The 9 States With No Income Tax — And What They Charge Instead
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What you actually save
Estimated annual state income tax on a $100,000 salary, single filer:
| State | Approximate state tax | Versus no-tax state |
|---|---|---|
| California | ≈ $6,800 | −$6,800 |
| New York (NYC) | ≈ $9,300 | −$9,300 |
| Oregon | ≈ $7,400 | −$7,400 |
| Minnesota | ≈ $6,600 | −$6,600 |
| Illinois | ≈ $4,200 | −$4,200 |
| Pennsylvania | ≈ $2,600 | −$2,600 |
| Texas / Florida / etc. | $0 | — |
Run your own figure for any state with the paycheck calculator.
Where the money comes from instead
- Property tax. Texas averages about 1.6% of home value a year and New Hampshire about 1.8% — roughly double the national norm. On a $400,000 home that is $6,400–$7,200 annually, which can erase the entire income tax saving for a homeowner.
- Sales tax. Tennessee and Washington both reach around 9.5% combined, and Tennessee taxes groceries, which hits lower-income households hardest.
- Severance taxes. Alaska and Wyoming fund themselves largely from oil, gas and mineral extraction — which is why their model is not replicable elsewhere.
- Tourism. Nevada and Florida export a large share of their tax burden to visitors through gaming, hotel and sales taxes.
Who actually comes out ahead
| Situation | Verdict |
|---|---|
| High earner who rents | Large win — no income tax, no property tax exposure |
| High earner buying an expensive home in Texas | Often close to a wash |
| Middle earner, modest home | Usually a moderate win |
| Retiree living on Social Security | Smaller win — many states already exempt it |
| Low earner | Can be worse off — sales tax is regressive |
The remote work trap
Moving to Texas while working for a New York employer does not automatically end your New York tax obligation. Several states — New York, Delaware, Nebraska and Pennsylvania among them — apply a convenience of the employer rule, taxing remote workers of in-state companies unless the remote arrangement is required by the employer rather than chosen by the employee.
Establishing residency also takes more than a change of address. States check where you spend your days, where your car is registered, where you vote, where your doctor is, and where your family lives. California in particular audits departures aggressively.
If you are moving primarily for tax reasons, one conversation with a CPA before the move costs far less than an audit after it.
The honest summary
No income tax is a real benefit, largest for high earners who rent or own modestly, and smallest for low earners and expensive homeowners. It is one line in a budget that also contains housing costs, insurance, childcare and salary levels — and in most of these states salaries are lower too.
Compare total cost of living and after-tax income for the specific job and specific house, not the headline rate.
Frequently asked questions
Which states have no income tax?
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. New Hampshire completed the repeal of its interest and dividends tax in 2025, making it a full no-income-tax state.
Is Texas cheaper than California overall?
For most people yes, but by less than the income tax difference suggests. Texas property taxes are roughly double California’s effective rate thanks to Proposition 13, and Texas home insurance is among the most expensive in the country.
Do I pay state income tax where I live or where I work?
Generally where you live, but if you work in a different state you may owe there too. Reciprocity agreements and credits usually prevent genuine double taxation, though remote workers for employers in convenience-rule states can still owe the employer’s state.
Do these states tax retirement income?
They tax no income at all, including pensions, 401(k) withdrawals and Social Security — which is why Florida and Nevada are so popular for retirement. Many states that do have income tax also exempt Social Security.
Does Washington really have no income tax?
Not on wages. It introduced a 7% tax on capital gains above roughly $270,000 in 2022, upheld by the state supreme court in 2023, which affects people selling businesses or large stock positions.
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Related guides
This guide is general information from ToolNest, not financial, legal or tax advice. Figures are estimates based on the assumptions stated and current at the time of writing. For decisions that matter, speak to a qualified professional in your own country.