Nine states have no personal income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire became the newest full member of the group on January 1, 2025, when its repeal of the tax on interest and dividends took effect.1New Hampshire Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect Living in any of these states means no state return to file on your wages, salary, or investment income. It does not mean your total tax bill drops, and it does not release you from federal obligations or from other states that may still reach your paycheck.
The Nine States and What Each One Actually Skips
Not every state on this list is tax-free for the same reasons, and a couple of them come with caveats worth knowing before you plan a move.
- Alaska. Never adopted a broad-based income tax or a statewide sales tax. Severance taxes on oil and gas do most of the work, and residents receive an annual Permanent Fund Dividend, which was $1,000 in 2025.2Permanent Fund Dividend: Alaska Department of Revenue. Permanent Fund Dividend
- Florida. The state constitution limits any personal income tax to the amount that could be credited against a similar federal tax. Because no such federal credit exists, the legislature is effectively blocked from enacting one.3Florida Senate. Florida Constitution – Article VII
- Nevada. No personal income tax. Gaming and tourism revenues carry the budget, and businesses with more than $4 million in Nevada gross revenue pay a commerce tax.4Nevada Department of Taxation. Instructions for Commerce Tax Return
- New Hampshire. Long the outlier because it taxed interest and dividends. That tax was fully repealed for tax years beginning after December 31, 2024, so residents no longer file any state income tax return.1New Hampshire Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect
- South Dakota. Has never imposed a personal income tax. Sales tax revenue makes up much of the difference.
- Tennessee. Once taxed investment income under the Hall Income Tax. That tax was fully repealed as of January 1, 2021.5Tennessee Department of Revenue. HIT-3 – Hall Income Tax Repealed Beginning January 1, 2021
- Texas. Voters approved a constitutional amendment in November 2019 that prohibits a personal income tax. Reversing that ban would require a two-thirds vote in both chambers of the legislature plus a statewide referendum.6Texas Legislative Council. Analyses of Proposed Constitutional Amendments 86th Regular Session November 5, 2019, Election
- Washington. No tax on wages or salary, but a 7% tax on long-term capital gains above a threshold, discussed below.7Washington Department of Revenue. Capital Gains Tax
- Wyoming. Funded primarily by severance taxes on mineral extraction. Has never had a personal income tax.
Texas and Florida offer the strongest protections in the group because their bans sit in their state constitutions. The other seven rely on statutory choices a future legislature could theoretically reverse, though the political cost of doing so would be steep.
Washington’s Capital Gains Tax
Washington belongs on the list, but with an asterisk if you hold significant investments. Since 2022, the state has taxed the sale of long-term capital assets such as stocks, bonds, and business interests at 7%.7Washington Department of Revenue. Capital Gains Tax A standard deduction shields most residents from paying anything: for tax year 2025, the first $278,000 in capital gains is exempt, and the threshold adjusts annually for inflation. Real estate sales, retirement account withdrawals, and assets in tax-deferred accounts are excluded.
Wage earners will never encounter this tax. Someone selling a concentrated stock position or a business, however, faces a real bill. If your Washington move is driven by a planned liquidity event, the state is not as tax-free as the shorthand suggests.
Where the Money Actually Comes From
State governments need revenue, and skipping income tax means leaning harder on other sources. For many households the savings are smaller than expected once the substitutes are counted.
Sales Taxes
Several of these states run some of the highest combined state and local sales tax rates in the country. Tennessee averages 9.61%, Washington 9.51%, Nevada 8.24%, and Texas 8.20%. Alaska is the exception at the state level: no statewide sales tax, though some localities impose their own. For households that spend most of what they earn, the sales tax bill offsets much of what income tax would have taken.
Property Taxes
Texas is the clearest example of the trade. With no income tax and heavy reliance on local property taxes to fund schools, effective property tax rates in many Texas counties rank near the top nationally. The state does offer a $140,000 homestead exemption for school district taxes on a primary residence.8Texas Comptroller of Public Accounts. Property Tax Exemptions New Hampshire also depends heavily on property taxes for local government and education funding.
