States With No Income Tax
Nine US states levy no tax on wage income:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
If you work in any of them, the “state income tax” line on your pay stub is simply $0. Federal income tax and FICA are unchanged. But whether you actually come out ahead depends on how those states raise money instead — and on how you earn and spend.
The edge cases
- New Hampshire never taxed wages, but it did tax interest and dividends through 2024. That tax has been fully phased out, so New Hampshire now has no personal income tax of any kind.
- Washington has no wage income tax, but since 2022 it taxes long-term capital gains above an annual exemption (a little over $250,000 of gains) at 7%. That reaches large investment and business-sale gains, not salaries.
- Tennessee finished phasing out its “Hall tax” on investment income in 2021.
- The remaining six — Alaska, Florida, Nevada, South Dakota, Texas, Wyoming — tax no personal income at all.
How they pay for services instead
A state still has to fund schools, roads, prisons, and Medicaid. No-income-tax states lean on some combination of:
- Sales tax. Often higher rates and broader bases. Tennessee and Washington have among the highest combined state-and-local sales tax rates in the country; Texas and Nevada are above the national average.
- Property tax. Texas and New Hampshire have notably high effective property tax rates — a real cost for homeowners that renters pay indirectly through rent.
- Severance taxes on natural-resource extraction. Alaska and Wyoming tax oil, gas, and minerals so heavily that they can skip both an income tax and keep other taxes low. Alaska even pays residents an annual Permanent Fund Dividend.
- Tourism and gaming taxes. Nevada taxes casino revenue; Florida and Nevada both tax hotel stays heavily, exporting part of the burden to visitors.
What it means on your paycheck
In a no-income-tax state, your take-home pay is higher than the same salary in a state with an income tax — the difference is just the state withholding line. Everything else on the stub (federal tax, Social Security, Medicare, pre-tax deductions) is identical.
Worked comparison
A single filer, $85,000 salary, standard W-4, biweekly:
| California (graduated, top of range ~9.3% on the last dollars) | Texas (no income tax) | |
|---|---|---|
| Federal income tax | ~$9,900/yr | ~$9,900/yr |
| State income tax | ~$3,800/yr | $0 |
| FICA | ~$6,500/yr | ~$6,500/yr |
| Annual take-home (~) | ~$64,900 | ~$68,700 |
About $3,800 a year more in take-home in Texas on this salary — real money, but Texas’s higher property tax can claw a large part of it back if you own a home. See how the pieces compare on the sales tax and minimum wage lookups side.
“No income tax” is not the same as “low taxes”
Total state and local tax burden — income, sales, property, and excise taxes combined, as a share of income — is the number that matters.
| Profile | Likely outcome |
|---|---|
| High salary, modest spender, renter | Clear win — you skip a big income tax and avoid high property tax |
| Middle income, homeowner | Often a wash — a high property tax can eat the income-tax saving |
| High spender on taxable goods | Partial offset — a high sales tax claws some of it back |
| Retiree on Social Security and modest withdrawals | Smaller benefit — many income-tax states already exempt Social Security and some retirement income |
Cost of living, housing prices, and insurance costs (home and auto) usually move the needle more than the tax structure. Tax should be one input to a relocation decision, not the whole case.
How each one funds itself
| State | Main non-income-tax revenue levers |
|---|---|
| Alaska | Oil and gas severance taxes; investment earnings of the Permanent Fund. No state sales tax (localities may levy one) |
| Florida | Sales tax, heavy tourism and hotel taxes, documentary stamp taxes on real estate |
| Nevada | Gaming (casino) tax, sales tax, mining taxes, tourism |
| New Hampshire | High property taxes; business profits and enterprise taxes. No sales tax |
| South Dakota | Sales tax (relatively broad base), plus a bank-franchise tax |
| Tennessee | Among the highest combined sales tax rates in the US; business franchise/excise taxes |
| Texas | High property taxes; sales tax; oil and gas production taxes; a business “margin” tax |
| Washington | Sales tax; a business & occupation (gross receipts) tax; the newer capital-gains tax on large gains |
| Wyoming | Mineral severance taxes and federal mineral royalties; sales and property taxes kept low as a result |
The pattern: resource-rich states (Alaska, Wyoming, Texas) export part of the burden to energy companies; tourism states (Florida, Nevada) export it to visitors; the rest (Tennessee, Washington, South Dakota) lean on a high, broad sales tax that residents pay directly.
If you move mid-year
- Update your state withholding certificate with payroll and give them your correct home and work state.
- You will generally file a part-year resident return in each state for the year of the move.
- If you live in one state and work in another, check for a reciprocity agreement (common between neighbouring states) — it lets you be withheld only for your home state.
- Remote workers: your state tax usually follows where you physically perform the work, not where the company is. A few states have “convenience of the employer” rules that complicate this.
The bottom line
Nine states do not tax wages, and your paycheck is straightforwardly larger in them — commonly 3–6% of gross versus a comparison state. But they recover the revenue through sales, property, severance, or tourism taxes, so “no income tax” only translates to “lower total taxes” for certain profiles — typically high earners who rent and do not spend heavily. Compare the full state-and-local burden. The paycheck calculator shows $0 state tax for all nine and lets you compare take-home across states.