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As of 2025, eight states don’t levy income taxes: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. Washington does not tax income but does place a levy on the capital gains of certain high earners.
Of course, this doesn’t mean that residents of these states don’t pay state taxes, as some of these states still levy taxes on property and sales. While living in one of these states may lower your overall tax burden, you should consider other taxes and the cost of living before considering changing your home state.
Key Takeaways
- Eight U.S. states impose no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming do not levy income taxes. Washington does not tax income but does tax capital gains of certain high earners.
- “No income tax” doesn’t mean tax-free—residents still pay sales, property, and other taxes that can potentially offset savings.
- Retirees benefit particularly—these eight states generally don’t tax wages, pensions, Social Security, or withdrawals from IRAs and 401(k)s.
- Before making a move, consider cultural fit, public transportation, job opportunities, and the availability of government services.
- If you want to enjoy the benefits of a state with no income tax, you must establish residency there, meaning spending most of the year living in that state.
What Is State Income Tax?
A state income tax is levied directly by a state on income earned in or from the state. State income taxes, like those at the federal level, are self-assessed, with individuals filing a tax return to the state.
The laws surrounding taxes, such as what’s considered income or what can be deducted, the rates filers pay, as well as the procedures and forms that accompany taxes, are set at the state level and therefore can vary widely. Some states apply a flat rate, where everyone pays the same percentage of their income to the government, or a bracket-based system that determines rates based on how much you earn.
Living in a State With No Income Taxes
While living in a state with no income tax sounds like a dream, meaning you get to keep more of your annual income, there are other things to consider when weighing whether a move is worthwhile. For example, while Nevada doesn’t tax income, its sales tax is higher than average, according to the Tax Foundation. Here are the pros and cons of living in a state with no income tax:
Pros and Cons of Living in a State With No Income Taxes
Pros
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Typically, do not tax retirement income
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May also have lower property and sales taxes
Pros Explained
- States that don’t have income taxes typically don’t tax retirement income either. That could help retirees save more of their hard-earned money, but they should also consider other factors, such as health care affordability and access, being close to friends and family, and access to senior services.
- States with no income taxes may also have lower property and sales taxes. For example, New Hampshire does not have a sales tax, although its property taxes are relatively high.
Cons Explained
- Avoiding taxes is one thing, but a move to one of these states could come with culture shock. For example, escaping New York’s relatively high taxes for Florida will save you money, but it’ll also come with a big lifestyle change.
- Access to jobs is also key here, as more employers require workers to be present in the office. Even if you are a remote worker, things change, and you may find yourself with fewer options if you move to a state with no income tax but reduced job prospects.
For those considering a move, the concept of domicile is worth noting. You won’t be able to pick up and move to a no-income-tax state and expect to escape paying that year’s state taxes. You’ll have to live in a no-income-tax state for at least half the year before being considered a permanent resident.
Warning
Having residency in two different states can mean paying taxes in both places.
States With No Income Taxes
Alaska
Alaska has no sales tax, an average local tax rate of 1.82%, and an effective property tax rate of 1.07%. The state ranks 35th in affordability, 36th in cost of living, and 30th in housing affordability.
Florida
Florida has a 6% sales tax, an average local tax rate of 1%, and an effective property tax rate of 0.71%. The state ranks 39th in affordability, 38th in cost of living, and 40th in housing affordability.
Nevada
Nevada has a 6.85% sales tax, an average local tax rate of 1.39%, and an effective property tax rate of 0.44%. The state ranks 33rd in affordability, 28th in cost of living, and 39th in housing affordability.
New Hampshire
New Hampshire has no sales tax or local taxes and an effective property tax rate of 1.61%. The state ranks 44th in affordability, 45th in cost of living, and 42nd in housing affordability.
South Dakota
South Dakota has a 4.2% sales tax, an average local tax rate of 1.91%, and an effective property tax rate of 1.01%. The state ranks fifth in affordability, fourth in cost of living, and seventh in housing affordability.
Tennessee
Tennessee has a 7% sales tax, an average local tax rate of 2.55%, and an effective property tax rate of 0.48%. The state ranks 18th in affordability, 17th in cost of living, and 18th in housing affordability.
Texas
Texas has a 6.25% sales tax, an average local tax rate of 1.95%, and an effective property tax rate of 1.47%. The state ranks 28th in affordability, 29th in cost of living, and 31st in housing affordability.
Washington
Washington has a 6.5% sales tax, an average local tax rate of 2.88%, and an effective property tax rate of 0.76%. The state ranks 47th in affordability, 48th in cost of living, and 45th in housing affordability.
Wyoming
Wyoming has a 4% sales tax, an average local tax rate of 1.44%, and an effective property tax rate of 0.55%. The state ranks 19th in affordability, 20th in cost of living, and 22nd in housing affordability.
| Comparison of States with No Income Tax | ||||||
|---|---|---|---|---|---|---|
| State | Sales Tax | Avg. Local Tax Rate | Effective Property Tax Rate | Affordability Rank | Cost of Living Rank | Housing Affordability Rank |
| Alaska | None | 1.82% | 1.07% | 35th | 36th | 30th |
| Florida | 6% | 1% | 0.71% | 39th | 38th | 40th |
| Nevada | 6.85% | 1.39% | 0.44% | 33rd | 28th | 39th |
| New Hampshire | None | None | 1.61% | 44th | 45th | 42nd |
| South Dakota | 4.2% | 1.91% | 1.01% | 5th | 4th | 7th |
| Tennessee | 7% | 2.55% | 0.48% | 18th | 17th | 18th |
| Texas | 6.25% | 1.95% | 1.47% | 28th | 29th | 31st |
| Washington | 6.5% | 2.88% | 0.76% | 47th | 48th | 45th |
| Wyoming | 4% | 1.44% | 0.55% | 19th | 20th | 22nd |
The Bottom Line
Moving to a state with no income tax can be enticing if you want to keep more of your annual income. Of course, you must consider this move carefully, as certain things may be more expensive in the state you’re moving to, and you may have less access to job opportunities.
Finally, consider the concept of domicile and the time you spend moving carefully so that you spend most of the tax year in your desired state.
