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For employees, retirees, investors and entrepreneurs, moving to a state without personal income tax can appear to offer substantial savings. However, the phrase “no income tax” requires some explanation because states may still tax capital gains, business revenue, property, purchases and other transactions.
As of 2026, nine US states do not impose a broad-based individual income tax on salaries and wages:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Under a stricter tax-policy definition, only eight have no individual income tax at all. Washington does not tax wages but imposes a separate tax on certain long-term capital gains. New Hampshire officially joined the no-income-tax group after repealing its tax on interest and dividends for tax periods beginning on or after January 1, 2025.
Which States Do Not Tax Personal Income?
| State | Tax on salaries and wages? | Important tax considerations |
| Alaska | No | No statewide sales tax, although municipalities may impose local sales taxes. |
| Florida | No | Sales tax, property tax and corporate income tax may still apply. |
| Nevada | No | Sales and property taxes apply, while some businesses may owe Commerce Tax. |
| New Hampshire | No | No statewide sales tax, but property and business taxes remain important. |
| South Dakota | No | The state relies partly on sales and use taxes. |
| Tennessee | No | The former Hall tax on interest and dividends was fully repealed in 2021. |
| Texas | No | Property and sales taxes can be significant, while taxable entities may face franchise tax obligations. |
| Washington | No tax on wages | Certain long-term capital gains are taxed, and businesses may owe B&O tax on gross receipts. |
| Wyoming | No | The state has no broad individual or corporate income tax but collects other taxes and resource revenues. |
Alaska
Alaska has no personal state income tax and no statewide sales tax. Local governments can impose their own sales and property taxes, so the total cost depends heavily on the municipality in which a person lives or operates a business.
Florida
Florida does not impose a state individual income tax, making it attractive to high earners, retirees and business owners receiving pass-through income. However, the state imposes a general 6% sales tax, and local discretionary sales surtaxes may increase the final rate. Florida also administers corporate income, property-related, documentary stamp and reemployment taxes.
Nevada
Nevada residents do not pay state tax on salaries, wages or similar individual compensation. The state instead collects revenue through sales taxes, property taxes, gaming-related taxes and business levies. Businesses with more than $4 million in Nevada gross revenue may be required to register for the Commerce Tax.
New Hampshire
New Hampshire previously taxed certain interest and dividend income, even though it did not tax wages. That levy was repealed for taxable periods beginning after December 31, 2024, meaning New Hampshire now has no broad individual income tax. It also has no statewide general sales tax, although residents may encounter comparatively important property and business taxes.
South Dakota
South Dakota does not impose a state individual income tax or a general corporate income tax. It does, however, collect sales and use tax on a broad range of products and services. The state sales and use tax rate is 4.2%, before any applicable local tax.
Tennessee
Tennessee has never imposed a general tax on salaries and wages. It previously collected the Hall Income Tax on certain interest and dividend income, but that tax was fully repealed for tax years beginning on or after January 1, 2021. Businesses may still have state and local filing responsibilities unrelated to personal income tax.
Texas
Texas has no personal state income tax, but it should not automatically be treated as a low-tax state for every household. Residents may pay sales taxes and locally administered property taxes, while companies and other taxable entities can be subject to the Texas franchise tax. The franchise tax is generally based on a business’s taxable margin rather than an individual’s salary.
Washington
Washington does not impose a traditional individual or corporate income tax. Nevertheless, it taxes qualifying long-term capital gains and imposes Business and Occupation tax on the gross receipts of many businesses.
Beginning with tax year 2025, the first $1 million of taxable Washington capital gains is generally subject to a 7% rate, while taxable gains above $1 million are subject to a 9.9% rate. Exemptions, deductions and asset-specific rules can affect whether the tax applies.
Washington’s B&O tax is calculated from gross business income rather than profit. Ordinary deductions for labour, rent, materials and other operating expenses are generally unavailable when calculating the gross-receipts tax, which can make the state less advantageous for low-margin businesses.
Wyoming
Wyoming does not impose a personal state income tax or a traditional corporate income tax. The state generates revenue from sales taxes, property taxes and taxes connected with natural-resource production. Its overall structure can be attractive to some residents and companies, although forming a Wyoming company does not eliminate tax obligations in other states where the company actually operates.
Does No State Income Tax Mean No Tax?
Living in a state without individual income tax does not make a person tax-free. Federal income tax, Social Security tax, Medicare tax and applicable federal employment taxes continue to apply.
States without personal income tax must also fund public services. They may rely more heavily on:
- Sales and use taxes
- Property taxes
- Business franchise or gross-receipts taxes
- Tourism and hospitality taxes
- Fuel and vehicle taxes
- Insurance premium taxes
- Natural-resource or severance taxes
For example, Alaska and New Hampshire have no statewide general sales tax, although Alaska permits local sales taxes. Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming collect state sales taxes in addition to any permitted local charges.
