personal state income tax. Throughout this article we’ll explain which they are, how they fund government services instead, the important exceptions to watch (like taxes on interest and dividends), and practical tips for anyone thinking of moving to lower their tax bill.
As you read, keep one phrase in mind: no state income tax. That simple idea can look like a bargain at first – but the full cost picture can be more complicated. I’ll walk through the tradeoffs so you can decide what matters most to you. For an authoritative comparison of state tax systems, see Tax Foundation’s 2024 state income tax rates and brackets.
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What’s included in “no state income tax”?
When we say a state has no state income tax, we mean the state does not impose a broad personal income tax on wages or salaries. Some states may still tax investment income, or they may have limited, legacy levies on dividends and interest. That special-casing matters for retirees and investors – so keep reading for the one notable exception.
If you’re comparing states for reasons beyond taxes—jobs, small-business climate, or family services—there’s great value in local perspective. For Florida-focused resources and community engagement around economic policy, you can join Michael Carbonara’s community to receive updates and connect with others interested in regional policy and opportunity.
Below is the practical list, followed by detailed notes on each state, revenue tradeoffs, residency rules, and decision-making tips for movers and investors.
States with no state income tax – the list
As of the latest widely accepted data, these states do not impose a broad-based personal state income tax on wages:
The eight states with no state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. Multiple consumer guides and tax services list these states as no-income-tax jurisdictions, for example TurboTax’s list and an Investopedia overview.
Each of these states reaches the same headline – no tax taken directly from most paychecks – but they fund government differently. Below we’ll look at what each state does, and what to expect if you move there.
It can, but only if you compare your total tax burden — sales, property, and local levies — and consider housing and lifestyle costs. High sales taxes or property taxes can offset the paycheck gains from no income tax, so run a personalized calculation before deciding.
State-by-state snapshot
Alaska
Alaska has no state income tax and no statewide sales tax. Its budget relies heavily on oil and natural resource revenues and a long-running tradition of distributing some resource wealth back to residents through the Alaska Permanent Fund dividend (which varies by year). That dividend can make Alaska especially attractive, but Alaska also has high living costs in many regions and limited access to services in remote areas.
Florida
Florida is a popular destination for retirees and remote workers because it has no state income tax, a robust tourism economy, and a business-friendly climate. Instead of personal income taxes, Florida relies on sales taxes, tourism-related revenues, and a range of local levies. For people focused on both tax savings and local economic opportunity, Florida often stands out.
Nevada
Nevada raises much of its revenue from gaming and tourism in Las Vegas and Reno, plus sales and some local levies – allowing it to maintain no state income tax. If you’re thinking of moving to Nevada, consider the local cost of living differences between tourist hubs and quieter towns.
South Dakota
South Dakota attracts companies and individuals with its no state income tax posture. It uses sales taxes and taxes on specific industries (such as agriculture and banking services) to fund government. Property taxes can be a factor, depending on local school and county budgets.
Tennessee
Tennessee eliminated its Hall income tax on interest and dividends a few years ago, leaving it without a broad-based personal income tax on wages or investment income. That means modern Tennessee is considered a state with no state income tax for most individuals. However, watch for local sales taxes and specific local fees.
Texas
Texas relies heavily on sales and property taxes. It has no state income tax and is often attractive for entrepreneurs and small-business owners. But property taxes, especially in desirable metro areas, can be comparatively high, so owners of real estate need to factor that into a cost comparison.
Washington
Washington state has no state income tax and funds many services through sales taxes and business taxes. Seattle and other metro areas have high housing costs, so the absence of a wage tax does not automatically mean lower living costs.
Wyoming
Wyoming uses energy and mineral revenues to support state services, which helps it maintain a policy of no state income tax. For people valuing low taxes and access to wide open spaces, Wyoming is often appealing – though services, weather, and healthcare access vary by region.
