The 9 States with No Income Tax in 2025

If you're tired of watching state income taxes eat into your paycheck, you're not alone. Nine US states have zero state income tax, potentially saving you thousands of dollars every year.

The complete list:

1. Alaska - No state income tax (plus residents may receive Permanent Fund Dividend payments)
2. Florida - No state income tax, warm climate, no estate tax
3. Nevada - No state income tax, entertainment and tourism economy
4. New Hampshire - No earned income tax (but 3% tax on interest and dividends until 2027)
5. South Dakota - No state income tax, business-friendly policies
6. Tennessee - Repealed income tax completely in 2021
7. Texas - No state income tax, large job market
8. Washington - No income tax (but 7% capital gains tax on high earners)
9. Wyoming - No state income tax, low population density

How Much Could You Actually Save?

The savings depend entirely on your income level. Here's what someone earning $100,000/year could save by moving from a high-tax state to a no-tax state:

Savings Comparison (Annual)

From California (top tax state):

• California state tax on $100K: ~$4,500-5,500
• Savings by moving to Texas/Florida: $4,500-5,500/year

From New York:

• New York state tax on $100K: ~$4,800-5,800
• Savings by moving to Nevada/Tennessee: $4,800-5,800/year

From Illinois:

• Illinois state tax on $100K: ~$4,950 (flat 4.95% rate)
• Savings by moving to Washington/Wyoming: $4,950/year

Over 10 years, that's $45,000-55,000 in saved taxes for a $100K earner. For higher earners, the savings multiply dramatically.

But Wait - There's a Catch

No-income-tax states aren't free money machines. They fund government services through other means:

Higher Sales Taxes

States without income tax often have higher sales taxes:

• Tennessee: 9.55% combined state + average local sales tax (highest in nation)
• Washington: 9.38% combined
• Nevada: 8.23% combined

Compare to California's 8.68% - not as different as you'd think.

Higher Property Taxes

Some no-tax states make up revenue through property taxes:

• New Hampshire: 2.05% average effective property tax rate (2nd highest nationally)
• Texas: 1.60% average rate (7th highest)

Example: A $400,000 home in Texas could cost you $6,400/year in property taxes vs. ~$3,200 in California (0.74% rate).

Other "Hidden" Taxes

• Florida: No estate tax, but has intangibles tax on business assets
• Nevada: Gaming and hotel occupancy taxes (passed on to consumers)
• Alaska: Local sales taxes vary widely (none at state level)

The Real Math: Total Tax Burden

Smart financial planning looks at total tax burden, not just income tax.

Use our free calculator to compare:

• Federal income tax (same everywhere)
• State income tax
• Sales tax impact
• Property tax estimates
• FICA taxes
• Real buying power adjusted for cost of living

Example Calculation: $100K Earner

Living in California (high income tax):

• State income tax: $5,200
• Property tax (on $500K home): $3,700
• Sales tax impact: $2,500/year
• Total state/local taxes: ~$11,400

Living in Texas (no income tax):

• State income tax: $0
• Property tax (on $500K home): $8,000
• Sales tax impact: $2,800/year
• Total state/local taxes: ~$10,800

Net savings: Only $600/year - not the $5,200 you might expect!

When Moving to a No-Tax State Makes Sense

✅ You Should Consider It If:

1. You're a high earner ($200K+)

   • State income tax savings scale with income
   • Property/sales tax increases don't scale as much

2. You rent, don't own

   • Avoid high property taxes
   • Maximize income tax savings

3. You have substantial investment income

   • No state tax on capital gains, dividends, interest
   • Major benefit for retirees and investors

4. You're retiring with pension/401(k) income

   • No state tax on retirement distributions
   • Florida and Nevada popular for this reason

5. Your job is fully remote

   • Work from anywhere = choose the best tax situation
   • No state tax + lower cost of living = big wins

❌ Think Twice If:

1. You're a low-to-moderate earner (<$75K)

   • Income tax savings are small
   • Sales/property tax increases might cost more
   • Cost of living might be higher overall

2. You value public services

   • Some no-tax states rank lower in education, healthcare
   • Check school quality, infrastructure before moving

3. You're buying expensive property

   • High property tax rates in Texas, New Hampshire eat into savings
   • Do the math on your specific home price

4. You're in a career cluster

   • Tech in San Francisco, finance in New York
   • Lower salary in no-tax state might offset tax savings

State-by-State Breakdown

Florida - The Retiree's Paradise

Pros:

• No state income tax
• No estate tax
• No inheritance tax
• Warm weather year-round
• Growing job market (especially Tampa, Miami, Orlando)

Cons:

• Hurricane risk and insurance costs
• High property insurance ($2,000-4,000/year average)
• Tourist-heavy economy (seasonal volatility)
• Sales tax: 7.01% average

Best for: Retirees, remote workers, high earners

Texas - The Business Hub

Pros:

• No state income tax
• Large, diverse economy
• Major job markets (Austin, Dallas, Houston)
• Business-friendly regulations

Cons:

• High property taxes (1.60% average)
• Hot summers, occasional severe weather
• Sales tax: 8.20% average

Best for: Tech workers, entrepreneurs, growing families

Washington - The Tech Haven

Pros:

• No state income tax
• Booming tech economy (Seattle, Bellevue)
• Beautiful natural scenery
• No estate tax under $2.2M

Cons:

• High cost of living (Seattle especially)
• 7% capital gains tax on $250K+ earners
• Sales tax: 9.38% average
• Rainy climate

Best for: Tech workers, nature lovers, earned income (not capital gains)

Nevada - The Entertainment State

Pros:

• No state income tax
• No corporate income tax
• Growing job market (Las Vegas, Reno)
• Lower cost of living than California

Cons:

• Sales tax: 8.23%
• Limited water resources
• Hot desert climate
• Gaming economy

Best for: California refugees, business owners, entertainment industry

Tennessee - The Southern Favorite

Pros:

• No state income tax (fully repealed 2021)
• Low cost of living
• Growing cities (Nashville, Memphis, Chattanooga)
• Music and culture scene

Cons:

• Highest combined sales tax: 9.55%
• Property tax: 0.59% (moderate)

Best for: Young professionals, remote workers, retirees

Tax Planning Strategies for No-Tax States

If You're Moving

1. Establish Domicile Properly

   • Get driver's license in new state
   • Register to vote
   • Change mailing address
   • Open bank accounts
   • Why: High-tax states like California audit "move-aways"

2. Time Your Move

   • Move before year-end for full-year tax benefit
   • Or move mid-year and file part-year returns

3. Plan for Stock/Bonus Income

   • Defer bonuses until after move (if possible)
   • Exercise stock options in new low-tax state

If You're Staying Put

1. Maximize Tax Deductions

   • 401(k) contributions (up to $23,000 in 2025)
   • HSA contributions ($4,150 individual, $8,300 family)
   • Student loan interest deduction

2. Use Tax-Advantaged Accounts

   • Roth IRA (no state tax on qualified withdrawals)
   • 529 plans (state tax deduction in some states)

3. Consider Partial-Year Strategy

   • Work remotely from no-tax state part of year
   • Check state rules on "tax residency"

Common Myths Debunked

Myth 1: "No income tax = cheap state"

Reality: Total cost of living matters more. Houston might have no income tax, but a $500K home costs $8,000/year in property tax. California's $500K home: $3,700/year.

Myth 2: "I'll automatically save money"

Reality: You need to do the math for YOUR situation. Use our calculator to see your real tax burden including all taxes.

Myth 3: "No-tax states have terrible public services"

Reality: It varies. Washington has excellent schools. Wyoming has great infrastructure. Tennessee struggles in some areas. Research your specific location.

Myth 4: "Remote workers can just move and save immediately"

Reality: Some states (like New York and California) tax income earned while a resident, even if you move mid-year. Proper domicile planning is essential.

How to Decide: Your Action Plan

Step 1: Calculate Your Current Tax Burden

Use our calculator to determine:

• Your current state income tax
• Estimated property tax
• Sales tax impact
• Total annual tax bill

Step 2: Calculate Potential Savings

Compare to no-tax states you're considering:

• Florida vs your current state
• Texas vs your current state
• Nevada vs your current state

Step 3: Factor in Cost of Living

Don't just look at taxes:

• Housing costs
• Insurance (health, home, auto)
• Utilities and transportation
• Food and everyday expenses

Step 4: Consider Quality of Life

Money isn't everything:

• Climate and weather
• Schools and education
• Healthcare access
• Job market for your industry
• Proximity to family/friends
• Recreation and culture

Step 5: Run the Numbers

A no-tax state makes sense if:

• Total annual savings > $5,000 for your specific situation
• You value other factors (climate, culture, family)
• Your career isn't negatively impacted
• Quality of life improvements justify any costs

Final Recommendations by Income Level

Under $50K/year

• Verdict: Income tax savings likely minimal
• Better focus: Overall cost of living, job opportunities
• Consider: Tennessee (low COL + no tax) or South Dakota

$50K-100K/year

• Verdict: Moderate savings possible
• Do the math: Compare total tax burden carefully
• Consider: Florida (if retiring), Texas (if working)

$100K-250K/year

• Verdict: Significant savings likely
• Sweet spot: Income tax savings outweigh other taxes
• Consider: Any no-tax state that fits your lifestyle

$250K+/year

• Verdict: Massive savings potential
• No-brainer (usually): $10K-30K+ annual savings
• Consider: Florida, Texas, Nevada, Washington

Conclusion: Is a No-Tax State Right for You?

Moving to a state with no income tax can absolutely save you money - but it's not automatic. The smartest approach:

1. ✅ Calculate your total tax burden (not just income tax)
2. ✅ Factor in cost of living differences
3. ✅ Consider quality of life and career impact
4. ✅ Plan the move properly for tax purposes
5. ✅ Don't forget hidden costs (property tax, sales tax, insurance)

Bottom line: For high earners, retirees, and remote workers, moving to a no-tax state can mean $10,000-50,000+ in lifetime savings. But for others, the savings might be smaller than you think - or even negative once you factor in everything.

Your next step: Use our free calculator to compare your exact take-home pay across all 50 states. See the real numbers for your salary and situation before making any big decisions.

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Frequently Asked Questions

Q: Can I work in a high-tax state and live in a no-tax state to avoid taxes?

A: Not usually. You'll owe taxes to the state where you physically work. Exception: If you work remotely from home in a no-tax state, you generally don't owe tax to your employer's state (but check reciprocal agreements).

Q: Do no-tax states have higher taxes on businesses?

A: Some do (Texas has franchise tax), some don't (Nevada, Wyoming very business-friendly). It varies.

Q: What about Social Security and retirement income?

A: Social Security isn't taxed at state level anywhere. But pension/401(k) distributions ARE taxed by states with income tax. No-tax states = no tax on retirement income.

Q: Can California or New York come after me if I move?

A: They can audit you, yes. Properly establish domicile: driver's license, voter registration, home sale/purchase, bank accounts, and spend less than 183 days/year in the old state.

Q: Which no-tax state is "best"?

A: Depends on your priorities:

• Warm weather: Florida, Texas, Nevada
• Business-friendly: Nevada, Wyoming, South Dakota
• Tech jobs: Washington, Texas (Austin)
• Lowest total taxes: Wyoming, Alaska, Tennessee
• Retirement: Florida, Nevada

Calculate your savings now →