States With No Income Tax: Where Can You Save the Most?
Nine states don’t impose a broad-based individual income tax on wages in 2026. Moving to one could lower your tax bill, but property taxes, sales taxes, housing and insurance costs can reduce what you save.
You may also owe income tax to another state after moving, depending on where you earn it. The comparison below shows what each state still charges and how to estimate whether a move would leave you with more money.
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The nine states with no income tax on ordinary wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For 2026 state income taxes, Washington’s capital gains tax explains why some lists count eight. Compare living costs and other taxes, including income tax your former state may still charge.
- For 2026, ordinary wages aren’t subject to a broad-based individual income tax in these nine states.
- Certain investment profits remain taxable under Washington capital gains tax.
- New Hampshire no longer taxes interest and dividends for tax periods beginning January 1, 2025.
- Housing and insurance costs can offset savings, as can property and sales taxes.
- Moving doesn’t automatically end former-state tax or filing obligations.
Which nine states have no income tax on wages?
Nine states with no income tax on wages qualify under the 2026 income tax classifications. A wage earner and an investor can face different state taxes in the same place. Certain investment gains and business income may remain taxable, alongside sales and property taxes.
The nine-state list
- Alaska: The state has no general sales tax. Local sales taxes may apply.
- Florida: Allow for sales and local property taxes in comparing housing costs and potential savings.
- Nevada: Sales taxes remain payable; business owners may face separate state taxes.
- Nuevo Hampshire: Local property taxes matter, even without a general statewide sales tax.
- Dakota del Sur: Your purchases may carry local sales tax and state sales tax.
- Tennessee: Combined state and local sales taxes average more than in many states.
- Texas: A home’s location and property tax exemptions affect the owner’s bill.
- Washington: The 2026 rules tax certain capital gains. A separate income tax begins in 2028.
- Wyoming: Property and local sales taxes vary by location.
What no state income tax means
For this list, states with no income tax means states without a broad-based individual income tax on wages. You’re still subject to federal income tax rules, and running a business may bring separate state tax obligations. Washington’s treatment of investment gains shows why the type of income matters.
Why do some sources list eight states instead of nine?
Washington doesn’t tax ordinary wages in 2026, but it does tax certain investment gains. Include Washington when counting states with no income tax on wages, and you get nine. Exclude states that tax any individual income, and the count drops to eight.
Washington's capital gains exception
Washington doesn’t tax profits from every investment sale. Its state capital gains rules apply to certain long-term gains with exclusions, deductions, and thresholds that can leave you owing no tax even after selling at a gain.
Washington’s upcoming income tax begins January 1, 2028. The new 9.9% tax applies to annual adjusted gross income exceeding $1 million, with the first returns due in April 2029. The new tax doesn’t apply to income from the 2026 tax year.
New Hampshire's repealed tax
Interest and dividends no longer trigger New Hampshire’s tax for taxable periods beginning January 1, 2025, under New Hampshire’s tax repeal. A recently published list can still use pre-repeal rules. Look for the tax year behind its count.
What other taxes do states without income tax charge?
Sales and property taxes remain costs in states with no income tax. A business may face taxes separately. Excise taxes apply to specific purchases or activities. Your location and purchases determine costs.
Compare state and local taxes
| State | Average combined sales tax (July 1, 2026) | Effective property tax on owner-occupied homes (2024) | Local consideration |
|---|---|---|---|
| Alaska | 1.82% | 0.94% | Local sales tax varies |
| Florida | 6.98% | 0.78% | County property bills matter |
| Nevada | 8.24% | 0.50% | Check business tax obligations |
| Nuevo Hampshire | 0.00% | 1.50% | Property taxes remain payable |
| Dakota del Sur | 6.11% | 1.00% | State and local charges |
| Tennessee | 9.61% | 0.52% | Relatively high sales taxes |
| Texas | 8.20% | 1.40% | Check homeowner tax exemptions |
| Washington | 9.57% | 0.75% | Certain capital gains taxable |
| Wyoming | 5.39% | 0.53% | Rates vary by locality |
Sources: July 2026 sales tax rates use population-weighted local averages. The 2024 effective property tax data, published in 2026, show historical statewide taxes relative to home values, not your property's tax rate.
Why statewide averages do not determine your bill
For a home in states with no income tax, the assessment and local tax rate matter, along with exemptions. You can’t work out the bill from the purchase price alone. Two counties can produce different bills.
Alaska and New Hampshire have no statewide general sales tax. Alaska allows local sales taxes. Estimate tax on taxable purchases; don’t apply the rate to all your spending.
Como tú estimate your mortgage payment, include property taxes and insurance when comparing the total ongoing cost of homeownership.
Which no-income-tax state could save you the most?
Income tax savings depend on which earnings and investments your current state taxes. Housing can change the outcome, especially if you own. To compare states with no income tax, include spending and any tax tied to work elsewhere.
| Reader profile | First costs or taxes to compare |
|---|---|
| Higher-income employee | Tax on wages before moving and obligations to other states |
| Propietario de vivienda | Home prices and insurance; property bills after exemptions |
| Inquilino | Rent and other recurring household expenses |
| Retiree | Taxes on retirement income and local living costs |
| Investor | Whether capital gains face state tax |
| Contribuyente autónomo | Personal income taxes and taxes on the business |
Match the comparison to your finances
A homeowner comparing two counties needs tax estimates for the homes under consideration. Statewide property tax averages won’t show how each home’s value and available exemptions affect the bill.
BEA regional price comparisons show how state and metro price levels differed in 2024. They can help narrow your choices, but they don’t predict the cost of a particular home or your household’s spending.