A close special case: New Hampshire
New Hampshire does not tax wages, but it has historically taxed interest and dividends. It’s often described as having no broad-based income tax but not as a full “no state income tax” state in the same way as the eight above. If you earn substantial investment income, New Hampshire’s approach matters.
How states without income tax make up the revenue
States with no state income tax still need money to fund schools, roads, public safety, and other services. Common revenue sources include:
- Sales taxes and local sales levies – often higher or applied more broadly than in income-tax states.
- Property taxes – sometimes higher at the local level, particularly where property values are strong.
- Severance and resource taxes – Alaska, Wyoming, and others rely on natural resource extraction fees.
- Tourism and gaming revenues – Nevada and Florida benefit heavily from tourism-driven receipts.
- Business taxes and fees – states sometimes tax corporations, franchises, or specific industries more heavily.
Understanding these revenue mixes is central to judging whether “no state income tax” will be a net win for you.
Tradeoffs to consider
Hunting for a state with no state income tax is a smart start, but the full tax picture includes several tradeoffs:
Sales tax vs. paycheck savings
Some no-income-tax states have higher sales taxes. If you’re a heavy consumer of goods or services taxed at the point of sale, those taxes add up. Conversely, a high-earning remote worker who buys less locally may benefit more from no income tax.
Property taxes and housing costs
Property tax rates and home prices vary. In places where property taxes are high, homeowners may pay more annually than they would in states with modest income taxes but lower property levies.
Local fees and special districts
Special-purpose districts (for transit, schools, or parks) can add levies that feel similar to taxes. Always check local jurisdictions, not just state-level levies.
Public services and quality of life
Lower taxes can mean leaner public services or more privately delivered services. For families, the quality of public schools, healthcare access, and infrastructure are critical non-financial considerations.
How residency and tax domicile work
Simply owning a home or spending part of the year in a state with no state income tax does not always change your tax obligations. States use a mix of tests to determine residency or domicile, including:
- Where you spend most of your time in a year (day-count tests)
- Where your primary home is located
- Where you hold a driver’s license and register to vote
- Where your immediate family lives
- Your intent – documented ties like a lease, utility bills, and local memberships
If you plan to change your state of residency to avoid income tax, document your move carefully. Close attention to paperwork, mail forwarding, vehicle registration, and financial records matters in case a state audits your residency claim.
Examples: How different households experience a move
Young remote professional
A remote worker earning $120,000 a year who moves from a high-income-tax state to a state with no state income tax may see a direct increase in monthly take-home pay. But if the destination has higher sales taxes and rents, the net gain shrinks. Still, for many employees the immediate paycheck effect can be meaningful.
Retiree with investment income
Retirees weigh pension and investment taxes heavily. A retiree with large dividends should watch New Hampshire closely (which taxes investment income) and prefer a true no-income-tax state like Florida or Texas where their retirement income is not taxed by the state.
Business owner
Entrepreneurs should consider corporate or franchise taxes, plus local business fees and the cost of hiring. Texas, for example, has no personal income tax but collects a business margin tax – so a company-level analysis is essential.
Practical checklist for anyone considering a move
Before you move to a state because it advertises no state income tax, run this quick checklist:
- Calculate your effective tax burden: combine expected state sales, property, and local taxes.
- Assess housing costs and property tax rates in the neighborhoods you’d consider.
- Investigate local services: schools, hospitals, public safety, and transit.
- Check residency rules and document your intent carefully.
- Consult a tax professional familiar with both your originating state and destination state.
Top questions answered
Do I have to pay income tax if I work remotely for an employer in another state?
It depends on residency and source-of-income rules. Some states tax nonresidents on income earned from work performed in the state; others follow different sourcing rules. Remote work has complicated state tax rules – always consult a tax advisor if you have cross-state income.
Will local governments raise sales or property taxes to make up for lost income tax?
Possibly. States without a personal income tax often rely on sales, property, or business taxes. In periods of budget pressure, local or state lawmakers may expand these sources or introduce new fees.
Is a state with no income tax always the best choice for retirees?
