No city in the United States is entirely tax-free, but dozens of major cities skip at least one of the three big local levies: income tax, sales tax, or property tax. Eight states prohibit individual income tax entirely, five states charge no statewide sales tax, and a handful of remote Alaska communities operate without property tax. Every one of these places replaces the missing revenue with something else, so the honest question isn’t which cities are tax-free but which taxes you can legally avoid and what those savings actually cost you.
Cities With No Income Tax
Eight states impose no individual income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. Live and work in a city inside any of them and neither the state nor any local government takes a percentage of your paycheck. That makes Miami, Austin, Nashville, Las Vegas, and Cheyenne popular with workers focused on take-home pay.
Some of these bans are harder to reverse than others. Florida’s constitution ties any potential income tax to credits available under federal law, and since no such federal credit structure exists, the provision effectively blocks income tax at every level of Florida government. Texas requires voter approval by constitutional amendment before an income tax could ever be enacted. Tennessee fully repealed its Hall Income Tax on interest and dividends as of January 1, 2021, so Nashville residents now owe zero state or local income tax on any type of income. New Hampshire finished phasing out its interest and dividends tax as of January 1, 2025.
City-level income taxes are relatively uncommon and concentrated mainly in parts of Ohio, Pennsylvania, and Maryland. Los Angeles, Chicago, and Charlotte don’t levy a separate city income tax even though their states collect one. The important boundary: no city can shield you from federal income tax. If your income exceeds the filing thresholds, you owe a federal return regardless of where you live.1Internal Revenue Service. Check if You Need to File a Tax Return
Cities With No Sales Tax
Five states charge no statewide sales tax, often remembered by the acronym NOMAD: New Hampshire, Oregon, Montana, Alaska, and Delaware. Shopping in Portland, Anchorage, or Wilmington means what you see on the price tag is what you pay at the register.
Alaska is the exception in the group. It’s the only NOMAD state that lets local governments impose their own sales tax, and many do, with some communities charging above 5%. Anchorage has no general sales tax but does levy targeted excise taxes on tobacco, alcohol, rental vehicles, marijuana, and motor fuel. Groceries and clothing stay untaxed.
Delaware makes up its missing sales tax with a gross receipts tax on businesses, roughly 0.1% to 2% depending on activity. Consumers never see it on a receipt, but businesses pass the cost through in higher prices. That same dynamic plays out across the other no-sales-tax states.
Portland shows why focusing on one tax type can mislead. Oregon has no sales tax, so purchases are cheap. But Portland-area residents pay significant local income taxes that most other American cities don’t impose. The Metro regional government levies a 1% tax on individual taxable income above $125,000 ($200,000 for joint filers) to fund supportive housing services, with the threshold adjusting for inflation starting in 2026. Additional local income-type levies apply in Multnomah County. A high earner in Portland can easily owe more in local income taxes than someone in a city with sales tax but no local income levy.
Cities With No Property Tax
Property tax is the hardest local tax to escape. Nearly every incorporated city relies on it as a primary revenue source. The rare exceptions cluster in remote parts of Alaska, where state law makes property tax optional for municipalities rather than mandatory.
The Lake and Peninsula Borough in southwestern Alaska charges no property tax, no income tax, and no sales tax. The borough covers a vast stretch of wilderness with extremely limited infrastructure, and its revenue comes from natural resource royalties and federal grants rather than assessments on private land. Other unincorporated or lightly populated Alaska areas operate the same way.
Living without property tax means living without the services it normally funds. Homes in these areas may lack access to public water, municipal sewer, paved roads, or professional fire departments. Some homeowners subscribe to private fire protection services, paying an annual fee for coverage that isn’t included in any tax bill. Skip the subscription and your options during a fire become extremely limited. The trade-off works for residents who value isolation over convenience; for most people, it isn’t practical.
Fees and Charges That Replace Missing Taxes
When a city drops one of the big three, it makes up the difference somewhere else. These alternative revenue sources rarely get the same attention, but they affect your monthly costs just as much.
Franchise fees are one of the most common substitutes. Cities charge utility companies a percentage of gross revenue, often 2% to 6%, for the right to operate within city limits. The utility passes that cost directly to you as a line item on your electric, gas, or water bill. Most people don’t realize the charge functions as a local tax.
Impact fees target homebuyers and developers. When new construction requires expanded roads, water lines, or sewer capacity, many cities charge a one-time fee during the permitting process. As of the most recent nationwide count, 29 states had explicit legislation authorizing these fees, and the amounts can run into thousands of dollars per housing unit.2Federal Highway Administration. Value Capture – Frequently Asked Questions – Impact Fees The cost gets passed through to buyers in higher purchase prices.
Special assessment districts let cities charge property owners for specific improvements, such as a new sidewalk, upgraded water mains, or better street lighting, without levying a general property tax. The charge depends on proximity to the improvement or the size of the property’s frontage. Owners can usually pay up front or spread the cost over 10 to 20 years as a lien collected alongside other property charges. Every state has legal authority to create these districts.3Federal Highway Administration. Special Assessments – An Introduction
Occupational privilege taxes fly under the radar too. Some cities impose a flat monthly fee on anyone who works within city limits, regardless of residence. Denver charges employees $5.75 per month and employers $4.00 per month per worker. It isn’t percentage-based, so it doesn’t scale with earnings, but it still chips away at take-home pay in a city that otherwise has no local income tax. You don’t have to live in Denver to owe it. Working inside city limits is enough.
Why Moving to a No-Income-Tax City May Not Save You Anything
Relocating to a tax-free city loses much of its appeal if your employer sits in a state that taxes nonresidents based on where the company is located. Several states enforce a “convenience of the employer” rule, treating remote workers as if they’re physically present in the employer’s state unless the remote arrangement is a genuine business necessity rather than personal preference.
New York is the most aggressive enforcer. If your employer’s office is in New York and you work remotely from Miami, New York will tax your income as though you earned it in Manhattan, unless your home office qualifies as a “bona fide employer office” under a multi-factor test that’s deliberately hard to pass. You’d need to show things like specialized equipment at home, an employer requirement to work remotely, and regular in-person client meetings at your home office. Casual remote work doesn’t qualify. Connecticut, Delaware, Nebraska, New Jersey, Oregon, Alabama, and Pennsylvania have versions of this rule, though specifics vary.
Even without a convenience rule, spending too many days working in a state with income tax can trigger statutory residency. Many states treat anyone who maintains a home in the state and spends more than 183 days there as a tax resident, regardless of where they claim their permanent address. Spending fewer than 183 days doesn’t guarantee safety either if the state determines your real center of life is within its borders based on family location, property holdings, and social ties.
Before relocating for the tax savings, check where your employer is based and which state’s convenience rule might reach your paycheck. A Florida address doesn’t help if New York still claims your earnings.
The Federal Floor No City Can Move
Federal income tax follows you regardless of ZIP code. The IRS doesn’t care whether your city or state also collects income tax; your filing obligation depends on your income level and filing status, not your address.1Internal Revenue Service. Check if You Need to File a Tax Return Self-employment tax, capital gains tax, and payroll taxes (Social Security at 6.2% and Medicare at 1.45%) apply nationally.
The most honest way to evaluate a “tax-free” city is to add up your total burden: federal, state, local, property, sales, franchise fees, and special assessments combined. A city with no income tax but steep property taxes and high utility franchise fees can cost you more annually than a city with moderate taxes across the board. The label is always relative to a specific tax, and the savings in one category almost always get offset somewhere else.