9 States With No Income Tax (2025)

Nine U.S. states do not levy a personal income tax on wages and salaries. For workers earning above-average incomes, living in one of these states can mean thousands of extra dollars in take-home pay every year. But no income tax does not mean no taxes. Every state needs revenue, and the money has to come from somewhere.

Before you pack your bags, it is worth understanding how each of these states makes up the difference, because higher sales taxes, property taxes, or other fees can offset much of the savings. Use our paycheck calculator to see exactly how your take-home pay would change by state.

The Complete List

As of the 2025 tax year, these nine states impose no tax on earned income:

• Alaska (AK)
• Florida (FL)
• Nevada (NV)
• New Hampshire (NH)
• South Dakota (SD)
• Tennessee (TN)
• Texas (TX)
• Washington (WA)
• Wyoming (WY)

Note on New Hampshire: While New Hampshire does not tax wages or salaries, it historically taxed interest and dividend income at 5%. That tax was fully phased out as of January 1, 2025, making New Hampshire a true no-income-tax state for all income types.

State-by-State Breakdown

Alaska

Alaska is the only state with no income tax and no state sales tax. It also pays residents an annual dividend from the Permanent Fund, which was $1,312 per person in 2024. However, local municipalities can levy their own sales taxes (up to 7.5% in some areas), and the cost of living, particularly housing and groceries, is among the highest in the nation due to the state's remote location.

Florida

Florida's lack of income tax is written into its state constitution. The state relies heavily on a 6% sales tax (plus local surtaxes up to 2.5%, totaling as high as 8.5%) and tourism-related taxes. Property taxes are moderate, averaging about 0.86% of assessed value. Florida is one of the most popular destinations for high-income earners and retirees looking to minimize their tax burden.

Nevada

Nevada funds its government largely through gaming taxes, tourism revenue, and a 6.85% state sales tax (up to 8.375% in Clark County, which includes Las Vegas). Property taxes are relatively low, capped at 3.64% annual growth. The state also levies a Commerce Tax on businesses with gross revenue over $4 million.

New Hampshire

New Hampshire has no sales tax and no income tax, but it has some of the highest property taxes in the country, averaging around 1.86% of assessed value. For homeowners, this can significantly offset the income tax savings. Renters benefit more from the no-income-tax policy since property tax costs are only partially passed through in rent.

South Dakota

South Dakota keeps things simple with a 4.5% state sales tax (up to 6.5% with local taxes) and moderate property taxes around 1.14%. The state has become increasingly popular with businesses and trusts due to its favorable tax laws. Cost of living is generally below the national average.

Tennessee

Tennessee eliminated its Hall Tax on investment income in 2021 and has had no wage income tax for decades. To compensate, the state levies one of the highest combined sales tax rates in the country: 7% state rate plus local taxes that can push the total to 9.75% in some areas. This means everyday purchases cost more, which disproportionately affects lower-income households.

Texas

Texas is the largest no-income-tax state by population and a major draw for businesses relocating from high-tax states. However, Texas has notably high property taxes, averaging about 1.68% of assessed value. On a $350,000 home, that amounts to roughly $5,880 per year. The state sales tax is 6.25%, with local additions pushing it to 8.25% in most metro areas. Use our Texas paycheck calculator to see your exact take-home pay.

Washington

Washington State has no income tax on wages but does have a 7% capital gains tax on gains exceeding $262,000 (as of 2025). The state sales tax is 6.5%, and when local taxes are added, the combined rate can reach 10.25% in parts of Seattle. Washington also has a relatively high Business & Occupation (B&O) tax on gross receipts, which affects business owners.

Wyoming

Wyoming has no income tax and a low 4% state sales tax (up to 6% with local taxes). Property taxes are also low, averaging about 0.56%. The state funds itself largely through mineral extraction taxes and federal mineral royalties. Wyoming offers one of the lowest overall tax burdens in the country, though job opportunities are more limited given the small population.

The Trade-Offs: What No-Income-Tax States Charge Instead

States without income taxes typically rely on three alternative revenue sources:

• Higher sales taxes: Tennessee and Washington have some of the highest combined sales tax rates in the country. Sales taxes are regressive, meaning they take a larger percentage of income from lower earners.
• Higher property taxes: Texas and New Hampshire stand out with property tax rates well above the national average of about 1.1%. If you own a home, this can eat into your income tax savings significantly.
• Fees, tourism, and natural resources: Nevada relies on gaming revenue, Alaska on oil, and Wyoming on mineral extraction. These sources subsidize residents but are vulnerable to commodity price swings.

Who Benefits Most From No-Income-Tax States?

The savings from living in a no-income-tax state vary widely depending on your income level and lifestyle:

• High-income earners ($150K+): Stand to save the most. Someone earning $200,000 in California would pay over $15,000 in state income tax. Moving to Texas or Florida eliminates that entirely, even after accounting for higher property taxes.
• Retirees: Particularly benefit in Florida and Nevada, where Social Security is also untaxed and the cost of living can be reasonable.
• Remote workers: Can choose their state of residence without changing employers, making no-income-tax states especially attractive.
• Lower-income households: May not benefit as much. Higher sales taxes on everyday goods can offset the income tax savings, and public services (education, infrastructure) may be less funded.

Other States Worth Watching

Several states have been trending toward lower or no income taxes. For example, Mississippi has been gradually cutting its income tax rate with a goal of eventual elimination. Iowa has been reducing brackets to move toward a flat tax. While none have yet joined the no-income-tax list, the trend is worth monitoring if you are planning a long-term move.

How to Compare Your Take-Home Pay by State

The best way to evaluate whether a no-income-tax state is right for you is to run the actual numbers. Our paycheck calculator lets you compare your take-home pay across all 50 states, factoring in federal taxes, FICA, and state-specific deductions. Try running your salary through the calculator for your current state and a no-income-tax state side by side.

The Bottom Line

Living in a state with no income tax can meaningfully increase your take-home pay, but it is not a free lunch. Higher property taxes, sales taxes, and cost of living can narrow the gap. The best approach is to calculate your total tax burden in each state, not just the income tax line. Consider your housing costs, spending habits, and career opportunities in addition to the tax picture.

For a deeper understanding of how your paycheck breaks down, check out our guide on how FICA taxes work, which covers the federal payroll taxes that apply in every state.