9 States With No Income Tax in USA: Full Comparison With Sales Tax, Property Tax, and Cost of Living (2026)

There are 9 states with no income tax in USA as of 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you live in any of these states, your wages, salaries, and retirement income are not taxed at the state level.

New Hampshire became the newest fully no-income-tax state on January 1, 2025, when it eliminated its 5% tax on interest and dividends. Before that date, it taxed investment income but not earned income. Now all 9 states charge zero state income tax on all forms of individual income.

However, no income tax does not mean no taxes. These states still collect revenue through sales taxes, property taxes, excise taxes, and other fees. In some cases, the total tax burden in a no-income-tax state can be higher than in states that do charge income tax, depending on your situation.

This guide provides a complete breakdown of all 9 states, including their sales tax rates, property tax rates, overall tax burden, cost of living, and who benefits most from living in each one.

Complete List of States With No Income Tax in USA (2026)

Here are all 9 states that do not charge any state income tax, listed alphabetically:

1. Alaska
2. Florida
3. Nevada
4. New Hampshire
5. South Dakota
6. Tennessee
7. Texas
8. Washington
9. Wyoming

Tax Comparison Table: All 9 States With No Income Tax

The following table compares the key tax rates and cost indicators for all 9 no-income-tax states. Data is from the Tax Foundation (2026 State Tax Competitiveness Index), the US Census Bureau, and the Bureau of Economic Analysis.

Sources: Tax Foundation 2026 State Tax Competitiveness Index. Investopedia. State government websites. Property tax rates are effective rates based on median home values.

Detailed State-by-State Breakdown

1. Alaska

Alaska is the only US state with no income tax and no state sales tax. It has the lowest overall tax burden of any state in the country. Additionally, Alaska pays residents an annual Permanent Fund Dividend (PFD) — a cash payment from oil revenue. In 2024, the PFD was $1,702 per person. A family of four received $6,808.

The tradeoff is that Alaska has a high cost of living, especially for groceries and housing, because of its remote location. Winters are extremely long and harsh, which limits its appeal for many people.

• Best for: Outdoor enthusiasts, oil industry workers, people comfortable with remote living and extreme weather.
• Property tax: 1.07% (moderate).
• Population: ~733,000 (least populous state after Wyoming).
• Major cities: Anchorage, Fairbanks, Juneau.

2. Florida

Florida is the most popular no-income-tax state by population. With over 22 million residents, it is the 3rd most populous state in the USA. Florida has no income tax on wages, salaries, Social Security benefits, pensions, or 401(k) withdrawals. It also has no estate or inheritance tax.

The economy is driven by tourism, real estate, healthcare, aerospace (Cape Canaveral), and a growing technology sector. The warm climate, beaches, and no state income tax make Florida the top destination for retirees and people relocating from high-tax states like New York, New Jersey, and California.

• Best for: Retirees, remote workers, business owners, families who want warm weather.
• Sales tax: 6% state + local averages 7.02% combined.
• Property tax: 0.74% (below national average).
• Major cities: Miami, Tampa, Orlando, Jacksonville, Fort Lauderdale.
• Consideration: Home insurance costs are among the highest in the US due to hurricane risk.

3. Nevada

Nevada generates most of its state revenue from the gambling and tourism industries. Las Vegas alone attracts over 40 million visitors per year. The state has no income tax and no corporate income tax. The sales tax is moderately high at 8.24% combined, but property taxes are among the lowest in the country at 0.49%.

• Best for: Entertainment industry workers, hospitality workers, remote workers who want low property tax, retirees.
• Sales tax: 6.85% state + local averages 8.24% combined.
• Property tax: 0.49% (very low).
• Major cities: Las Vegas, Reno, Henderson.
• Consideration: Summers in Las Vegas are extremely hot. Water scarcity is a long-term concern.

4. New Hampshire

New Hampshire is unique among no-income-tax states because it also has no state sales tax. It is one of only two states (along with Alaska) with neither income tax nor sales tax. However, New Hampshire compensates with very high property taxes — 1.41%, among the highest in the country.

New Hampshire eliminated its 5% tax on interest and dividends income on January 1, 2025, becoming fully income-tax-free for the 2025 tax year onward.

• Best for: High earners with moderate-value homes, renters (who avoid property tax directly), people who work in Boston but live across the state line.
• Sales tax: None.
• Property tax: 1.41% (very high).
• Major cities: Manchester, Nashua, Concord.
• Consideration: Many New Hampshire residents work in Massachusetts. If you work in Massachusetts, you may still owe Massachusetts income tax even if you live in NH (check reciprocity rules).

5. South Dakota

South Dakota has a low overall tax burden. The state has no income tax, moderate sales tax (6.11% combined), and moderate property tax (0.99%). It is a popular state for business incorporation, trusts, and credit card companies due to its business-friendly regulatory environment.

