9 US States With No Income Tax in 2026 (Full Guide)

The Nine States

As of 2026, nine states impose zero state income tax on wages and salaries:

• Alaska — No income tax, no sales tax. Pays residents an annual Permanent Fund Dividend from oil revenue. Average property tax: 1.04%.
• Florida — No income tax. 6% state sales tax. Popular with retirees and remote workers. Growing tech scene in Miami. Property taxes average 0.89%.
• Nevada — No income tax. 6.85% sales tax. Low property taxes at 0.53%. Las Vegas economy diversifying beyond gaming.
• New Hampshire — No income tax on wages (interest and dividends tax fully phased out in 2025). No sales tax either. But property taxes are among the highest in the country at 1.86%.
• South Dakota — No income tax. 4.5% sales tax. Very low cost of living. Business-friendly trust and LLC laws make it popular with asset protection structures.
• Tennessee — No income tax. 7% state sales tax — combined with local taxes it often exceeds 9.5%. Low cost of living statewide. Nashville and Memphis growing fast.
• Texas — No income tax. 6.25% state sales tax. But property taxes average 1.68% of home value — one of the highest in the country. Major tech and energy hub.
• Washington — No income tax on wages. 6.5% sales tax. One catch: 7% capital gains tax on gains over $270,000. Home to Amazon, Microsoft, Boeing.
• Wyoming — No income tax. 4% sales tax. Lowest overall tax burden of any state. Very low cost of living. Popular for LLC and trust structures.

How Much Do You Actually Save?

The saving depends entirely on which state you're leaving. Here's the approximate annual state income tax you avoid by moving to a no-tax state, at different incomes:

These are real dollars — not percentages on a chart. At $150,000, the California saving alone is enough for a down payment contribution every two years.

The Trade-Offs Nobody Talks About

Zero income tax is not zero tax. States still need revenue. They find it elsewhere.

Property Taxes

Texas has no income tax but an average property tax of 1.68% of assessed value. On a $500,000 home, that's $8,400 per year — reassessed annually at market value. California's Prop 13 caps property tax at 1% of purchase price with limited increases. For longtime California homeowners with locked-in low assessments, the property tax comparison is not always favorable for Texas.

New Hampshire hits 1.86%. The states with both low income tax and low property taxes are Wyoming (0.55%), Nevada (0.53%), and Florida (0.89%).

Sales Tax

Tennessee's combined state and local sales tax averages 9.5% — highest in the country. Spend $50,000 per year on taxable goods and services and you're paying $4,750 in sales tax. Alaska and New Hampshire have no sales tax at all, which partly explains why they can sustain zero income tax without crushing residents.

Cost of Living

Washington state's cost of living index is 115 (15% above national average). Florida is 103. Alaska is 127 — expensive due to logistics. The states where zero income tax actually translates to lower overall burden are Wyoming (95), South Dakota (92), and Tennessee (90).

Who Benefits Most

The math favors high earners. At $50,000, the California saving from moving to Texas is roughly $2,800 — meaningful, but offset by moving costs within a year. At $200,000, the saving is $18,000+ annually. Different calculation entirely.

Remote workers are the biggest winners. If your job is location-independent, you capture the full income tax saving without any salary cut. A software engineer earning $180,000 from anywhere saves $15,000–18,000 per year by domiciling in Texas or Florida instead of California.

Retirees also benefit significantly. Social Security and pension income are taxed at the state level in most states. Florida and Tennessee eliminate that entirely.

Investors with capital gains should pay attention to Washington's 7% capital gains tax over $270,000. If you're realizing large gains, Washington is no longer the cleanest no-tax destination.

Domicile: California and New York Will Chase You

Moving abroad does not automatically sever your state tax obligations. California's Franchise Tax Board and New York's Department of Taxation are the two most aggressive in the country at auditing high-income taxpayers who claim to have moved. Part-year residents still owe tax on income earned while resident. The clock resets when you genuinely leave — not on January 1.

To successfully change domicile you generally need to: spend fewer than 183 days in the prior state, get a new driver's license and register vehicles, register to vote, update bank accounts and professional registrations, and file a part-year resident return for the year of the move.

Best States by Profile

• Tech workers / remote employees: Texas or Florida — strong job markets, no income tax, reasonable cost of living outside major metros
• Retirees: Florida or Tennessee — warm climate, no income tax, no tax on retirement income
• Business owners and investors: Wyoming or South Dakota — no income tax, favorable LLC laws, lowest cost of living
• Northeast proximity: New Hampshire — no income or sales tax, within range of Boston

Sources: Tax Foundation 2026 State Individual Income Tax Rates; Tax Foundation 2026 State and Local Sales Tax Rates; Tax Foundation 2025 Property Tax Rates; Washington DOR capital gains tax guidance (RCW 82.87). This article is educational and does not constitute tax advice.