Severance Revenue
Alaska and Wyoming have something most states cannot copy: large mineral and energy reserves that fund the government through severance taxes on extraction. The model works while commodity prices hold up and creates budget volatility when they don’t.
Tourism, Gaming, and Business Levies
Nevada draws heavily on gaming and hospitality taxes. Florida’s tourism economy shifts a meaningful share of sales and hotel tax revenue onto visitors. Washington runs a business and occupation tax and uses its capital gains tax for education. The pattern across all nine states is the same: the money still has to be raised, and the burden moves rather than disappears.
Business Taxes You May Still Owe
Owning a business or working for yourself changes the calculation. Several no-income-tax states impose levies on business activity that a personal income tax filer would never see.
- Texas franchise tax. Businesses owe 0.75% of taxable margin, or 0.375% for retail and wholesale. The no-tax-due threshold is $2.65 million in annualized revenue for the 2026 report year.9Texas Comptroller of Public Accounts. Franchise Tax
- Washington business and occupation tax. A gross receipts tax that applies whether or not the business is profitable. The retailing and wholesaling rate is 0.5%, and a 0.5% surcharge applies to businesses with more than $250 million in Washington taxable revenue starting in 2026.10CliftonLarsonAllen. Washington State Broadens Sales and B&O Taxes
- Nevada commerce tax. Applies to businesses with more than $4 million in annual Nevada gross revenue. Rates vary by industry category.4Nevada Department of Taxation. Instructions for Commerce Tax Return
Run these numbers before assuming the move will lower your total tax bill.
Moving There Means Actually Moving
Buying a house in Florida or renting a mailbox in Texas will not stop a high-tax state from claiming you. States that lose high-income residents run residency audits, and they look well past your address.
Auditors examine where you actually spend your time, where your spouse and children live, where you work, where your most valued possessions sit, and where you keep your professional and social ties. They pull cell phone records, E-ZPass logs, airline receipts, and bank statements to reconstruct where you actually lived. A vacation home you rarely use will not convince a former state’s tax department that you have left.
Most income tax states also apply a statutory resident rule: keep a permanent home in the state and spend more than 183 days there in a year, and the state can tax you as a resident regardless of where you claim domicile. If you split time between two states, count the days carefully.
Moving mid-year means filing a part-year resident return in your old state for the income you earned while living there. Earned income is generally allocated to the state where you were living when you received it. Investment income like interest and dividends is usually assigned to your state of residence at the time it was received. A clean break is easier to defend: update your driver’s license, register to vote, move your belongings, and stop maintaining a home in your old state.
Remote Work Can Still Pull You Back
Working remotely from a no-tax state for an employer based elsewhere can leave you owing tax to that employer’s state.
Connecticut, Delaware, Nebraska, New York, and Pennsylvania apply a convenience of the employer rule. Under that rule, an employee is taxed based on the location of the employer’s office rather than where the employee physically works, unless the remote arrangement is required by the employer rather than chosen by the employee. A Texas resident working from home for a New York-based company can owe New York income tax on those wages without ever setting foot in the state.
Traveling for work adds another layer. Many states require a nonresident return and tax on income earned while you were physically working within their borders. Two weeks of work at a client site in California can generate a California filing obligation. A no-tax home state does not shield you from every other state’s reach.
Federal Tax Does Not Go Away
The IRS expects a return every year regardless of where you live. All U.S. citizens and resident aliens must report worldwide income, including wages, investment gains, and foreign earnings.11Internal Revenue Service. Reporting Foreign Income and Filing a Tax Return When Living Abroad Federal rates run from 10% to 37% under the progressive bracket structure, and employers continue to withhold federal income tax, Social Security, and Medicare from each paycheck.12Internal Revenue Service. Federal Income Tax Rates and Brackets Failing to file on time triggers a penalty of 5% of unpaid tax per month, capped at 25%.13Office of the Law Revision Counsel. 26 U.S. Code 6651 – Failure to File Tax Return or to Pay Tax
The state-level simplification is real. You do have less paperwork. But the federal return still needs the same attention it would anywhere else, and the savings from skipping state tax can vanish quickly if federal filing slips.