• Best for: Business owners, people seeking low overall tax burden, rural lifestyle, trust and estate planning.
• Sales tax: 4.2% state + local averages 6.11% combined.
• Property tax: 0.99% (moderate).
• Major cities: Sioux Falls, Rapid City.
• Consideration: Very small population (900,000). Limited urban amenities. Cold winters.

6. Tennessee

Tennessee has no income tax but has the highest combined sales tax rate in the country at 9.61% when combining state (7%) and average local rates. This means you save on income but pay significantly more on purchases. Property tax is very low at 0.49%.

Tennessee has a strong economy led by healthcare (Nashville is the healthcare capital of the US), music, automotive (Nissan, GM), and a growing tech sector.

• Best for: High earners (who save more from no income tax than they lose on sales tax), retirees with low spending, homeowners (low property tax).
• Sales tax: 7% state + local averages 9.61% combined (highest in USA).
• Property tax: 0.49% (very low).
• Major cities: Nashville, Memphis, Knoxville, Chattanooga.
• Consideration: The high sales tax disproportionately affects lower-income residents who spend a larger share of income on taxable goods.

7. Texas

Texas is the 2nd most populous state (over 30 million residents) and has the 2nd largest state economy. It has no income tax but compensates with high property taxes — 1.36% on average, which is among the highest in the country. On a $400,000 home, that is roughly $5,440 per year in property tax.

The economy is massive and diversified: energy (oil and gas), technology (Austin, Dallas), healthcare (Houston), defense, agriculture, and manufacturing. Texas has been the top destination for corporate relocations, with companies like Tesla, Oracle, Caterpillar, and HP moving headquarters here.

• Best for: High earners, technology workers, business owners, families (good suburbs, large homes). Especially beneficial for renters and people with lower-value homes.
• Sales tax: 6.25% state + local averages 8.20% combined.
• Property tax: 1.36% (very high).
• Major cities: Houston, Dallas, Austin, San Antonio, Fort Worth.
• Consideration: The high property tax can offset income tax savings for homeowners with expensive properties. A $600,000 home in Texas costs roughly $8,160/year in property tax.

8. Washington

Washington has no income tax but has a high combined sales tax rate of 9.47%. In 2022, Washington introduced a 7% tax on capital gains above $250,000, which has been upheld by the state Supreme Court (classified as an excise tax, not an income tax). This makes Washington the only "no income tax" state that taxes some investment income.

The economy is anchored by technology — Amazon, Microsoft, and Boeing are headquartered here. Seattle has some of the highest salaries in the country.

• Best for: Tech workers earning high salaries (no income tax on wages), people with capital gains below $250,000, people who value Pacific Northwest lifestyle.
• Sales tax: 6.5% state + local averages 9.47% combined.
• Property tax: 0.75% (below national average).
• Major cities: Seattle, Tacoma, Spokane, Bellevue.
• Consideration: The 7% capital gains tax above $250,000 is important for investors and people selling stock or businesses. Seattle's cost of living is very high.

9. Wyoming

Wyoming has arguably the lowest overall tax burden of any no-income-tax state. It has no income tax, low sales tax (5.56% combined), and low property tax (0.55%). The state's revenue comes largely from mineral extraction taxes (coal, natural gas, oil).

Wyoming is the least populous state in the USA with about 577,000 residents. It offers wide open spaces, national parks (Yellowstone, Grand Teton), and an extremely rural lifestyle.

• Best for: People who want the absolute lowest tax burden, outdoor enthusiasts, retirees, people who value privacy and space, business owners (also no corporate income tax).
• Sales tax: 4% state + local averages 5.56% combined.
• Property tax: 0.55% (low).
• Major cities: Cheyenne, Casper, Jackson (very expensive resort town).
• Consideration: Very rural. Limited job market. Harsh winters. Limited healthcare facilities outside of major towns.

How Do These States Fund Their Governments?

Without income tax revenue, these states rely on alternative funding sources:

• Sales tax: The primary revenue source for Texas, Tennessee, Washington, Nevada, and Florida. Higher sales tax rates compensate for the absence of income tax.
• Property tax: The primary revenue source for Texas and New Hampshire. Both states have property tax rates that rank among the highest nationally.
• Natural resource revenue: Alaska and Wyoming generate significant revenue from oil, gas, and mineral extraction. Alaska's Permanent Fund is funded entirely by oil revenue.
• Tourism and gaming taxes: Nevada generates substantial revenue from casino and entertainment taxes. Florida generates revenue from tourism-related taxes.
• Corporate and business taxes: Most of these states still collect corporate taxes, franchise taxes, or gross receipts taxes from businesses.
• Federal transfers: Federal funding makes up a significant portion of revenue for all states, especially for Medicaid, highways, and education.

Who Benefits Most From No Income Tax?

