Nine states have no broad personal income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Residents of these no income tax states keep their full paycheck without filing a state return on wages. The savings are real, but every one of these states makes up the revenue somewhere else, and a move only pays off if you also handle residency, remote-work sourcing, and a few state-specific traps correctly.
The Nine States and Two Recent Changes
Two states joined the list only in the last few years. Tennessee phased out its Hall Income Tax on interest and dividends through annual rate reductions, completing the repeal on January 1, 2021.1Tennessee Department of Revenue. HIT-3 – Hall Income Tax Repealed Beginning January 1, 2021 New Hampshire’s Interest and Dividends Tax was originally scheduled for repeal in 2026 but was accelerated to take effect January 1, 2025.2NH Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect
Washington belongs on the list with an asterisk. Wages, salaries, and retirement income are not taxed, but the state imposes a capital gains tax on profits from selling stocks, bonds, and other financial assets. Starting with the 2025 tax year, capital gains above $250,000 are taxed at 7%, and gains above $1,000,000 face a combined rate of 9.9%.3Washington Department of Revenue. New Tiered Rates for Washingtons Capital Gains Tax If a large share of your income comes from investment sales, Washington is not really tax-free for you.
What You Pay Instead
Roads, schools, and public safety still need funding. Each of these nine states leans on a different mix of revenue, and that mix tells you where the cost lands for a resident.
Sales and Excise Taxes
Most of these states run above-average sales tax rates. Tennessee and Washington both have combined state and local rates that exceed 9% in many areas, among the highest anywhere. Texas and Florida also lean on sales tax. Nevada draws a significant portion of its budget from taxes on gaming revenue, which brought in roughly $1.2 billion in fiscal year 2024. All nine also collect excise taxes on gasoline, tobacco, and alcohol on top of the general sales tax.
Property Taxes
Texas is the clearest example of trading income tax for property tax. With no personal income tax and no corporate income tax on most businesses, Texas counties fund schools and local government almost entirely through property taxes on the fair market value of real estate. New Hampshire follows a similar pattern. Florida’s property taxes are somewhat lower but still make up a larger share of state and local revenue than they would in a state with a balanced system.
Natural Resource Revenue
Alaska funds the bulk of state operations from petroleum through production taxes, royalties, property taxes, and corporate income taxes.4Alaska Department of Revenue. Spring 2025 Revenue Forecast The state has no sales tax of its own, though some local governments impose one. Wyoming relies heavily on mineral extraction revenue, particularly from coal and natural gas.
Business Taxes
Several of these states tax businesses even though they leave individual wages alone. Washington imposes a business and occupation tax measured on gross receipts rather than net profit.5Washington Department of Revenue. Business and Occupation Tax Texas charges a margin tax on businesses above a certain receipts threshold. Alaska has a corporate income tax with a top rate of 9.4%. Only South Dakota and Wyoming levy neither a personal nor a corporate income tax.
Federal Tax Does Not Change
Moving to a no-tax state does not reduce your federal obligation by a single dollar. Ordinary income tax, the 6.2% Social Security and 1.45% Medicare withholding under FICA, the 0.9% additional Medicare surtax above $200,000 in wages, and the 3.8% Net Investment Income Tax at higher incomes all apply the same in Miami as they do in Manhattan.6Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates7Internal Revenue Service. Topic No. 559, Net Investment Income Tax The savings from relocation come entirely from removing the state layer.
Retirement Income
Retirees are the group for whom the math works most cleanly. Social Security benefits, pension payments, 401(k) distributions, and IRA withdrawals are all free of state tax in these nine states. Most states with an income tax do reach at least some retirement income, and a handful reach nearly all of it.
The federal side does not change. Social Security benefits become partially taxable once combined income exceeds $25,000 for single filers or $32,000 for married filing jointly, and traditional 401(k) and IRA withdrawals are taxed as ordinary income at your federal bracket. The state layer is where the difference shows up. For a retiree drawing $80,000 a year from a pension and traditional IRA, avoiding a 5% state income tax is roughly $4,000 more in after-tax income each year.
