January 20, 2025 · 6 min read · By Nishant Pokharel

States with No Income Tax — 2026 Guide

Most Americans pay federal income tax and state income tax on every paycheck. But 9 states collect no income tax on wages whatsoever — meaning workers there take home hundreds or even thousands more per year on the same salary. If you're considering a job offer in a new state, or thinking about relocating, understanding these differences could be worth more than a raise.

Plain English: What Does "No Income Tax" Actually Mean?

Never thought about state taxes before? Here's the simple version.

In the US, you pay two separate income taxes on your paycheck — one to the federal government (everyone pays this), and one to your state (only some states charge this).

Nine states have decided not to charge a state income tax at all. If you live in one of these states — Texas, Florida, Nevada, Washington, Wyoming, Alaska, South Dakota, Tennessee, or New Hampshire — that second tax disappears completely.

Here's a real-world example: Say you earn $75,000/year.

In Texas (no state tax): you take home roughly $58,016/year
In California: you take home roughly $55,500/year — about $2,500 less
In New York: you take home roughly $57,571/year — and if you live in NYC, even less

That gap is purely from state income tax. The federal taxes are identical in every state. Over a 10-year career, that $2,500–$10,000/year difference — if saved and invested — turns into tens of thousands of extra dollars in wealth.

Important caveat: No state income tax doesn't mean no taxes at all. These states often make up the revenue through higher property taxes or sales taxes. We cover that in detail below.

The 9 No-Income-Tax States

Click any state to see a pre-loaded salary calculator with your exact take-home pay.

Alaska Alaska has no state income tax — one of only 9 states. Florida Florida has no state income tax — great for high earners. Nevada Nevada has no state income tax. New Hampshire New Hampshire has no tax on wages or salaries. South Dakota South Dakota has no state income tax. Tennessee Tennessee has no state income tax on wages. Texas Texas has no state income tax — 1 of only 9 states. Washington Washington has no state income tax. Wyoming Wyoming has no state income tax.

How Much More Do You Keep?

The dollar difference between living in a no-tax state vs a high-tax state is significant at every income level. Here's an approximate comparison for a single filer after federal tax, FICA, and state income tax (Texas/Florida = $0 state tax; California and New York apply progressive brackets):

$50,000 ~$42,455 ~$40,900 ~$40,100

$75,000 ~$61,061 ~$58,016 ~$57,571

$100,000 ~$78,755 ~$73,450 ~$71,900

$150,000 ~$111,000 ~$100,800 ~$98,200

Approximate net annual take-home, single filer, 40 hrs/week, 52 weeks. Use the calculator for your exact figures.

At $75,000, a single filer in Texas takes home roughly $3,000 more per year than the same person in California — that's about $1.44/hour more, or a free tank of gas every week. At $150,000, the gap widens to $10,000+ per year.

Each No-Tax State, Explained

Texas

No state income tax and no plans to add one — it's written into the Texas Constitution that any income tax requires voter approval. Texas funds its government through property taxes and sales tax, which tend to be higher than average. Major metros like Austin, Dallas, and Houston have seen significant cost-of-living increases, so the tax savings may be partially offset by housing costs.

Florida

Florida abolished its personal income tax decades ago and has grown into one of the most popular relocation destinations in the US, especially for high earners from California and New York. The state relies on sales tax and tourism revenue. South Florida's housing market has become expensive, but much of the state remains affordable relative to coastal California or the NYC metro.

Washington

Washington state has no income tax, which is especially valuable given the concentration of high-earning tech jobs in the Seattle area. Amazon, Microsoft, and Boeing are all headquartered here. Washington does have a capital gains tax on investment gains over $262,000 (as of 2024), but wages remain untaxed.

Nevada

No income tax, funded heavily by gaming and tourism revenue. Las Vegas and Henderson have seen substantial population growth from California transplants. Cost of living is moderate compared to coastal states, making the net financial benefit of relocating here one of the strongest.

Alaska

No income tax and no state sales tax — Alaska is the only state with neither. It also pays residents an annual Permanent Fund Dividend (historically $1,000–$2,000/year). The catch: remoteness, harsh winters, and higher costs of goods make daily life more expensive in most areas.

Wyoming

No income tax and very low overall tax burden. Wyoming is popular with retirees and remote workers who want low taxes and wide open spaces. The state's budget is heavily funded by mineral extraction (coal, oil, natural gas).

