Nine states have no income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Eight of them impose no individual income tax of any kind. Washington is the exception, taxing long-term capital gains above an inflation-adjusted threshold while leaving paychecks alone. New Hampshire joined the fully tax-free group on January 1, 2025, when its longstanding tax on interest and dividends was repealed a year ahead of schedule.1New Hampshire Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect
The Washington Asterisk
If you earn a paycheck and nothing else, Washington behaves like the other eight states. Where it diverges is investment income. Washington imposes a 7% tax on long-term capital gains from selling assets such as stocks, bonds, and business interests when those gains exceed a threshold that started at $250,000 and adjusts annually for inflation.2Washington State Legislature. Washington Code 82.87 – Capital Gains Tax The most recently published exemption threshold is $262,000. That matters if you are planning to sell a concentrated stock position, exit a business, or realize a large gain in any single year.
What These States Charge Instead
None of the nine states goes without revenue. They shift the load onto consumption, property, and, where geology cooperates, natural resources.
Sales and Excise Taxes
Sales tax carries most of the weight. Tennessee and Washington both have combined state-and-local rates that can top 10% in some areas. Texas, Florida, and Nevada exceed 7% in many jurisdictions. Alaska is the outlier: no statewide sales tax, though some local governments impose their own.
Transaction taxes add up in ways a monthly paycheck deduction never would. Florida charges a documentary stamp tax on real estate transfers at 70 cents per $100 of the sale price in most counties.3Florida Department of Revenue. Documentary Stamp Tax On a $400,000 home, that is $2,800 at closing. Excise taxes on fuel, tobacco, and alcohol pile on top.
Property Taxes
Property taxes tend to run higher without an income tax to lean on, though the pattern is uneven. Texas ranks among the highest effective property tax rates nationally. Wyoming and New Hampshire also rely heavily on property taxes for schools and local services. Florida and Nevada fall closer to the national average. Alaska keeps property taxes relatively low across most boroughs, cushioned by oil revenue.
Severance Taxes
Alaska, Texas, Wyoming, and Nevada tax the extraction of oil, gas, or minerals. Alaska funds a large share of state government this way and distributes annual Permanent Fund dividends to residents. This is the piece that makes the no-income-tax model workable without pushing sales and property taxes even higher.
Business Taxes Still Apply
If you are moving a business rather than just yourself, the no-income-tax label understates what you will owe. Three of these states impose gross receipts or franchise taxes that function differently from a corporate income tax but still take a real bite.
- Texas franchise tax applies to businesses with total revenue above $2.65 million for the 2026 reporting year. Below that threshold you file paperwork but owe nothing.4Texas Comptroller of Public Accounts. Texas Franchise Tax Report Forms
- Nevada’s commerce tax applies to any business with Nevada gross revenue above $4 million during the taxable year, with rates that vary by industry category.5Nevada Department of Taxation. Instructions for Commerce Tax Return
- Washington’s Business and Occupation tax reaches nearly all business activity, with rates starting at 0.5% of gross receipts for retailing, wholesaling, and manufacturing, and no deduction for costs. Large businesses generating more than $250 million in annual Washington revenue face an additional 0.5% surcharge starting in 2026.
“No income tax” describes how the state treats your paycheck, not how it treats your company.
Estate Tax: Washington Is the Outlier
Eight of the nine states impose no state-level estate or inheritance tax, which is one reason Florida and Nevada draw retirees doing estate planning. Washington is the exception. It levies an estate tax on estates exceeding $3,076,000 in gross assets for deaths occurring in 2026.6Washington Department of Revenue. Estate Tax Tables That threshold is well below the federal exemption, so some Washington estates owe state tax while owing nothing federally.
Remote Work Can Undo the Benefit
Living in a no-income-tax state does not automatically shield your income if your employer sits in a state that does tax it. This is where people get caught.
A handful of states enforce a “convenience of the employer” rule that taxes your income based on where your employer is located rather than where you physically work. New York is the most aggressive. If you work remotely from Florida for a New York-based company, New York may claim the right to tax that income unless your employer can show your remote arrangement was a business necessity rather than a personal preference. Pennsylvania, Connecticut, Delaware, Nebraska, Massachusetts, and Arkansas apply versions of the same rule, some more selectively than others.
Reciprocity agreements between states help commuters avoid double taxation, but they do not apply here because the no-income-tax state is not taxing anything to begin with.7Tax Foundation. State Reciprocity Agreements – Income Taxes The risk runs one way: the income-tax state reaching across the border. Before you assume your remote paycheck is fully tax-free, check whether your employer’s state applies a convenience rule. Getting it wrong means back taxes plus interest.
Federal Return Effects
You cannot deduct state income tax on Schedule A if you do not pay any. The IRS lets you deduct state and local sales taxes instead, calculated using optional sales tax tables or actual receipts, with large purchases like vehicles and boats added on top.8Internal Revenue Service. Use the Sales Tax Deduction Calculator The combined deduction for all state and local taxes has been capped at $10,000 ($5,000 if married filing separately) under rules Congress has revisited repeatedly, so check the current year’s cap before filing. Most taxpayers take the standard deduction anyway, so this line matters less than people assume.
Establishing Residency
Changing your mailing address does not change your tax residency. You have to establish legal domicile, meaning your new state is your permanent home and the place you intend to remain.
Practically, that means a driver’s license in the new state, voter registration, vehicle registration, and spending the majority of your time there. Many states apply a 183-day statutory residency rule: cross that day count physically present and the state can treat you as a resident even if you claim domicile elsewhere. The reverse also applies. Your former state can argue you never really left if you keep spending significant time there.
Exit Audits
High-income taxpayers who move from New York, California, or New Jersey to no-income-tax states face a real risk of a residency audit. The former state has a financial reason to prove you never truly left, and auditors look at far more than your change-of-address form. They examine where you keep your most valuable home, where your family lives, where your social and religious affiliations are, where your business ties run deepest, and where you keep items of personal significance. The standard in many states is clear and convincing evidence that you abandoned your old domicile and established a new one with intent to stay. Close calls tend to go to the state.
What a Clean Break Looks Like
The people who survive these audits treat the move as irreversible. Sell or rent out the old home rather than keeping it furnished and available. Move bank accounts, estate planning documents, and medical providers to the new state. Keep a log of where you are each day, because auditors reconstruct the year using cell phone records, credit card receipts, toll transponder logs, and social media posts. The cost of relocating thoroughly is almost always smaller than the tax bill from a failed audit reaching back multiple years with interest and penalties attached.