Remote and Multi-State Workers
Remote work makes a move to a no-tax state more appealing and more complicated at the same time. Living in Florida while working for a New York employer does not automatically make your wages tax-free at the state level.
The Convenience of the Employer Rule
Several states tax nonresident remote workers as if they were physically present at the employer’s office unless the employee is working remotely out of business necessity rather than personal convenience. New York, Pennsylvania, Delaware, Nebraska, and Alabama apply full versions of this rule. Connecticut and New Jersey use a reciprocal version, and Oregon applies a limited version affecting certain managerial employees. If your employer is in one of these states and you telecommute from a no-tax state by choice, you may owe income tax to the employer’s state on all or part of your wages.
Part-Year and Multi-State Income
Moving mid-year does not erase your obligation to the state you left. You will generally owe that state’s income tax on wages earned while you were still a resident, and most states require part-year residents to allocate income by prorating earnings, exemptions, and deductions based on days lived in each state. A return in the old state is still required, even though the new state requires none.
Income sourced to a taxing state also remains taxable there. Living in Texas does not make California-sourced consulting income invisible to California. Rental property, freelance work performed in another state, and business income tied to another state’s economy all remain reachable by that state.
Establishing Residency in Your New State
Moving and legally qualifying as a resident are two different things. Your former state will not stop claiming you as a taxpayer just because you bought a condo in Miami. You need to establish domicile, the legal concept representing the one place you treat as your permanent home and intend to return to.
The 183-Day Rule
Most states treat anyone who spends more than 183 days within their borders as a statutory resident, regardless of where they claim domicile. Any part of a day typically counts as a full day. Spending too many days in your old state can keep you on the hook there, and failing to spend enough time in your new state undermines the claim that you moved. If you split the year between a taxing and a non-taxing state, tracking your physical location day by day is not optional.
Steps to Change Domicile
Tax authorities look at the full picture of where your life is centered. The core steps:
- Obtain a driver’s license and register your vehicles in the new state. Auditors check these first.
- Register to vote in the new state and cancel your registration in the old one.
- Update your address with the IRS, your bank, your employer, and the U.S. Postal Service.
- Move your doctors, accountants, lawyers, and regular banking to the new state.
- Sell or rent out the home in your old state if you can. Keeping it creates a strong presumption you have not truly left.
No single factor is decisive. Authorities weigh all your connections together and ask where you actually live your life.
Residency Audits
High-tax states have strong financial incentives to challenge residency changes, and auditors in states like New York, California, and New Jersey are experienced at picking apart relocation claims. Most planning falls apart here, because people treat residency as a checkbox exercise rather than a pattern-of-life question.
Auditors look at where you spend the most time, where your spouse and children live, where you keep personal belongings like art and family heirlooms, where your pets are housed, where you worship, and where you socialize. They examine cell phone records, credit card statements, E-ZPass and toll records, and social media posts for evidence of your physical location. A taxpayer claiming Florida residency whose credit card shows groceries in Manhattan three days a week has a problem.
The strongest defense pairs clean documentation with genuine relocation. Keep a contemporaneous log of which state you sleep in each night. Save utility bills showing consistent usage at your new home. If you keep any property in the old state, keep records showing limited personal use. The cost of losing a residency audit includes back taxes, interest, penalties, and the expense of professional representation during the audit itself.
One Estate Tax Warning
Relocating does not necessarily shield your estate. Washington imposes a state estate tax with a 2026 filing threshold of $3,076,000, well below the federal exemption of $15,000,000 per person.8Washington Department of Revenue. Estate Tax9Internal Revenue Service. Whats New – Estate and Gift Tax Estates above the state threshold owe Washington estate tax regardless of any income tax savings during your lifetime. The other eight no-income-tax states do not currently impose a state-level estate or inheritance tax.