South Dakota

No income tax and a business-friendly legal environment. Sioux Falls has become a financial services hub. South Dakota also has no inheritance tax, making it attractive for estate planning.

Tennessee

Tennessee eliminated its tax on investment income (the Hall Tax) completely as of 2021. Wages have never been taxed. Nashville has become one of the fastest-growing cities in the country, attracting workers from all industries.

New Hampshire

New Hampshire doesn't tax wages or salaries. It previously taxed interest and dividend income, but that tax was fully eliminated in 2025. For W2 employees, New Hampshire is now fully a no-income-tax state. No sales tax either — making it one of the lowest-tax states in the Northeast by a wide margin.

Should You Move for the Tax Savings?

The math is real, but moving decisions involve more than the tax line. Here's what to factor in:

Property taxes: Texas has some of the highest property tax rates in the country (~2.1% annually), which can offset income tax savings for homeowners.
Cost of living: Austin, Miami, and Seattle have seen massive rent and home price increases. Run the full cost-of-living comparison, not just the tax comparison.
Remote work eligibility: If your employer is in California, some states still withhold California income tax on remote workers in certain situations. Check with a tax professional before assuming you're fully exempt.
Career opportunities: A higher salary in a high-tax state can still net more than a lower salary in a no-tax state. Always compare net hourly rates, not tax rates.

The Highest-Tax States to Compare Against

For reference, these are the states where state income tax takes the biggest bite out of your paycheck:

California — up to 13.3% marginal rate
Hawaii — up to 11%
New Jersey — up to 10.75%
Oregon — up to 9.9%
Minnesota — up to 9.85%
New York — up to 10.9%

No-Income-Tax States Side-by-Side Comparison

Not all no-tax states are equal. Here's how they stack up across the factors that matter most for someone considering a move:

Texas6.25–8.25%High (1.8–2.2%)Moderate (rising)

Florida6–8.5%0.8–1.2%Moderate (coastal = high)

Washington6.5–10.4%0.9–1.2%High (Seattle metro)

Nevada6.85–8.375%0.5–0.8%Moderate

Alaska0% (no state)1.0–1.5%High (remote goods)

Wyoming4–6%0.6–0.7%Low–Moderate

South Dakota4.5–6.5%0.9–1.2%Low–Moderate

Tennessee7–9.75%0.5–0.7%Low (Nashville rising)

New Hampshire0% (no sales tax)1.8–2.2%Moderate

Property tax rates are effective annual rates on assessed value. Sales tax includes state + average local. "Red" indicates higher rates that partially offset income tax savings.

Hidden Taxes in No-Income-Tax States

Living in a no-income-tax state doesn't mean a zero-tax environment. Here's what you'll still pay:

Sales tax: Tennessee and Washington have some of the highest combined state+local sales tax rates in the country (up to 9.75% and 10.4% respectively). On $30,000/year in consumer spending, that's $2,925–$3,120 in sales tax annually — though income tax savings at $75k+ still come out ahead.
Property tax: Texas and New Hampshire have the highest property tax rates among no-tax states (~2%+ annually). On a $400,000 home, that's $8,000/year. This matters more for homeowners than renters, and it erodes some of the income tax advantage — especially at lower income levels.
Federal taxes: All US workers pay federal income tax and FICA regardless of state. Moving from California to Texas doesn't affect your federal tax bill at all — only the state portion changes.
Capital gains: Washington state added a 7% capital gains tax on gains over $262,000 (2024). This only affects high-income investors with taxable investment accounts — wages remain completely untaxed.
Estate taxes: Washington also has a state estate tax (10–20% on estates over $2.193M). No other no-income-tax state has an estate tax, making Wyoming, Nevada, and Florida especially attractive for high-net-worth estate planning.

The Real Cost-of-Living Math: Is Moving Worth It?

The best way to evaluate a move is to calculate the full financial picture — not just the tax line. Here's an example: moving from Los Angeles to Las Vegas on the same $100,000 salary:

State income tax−$7,650/yr$0+$7,650

Avg 1BR rent$2,400/mo$1,400/mo+$12,000

Sales tax (est. $30k spending)−$2,940 (9.8%)−$2,516 (8.375%)+$424

Property tax (on $400k home, if owned)−$4,000 (CA Prop 13)−$2,800+$1,200

This is an illustrative example. Individual results vary based on actual spending, housing market, and lifestyle. The income tax savings alone ($7,650) are significant — the housing cost difference ($12,000) is typically the larger driver.