Not everyone benefits equally from living in a no-income-tax state. The savings depend on your income level, homeownership status, and spending patterns.

People Who Benefit the Most

• High earners. Someone earning $200,000 per year in California pays roughly $18,000 to $20,000 in state income tax. The same person in Texas or Florida pays $0 in state income tax. The higher your income, the more you save.
• Retirees with large retirement income. Pension income, 401(k) withdrawals, and Social Security are all exempt from state tax in no-income-tax states.
• Remote workers earning tier 1 salaries. A software engineer earning $180,000 while living in Nashville or Austin keeps significantly more after-tax income than the same person in New York or San Francisco.
• Business owners. Self-employment income, pass-through business income, and capital gains all avoid state income tax.

People Who Benefit Less

• Low-to-moderate earners. If you earn $40,000 per year, the income tax savings are modest (maybe $1,500 to $2,500 per year), but you still face high sales taxes on everything you buy.
• Homeowners in high-property-tax states. In Texas, property tax on a $400,000 home costs about $5,440 per year. In New Hampshire, the same home costs about $5,640. For some homeowners, property tax exceeds what they would have paid in income tax elsewhere.
• People who spend heavily. If you spend a large portion of your income, the high sales tax in Tennessee (9.61%) or Washington (9.47%) can add up significantly.

Hidden Costs: What No Income Tax Does Not Cover

Before relocating to a no-income-tax state, consider these costs that many people overlook:

• Higher home insurance. Florida has the highest homeowners insurance rates in the country due to hurricane risk. Average annual premiums exceed $4,000 and can reach $10,000+ in coastal areas.
• Property taxes can be steep. Texas and New Hampshire's property taxes can easily cost $5,000 to $10,000+ per year, which may exceed what you'd pay in income tax in another state.
• Sales tax on everyday purchases. In Tennessee, you pay 9.61% sales tax on most purchases including groceries. Over a year, this adds up to thousands of dollars for families.
• Vehicle registration and fees. Some no-income-tax states charge higher vehicle registration fees, toll road fees, and other usage-based charges.
• Cost of living is not always low. Washington (Seattle), Florida (Miami, Naples), and Nevada (Reno) can be expensive places to live despite having no income tax.

Best No-Income-Tax States for Retirees

1. Florida — No income tax on Social Security, pensions, or 401(k). No estate tax. Warm climate. Strong healthcare infrastructure. Low property tax.
2. Wyoming — Lowest overall tax burden. No estate tax. Beautiful natural scenery. Very low property tax. Best for retirees who prefer quiet, rural living.
3. Nevada — No income tax. Low property tax. Warm climate. Access to Las Vegas entertainment and healthcare. No estate tax.
4. Tennessee — No income tax. Very low property tax. Moderate cost of living. Good healthcare (Nashville). Best for retirees with low spending.

Best No-Income-Tax States for High Earners

1. Texas — No income tax on any earnings. Massive job market. Major tech, energy, and finance industries. Best for high earners who rent or own moderate-value homes.
2. Washington — No income tax on wages or salary. Top tech salaries (Amazon, Microsoft, Google). Best for W-2 earners below the $250K capital gains threshold.
3. Florida — No income tax. Growing tech and finance sectors. Miami is becoming a financial hub. Good for business owners and remote workers.
4. Tennessee — Nashville's growing economy. No income tax. Very low property tax. Best for high earners who own homes (low property tax amplifies savings).

Best No-Income-Tax States for Families

1. Texas — Large suburban homes, good school districts (especially in suburbs of Dallas, Houston, Austin), diverse economy, strong job market. Tradeoff is high property tax.
2. Florida — Good weather year-round, theme parks, outdoor activities. School quality varies by district. Watch out for high insurance costs.
3. Tennessee — Affordable housing, low property tax, good quality of life in Nashville suburbs and Chattanooga. High sales tax affects family budgets.
4. New Hampshire — Excellent schools (consistently ranks top 5 nationally), safe communities, proximity to Boston job market. High property tax is the tradeoff.

No Income Tax vs Low Income Tax States

Some states charge very low income tax rates that may result in a lower total tax burden than some no-income-tax states:

The comparison shows that for homeowners with expensive properties and moderate incomes, a low-income-tax state like Arizona or Indiana may actually result in lower total taxes than Texas or New Hampshire.

You Still Pay Federal Income Tax

This is a common misunderstanding. Living in a state with no income tax does not eliminate your income tax obligation. It only eliminates the state-level portion.

All US residents and citizens must pay federal income tax to the IRS. Federal tax rates in 2026 are:

The savings from living in a no-income-tax state come from avoiding the additional state income tax, which ranges from approximately 3% to 13% in states that charge it. For high earners, this can mean savings of $10,000 to $50,000+ per year depending on income and the state they would otherwise live in.

Frequently Asked Questions