Taxpayers who itemize federal deductions may generally choose between deducting eligible state and local income taxes or eligible general sales taxes. Federal limitations and qualification rules still apply.
Is Moving to a State With No Income Tax Worth It?
A move may produce meaningful savings for people with high salaries, substantial retirement income or significant pass-through business profits. However, the result depends on the person’s complete financial circumstances.
A household saving $10,000 in annual state income tax could still face higher housing, insurance, property tax or sales tax costs. Florida and Texas, for example, may appeal to people seeking to avoid individual income tax, but housing-related expenses and locally determined property taxes should be included in any comparison.
Before relocating, compare:
- Estimated state income-tax savings
- Housing and homeowners’ insurance costs
- Property and sales taxes
- Healthcare and transport expenses
- Business taxes and licensing costs
- Estate, inheritance and capital-gains rules
- The cost of establishing and maintaining genuine residency
The most useful comparison is the total annual cost of living and taxation, not the state income-tax rate alone.
Can a Previous State Still Tax Income After a Move?
Moving to a no-income-tax state does not necessarily end every obligation to the former state. A taxpayer may need to establish a new domicile and demonstrate that the former state is no longer the permanent home.
Relevant evidence can include the location of the primary residence, time spent in each state, driver’s licence, voter registration, vehicle registration, mailing address and important personal or commercial connections. Residency tests differ by jurisdiction.
A nonresident can also owe tax on income sourced to another state. California, for example, taxes nonresidents on taxable California-source income, including compensation for services physically performed in California and income from California property or businesses. New York similarly taxes nonresidents on qualifying New York-source income and applies specific rules to some remote workers.
Therefore, moving to Texas or Florida does not automatically remove tax on rental property, business activity or work performed in California, New York or another income-tax state.
Are No-Income-Tax States Better for Business Owners?
They can be, particularly for owners of sole proprietorships, partnerships, LLCs and S corporations whose business income passes through to their personal returns. Avoiding individual state income tax may reduce the owner’s overall liability.
However, the state in which a company is registered is not necessarily the only state entitled to tax it. A business may create tax nexus through employees, offices, inventory, sales or services performed in another jurisdiction.
Business owners should examine:
- Corporate, franchise and gross-receipts taxes
- Sales-tax nexus and registration requirements
- Payroll and unemployment taxes
- Local business taxes and licence fees
- Pass-through entity tax elections
- Property and inventory taxes
- Industry-specific taxes
Texas has a franchise tax, Nevada has a Commerce Tax for qualifying businesses, and Washington imposes B&O tax on gross revenue. Consequently, “no personal income tax” should not be confused with “no business tax.”
Which No-Income-Tax State Is Best?
There is no single best state for every taxpayer.
Alaska and New Hampshire stand out because neither imposes a statewide general sales tax, although local or property taxes may still be substantial.
Florida, Texas and Nevada may appeal to people seeking large employment markets, major cities and warmer climates without a tax on wages.
South Dakota and Wyoming can be attractive to entrepreneurs and investors seeking states without broad individual or corporate income taxes.
Tennessee combines no individual income tax with access to several growing business centres, while Washington offers a large technology-driven economy but requires careful consideration of capital-gains and B&O taxes.
The best option depends on income sources, property ownership, business structure, lifestyle requirements and the taxes imposed by the specific city or county.
Final Considerations
The states with no income tax can provide genuine savings, particularly for high earners, retirees and owners of pass-through businesses. Nevertheless, choosing a state based solely on its individual income-tax rate can produce a misleading comparison.
Property tax, sales tax, insurance, housing, business levies and state-source income rules should all be included in the decision. Before making a permanent move or restructuring a company, obtain advice based on the tax rules of both the current state and the proposed destination.
Tax disclaimer: This article provides general information and does not constitute legal, tax or financial advice. State laws, thresholds and individual circumstances can change. Consult a qualified US tax professional before changing residency, transferring assets or reorganising a business.
Frequently Asked Questions
How many states have no income tax in 2026?
Nine states do not impose a broad-based tax on salaries and wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Washington is sometimes excluded from stricter lists because it taxes certain long-term capital gains.
Which states have no income tax and no statewide sales tax?
Alaska and New Hampshire have neither a personal state income tax nor a statewide general sales tax. Alaska municipalities may impose local sales taxes.
Do retirees pay state tax in no-income-tax states?
These states generally do not tax pensions, IRA withdrawals or Social Security benefits through a broad individual income tax. Other taxes and state-specific rules can still affect retirees.
Can a remote worker avoid state income tax by moving?
Possibly, but the outcome depends on domicile, where the work is physically performed, the employer’s location and the sourcing rules of the former or employer state. Some remote workers may still have a nonresident filing requirement.
Is Washington genuinely a no-income-tax state?
Washington does not tax salaries or wages and does not impose a conventional corporate income tax. However, qualifying long-term capital gains may be taxed, and businesses can face B&O tax on gross receipts.