Over a 10-year period, a $21,000 annual financial advantage — invested at 7% average market returns — compounds to approximately $290,000 in additional wealth. That's the real cost of staying in a high-tax, high-cost state when your career allows flexibility.

How Much Do You Save Moving to a No-Tax State? 10-Year Projection

The income tax savings of living in a no-tax state aren't just significant in year one — they compound enormously over time. Here's what $5,000–$10,000 in annual tax savings looks like if invested:

$3,000 (on $75k)~$17,300~$41,400~$123,000

$7,000 (on $100k)~$40,400~$96,600~$287,000

$10,000 (on $150k)~$57,700~$138,000~$409,000

$15,000 (on $200k)~$86,600~$207,000~$614,000

Compounding assumes all tax savings are invested annually at 7% average annual return (approximate long-term S&P 500 real return). This is why high earners in tech and finance who can work remotely increasingly choose Texas, Florida, Nevada, or Wyoming.

State Income Tax Rates for the Highest-Tax States (2026)

To fully appreciate the no-tax state advantage, here's what workers in high-tax states pay on top of federal taxes:

California13.3%~$7,650~$19,800

Hawaii11.0%~$8,000~$18,200

New Jersey10.75%~$6,300~$17,000

New York10.9%~$6,500~$17,500

Oregon9.9%~$7,000~$17,100

Minnesota9.85%~$6,200~$16,500

No-Tax States0%$0$0

State tax estimates are approximate for single filers using each state's standard deduction and 2026 brackets. NYC residents add an additional 3.1–3.9% local tax. Source: Tax Foundation, state DOR websites.

Frequently Asked Questions

Which states have no income tax?

In 2026, nine states have no state income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire eliminated its final investment income tax in 2025, making it fully income-tax-free for W2 workers. These states fund government through sales taxes, property taxes, or other revenue sources.

How much do you save by living in a no-income-tax state?

At a $75,000 salary, moving from California to Texas saves roughly $3,000–$3,500/year in state income tax. At $100,000, the savings vs California grow to $5,000–$7,000/year. At $150,000, you save $10,000+ annually vs California or New York. Over a 10-year career, that tax savings — invested in the market — can compound to $50,000–$150,000 in additional wealth.

Do no-income-tax states have higher property taxes?

Some do. Texas is famous for its high property tax rates — averaging 1.8–2.2% annually vs California's capped 1% (Prop 13). On a $400,000 home, Texas property taxes can be $7,200–$8,800/year vs $4,000/year in California. For renters, this matters less directly, but landlords often pass property tax costs into rent. Nevada, Florida, and Washington have more moderate property tax rates that don't fully offset the income tax savings.

Is Washington state really better than California for tech workers?

Yes, significantly. A $180,000 tech salary in Washington (Amazon, Microsoft, etc.) nets roughly $110,000/year after federal tax + FICA. The same salary in California nets about $96,000 — a $14,000/year difference purely from state taxes. Washington's cost of living is also lower than the Bay Area (though Seattle housing has risen sharply). Over a 5-year tech career, this gap represents $70,000+ in additional take-home, which can mean years of earlier financial independence.

Does Texas really have no income tax?

Correct — Texas has zero state income tax on wages and it's constitutionally protected: adding an income tax requires a voter referendum. Texas funds state government through sales tax (6.25% state + local) and property taxes (among the highest in the US). For most workers, the property tax offset only matters if you own a home — renters get the full income tax benefit without the property tax burden.

Can remote workers avoid state income tax by living in a no-tax state?

Generally yes, but with an important caveat: 'convenience of employer' rules in New York and several other states mean that if your employer is based in NY and your remote work is for your convenience (not required by the employer), NY can still tax your income. California has similar aggressive sourcing rules for income earned from California-based employers. If you're remote from a Texas or Florida address but work for a CA or NY company, consult a tax professional before assuming you owe zero state tax.

References & Data Sources

Tax Foundation — State Income Tax Rates 2026
Tax Foundation — State & Local Sales Tax Rates 2026
Tax Foundation — Property Taxes by State
IRS Rev. Proc. 2025-32 — 2026 federal brackets
Washington State DOR — Capital gains tax details

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