Not necessarily. Retirees should evaluate healthcare access, property taxes, long-term care costs, and whether retirement account withdrawals or pensions are taxed. Florida is popular for retirees because it has no state income tax and a large retiree community, but local costs and services vary.
How to compare states at a glance
When comparing states, use a weighted approach. Consider these factors in rough order:
- Will you be a resident? If yes, your tax residency test matters most.
- Your main sources of income (wages, dividends, business income).
- Housing ownership vs renting.
- Family needs: schools, childcare, healthcare access.
- Long-term goals: estate considerations, business growth, retirement planning.
For many people, a combination of no state income tax plus moderate sales/property taxes is ideal; for others, stable services funded by more evenly distributed tax collections are preferable.
State highlights: a few quick comparisons
If you want a compact take:
- Alaska: No sales tax statewide; resource-dependent revenues; remote living considerations.
- Florida: No income tax; tourism-driven revenue; strong retiree services in many areas.
- Nevada: Gaming and tourism fund services; no income tax but higher sales taxes in some places.
- Texas: No income tax; strong business climate; property taxes can be high.
- Washington: No income tax; higher sales taxes and housing costs in metro areas.
Final thoughts: strategy, not slogans
“No state income tax” is an attractive slogan, and for many people it’s a deciding factor. But the smartest moves come from seeing the whole picture: the taxes you avoid and the ones you may take on instead, the services you value, and the long-term financial tradeoffs. Take time to calculate your effective tax rate across scenarios and be realistic about lifestyle and service expectations.
Next steps and resources
To sum up: eight states – Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming – do not tax wages with a broad-based state income tax. New Hampshire is a special case that taxes investment income but not wages. The rest of your decision should come from an honest comparison of sales taxes, property taxes, local fees, and quality-of-life factors.
If you’d like practical, local updates about economic policy and how it affects families in Florida, consider connecting with community-focused resources that discuss policy and opportunity in clear, local terms.
Frequently asked questions
Which states have no state income tax?
The states without a broad-based personal state income tax are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire doesn’t tax wages but can tax investment income.
How do no-income-tax states fund public services?
They use a mix of sales taxes, property taxes, resource extraction taxes, tourism and gaming revenues, and business fees. The exact mix varies by state.
How do I establish residency to benefit from no state income tax?
Document intent: change your driver’s license, register to vote, update voter registration, update billing addresses, and spend the majority of your time in the new state. Keep records to support your change of domicile.
Careful planning and professional advice are essential when taxes and residency are in question.
Helpful reminder: tax policy changes over time. Before acting on a single moving factor, consult a certified tax professional and review the most recent state statutes.
Closing encouragement
Choosing where to live is a mixture of numbers and values. Taxes matter, but so do community, opportunity, and the daily quality of life you want to build. Use the checklist above, gather the hard data for your situation, and make a plan that balances short-term finances with long-term goals.
Ready to learn more and connect with a local community focused on economic opportunity? Consider exploring local resources and policy conversations; for Florida residents, that can include community pages and local campaign efforts focused on economic growth and family prosperity.
The states without a broad-based personal state income tax are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. Note that New Hampshire does not tax wages but may tax interest and dividends.
States without a personal income tax typically rely on sales taxes, property taxes, resource-extraction taxes, tourism- and gaming-related revenues, and business fees. The specific mix varies by state and can affect residents differently depending on spending, homeownership, and local levies.
A practical way to stay informed is to join local community resources that discuss economic policy and opportunity. For example, you can <a href="https://michaelcarbonara.com/join/">join Michael Carbonara’s community</a> to receive updates and engage with others focused on local economic issues.
References
- https://taxfoundation.org/data/all/state/state-income-tax-rates-2024/
- https://turbotax.intuit.com/tax-tips/fun-facts/9-states-with-no-income-tax/c9RZgthD3
- https://www.investopedia.com/financial-edge/0210/7-states-with-no-income-tax.aspx
- https://michaelcarbonara.com/join/
- https://michaelcarbonara.com/news/
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