Use local home listings or rents and insurance quotes for your budget, with sales tax calculated on usual purchases that are taxable there.
How can you calculate your potential tax savings before moving?
Compare annual taxes and living costs in your current location with the same costs after moving. Keep income, filing status, and household size constant for the first comparison. That shows what the move changes before you factor in a different job or other household changes.
Five steps to estimate the difference
- Start with your state return’s tax liability, meaning the tax you actually owe, or a current projection. Payroll withholding is a payment toward that bill, not the final amount.
- Project taxes after moving. Use the same income assumptions including earnings that another state may still tax.
- For housing, estimate annual rent or mortgage payments and insurance. Put property taxes in your tax total. If a mortgage payment includes property taxes or insurance through escrow, separate those amounts so you don’t count them twice.
- Include regular expenses and sales tax on taxable purchases. Don’t multiply your entire spending budget by the sales tax rate.
- Any significant federal deduction change belongs in the annual comparison. Keep moving expenses outside that total because they won’t recur each year.
Simple comparison formula and example
Estimated annual savings = current annual total − projected annual total.
Use annual amounts in both columns. Include any income tax still payable to another state after moving.
Enter annual dollar amounts for both locations. Blank fields count as zero. Count each expense once, and include income tax still payable to another state after moving.
If the move changes your federal tax, include that difference in the comparison. Count every expense once.
For example, suppose your current annual taxes total $15,000 and living costs total $45,000. After moving, taxes fall to $9,000, but living costs rise to $48,000:
- Current annual total: $60,000.
- Projected annual total: $57,000.
- Estimated annual savings: $3,000.
These are hypothetical figures, not estimates for a particular state. Prepare a separate move-year budget for one-time moving costs and any tax differences during the transition.
One federal deduction consideration
If you itemize, IRS deductible taxes guidance allows eligible state and local income taxes or general sales taxes, subject to federal limits. When comparing states with no income tax, include any resulting change in federal tax if it materially affects savings.
Does moving to a no-income-tax state end your old state's taxes?
Your former state may still require a return and tax payments after you leave. Moving to states with no income tax doesn’t settle whether you’re still a resident or have income taxable elsewhere.
Residency and the year of the move
A part-year resident return may cover the year you move. Your records should support when you left and where you lived:
- Move date and homes used.
- Workdays in each state.
- License or voter registration update dates.
- Other connections you kept in the former state.
Domicile is your permanent home. No single change of paperwork establishes it in every state.
Income still taxable to another state
Your tax residency may end on a different date from your physical move. Apply the former state’s residency rules before dividing income between resident and nonresident periods. State law determines whether work performed there, local rents, business earnings, or certain deferred and equity-based compensation remain taxable once you’re no longer a resident.
En California part-year and nonresident rules, the state generally taxes income received as a resident. Once you’re a nonresident, its tax generally reaches California-source income.
New York nonresident telecommuting guidance covers wages that New York may tax even when you work remotely elsewhere. That state’s special rules don’t apply everywhere. An employee’s wage rules don’t necessarily determine how a business reports out-of-state client income.
When review helps
Review state instructions alongside work locations, rental records, business earnings, deferred pay, and disputed residency facts. H&S Accounting & Tax Services can review filing documents within an agreed engagement for multi-state income tax preparation.
What changes for retirees and self-employed taxpayers?
Retirement income
Federal tax can still apply to pension payments and retirement-account withdrawals even when your state leaves those payments tax-free. Moving doesn’t change that federal treatment. Federal rules determine whether Social Security benefits are taxable, too.
Your current state return shows which retirement income you’re paying state tax on. Use that amount when comparing states with no income tax. Property taxes belong in the comparison, along with household expenses: higher housing and insurance bills could leave you with less to spend despite the income tax savings.
Self-employment and business taxes
Social Security and Medicare taxes don’t disappear with your state income tax bill. For people working for themselves, IRS self-employment tax guidance explains this separate federal tax obligation.
Business filings need their own review. Moving your household doesn’t change every business filing obligation. Work in a state may create filing requirements, while your business structure and activities affect whether you owe state business taxes or sales and use taxes.
Frequently asked questions about states without income tax
Which states have no income tax and no statewide sales tax?
Alaska and New Hampshire do. Alaska allows local sales taxes, so purchases aren’t necessarily tax-free. The comparison of state and local sales taxes shows why you need to check the locality, too.
Do any states have no income tax and no property tax?
No state offers a blanket absence of both. Local property taxes can apply in states with no income tax. Check the property’s local tax bill rather than assuming the state’s income tax policy covers homeownership.
Do you need to file a state tax return after moving?
The residency section separates the move year from later income. Even after moving to states with no income tax, you may need part-year filing for prior residency or nonresident filing for income taxable there afterward.
Can you deduct sales taxes when you live in a state without income tax?
Itemizers who qualify can claim general sales taxes in place of their state and local income taxes. IRS sales tax deduction rules set the limits. Compare itemizing with the standard deduction before choosing; itemizing doesn’t help every household.
Find the state that fits your actual tax picture
Your current state tax bill is the amount to compare with what a move would cost. A home with higher property taxes or insurance may use up much of that savings. Spending matters, too. No one location offers everyone the largest savings, even among states with no income tax. Include income that your former state could continue taxing when you compare the annual totals.
The return for your move year may differ from later filings. Your move date and income records must support the treatment under each state’s 2026 rules. To discuss part-year or nonresident preparation for work or income across states, schedule a tax appointment with H&S Accounting & Tax Services and review the scope.
