9 States with No Income Tax

Western CPE Staff

Oh, the joy of receiving a paycheck without income tax taken out. Though it may sound like a dream to some, it is the reality for those in 9 out of the 50 states. It’s not all cut and dry, though. While these nine U.S. states don’t take state income tax out of personal income, their actual tax burden can be more complex.

The Nine States With No Income Tax:

Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming

And there you have it, the nine states whose residents are free of income tax. But, before we get carried away, what’s the catch?

Filling the Void

If you’re feeling compelled to pack up and move to one of these states for a tax break, you may want to pump the brakes. If you’re not paying income taxes, the state is making up for that lost tax revenue somewhere else. There are other factors to assess when it comes to living in an income tax free state including sales tax, property tax, excise tax, and city or county taxes, as well as cost of living and environmental factors. Here we’ll offer some key takeaways of the pros and cons of each of these 9 income tax free states.

Alaska

Although Alaska ranks at 6th highest for cost of living index, “The Last Frontier” is a lower tax state.

In addition to no income tax, Alaska has no sales tax, although local municipalities can impose their own sales tax which varies upon location. The property tax in Alaska averages at 0.94%, ranking them 20th highest in the U.S. according to “Property Taxes by State and County, 2026” by Tax Foundation.

Despite it’s natural splendor, Alaska ranks #49 in the “Best States Rankings” by the U.S. News & World Report for reasons such as poor infrastructure & education, as well as high cost of living.

Florida

The Sunshine State is a popular choice for those headed into retirement as 401(k) distributions and Social Security benefits are not subject to tax. The state has a 6% sales tax, ranking in 17th highest place; as well as 0.74% property tax, ranking in 30th place.

With it’s warm climate and miles of coastline, Florida ranks #6 in the “Best States Rankings” by the U.S. News & World Report. Unfortunately though, flooding and hurricane season make for more expensive home insurance policies. With an average cost of $7,136 per year, home insurance is nearly $4,593 more than the national average of $2,543 (based on $300,000 dwelling coverage).

Nevada

Nevada offers a variety of activities, from nightlife in Las Vegas to outdoor adventures on Lake Tahoe and Great Basin National Park. With a cost of living index at 99.5, Nevada is just slightly below the national average. The state has a 6.85% sales tax, adding up to 8.24% when combined with average local sales tax and ranking in 13th highest place. Nevada has a 0.49% property tax, ranking in 42nd place.

The home of Sin City ranks in #34th place in U.S. News & World Report Best States Rankings. Strong economy and infrastructure are listed as positive aspects while higher crime and poorer healthcare are among the negatives.

New Hampshire

Known for its small-town charm and natural landscapes, New Hampshire may be one of the top states to live in of the income-taxless nine. New Hampshire ranks #4 in the Best States Rankings for reasons such as low crime, a good education system and economic opportunity.

In addition to no income tax, New Hampshire has no state or local sales tax. The state ranks 6th for highest property tax at 1.41% according to “Property Taxes by State and County, 2026” by Tax Foundation. Despite being a lower tax state, New Hampshire has a cost of living index of 110.5, putting it in 15th highest place. Housing shortage is listed as a prominent reason for high cost of living.

South Dakota

If you enjoy the great outdoors, South Dakota may be your next destination. Home to Mount Rushmore and The Black Hills, South Dakota ranks in 5th place for natural environment and in 8th place overall according to the Best States Rankings.

With a low cost of living index of 91.8, South Dakota ranks in 15th place for affordability. The state has a 4.20% sales tax, ranking in 39th highest place; as well as a 0.99% property tax, ranking in 27th place.

If you don’t mind the long cold winters and are looking to spend less, South Dakota is a strong contender.

Tennessee

Known for Nashville’s country music scene and good whiskey, Tennessee is the 9th most affordable state and boasts a low cost of living index of 90.1.

Tennessee ranks in 32nd place according to Best States Rankings. While mild climate, music and food culture are an enjoyable aspect of life in Tennessee, the state ranks poorly with regards to healthcare, crime rate and education.

Tennessee has a base 7.0% sales tax. This adds up to 9.61% when combined with average local sales tax, ranking the state in 2nd highest place. In addition, Tennessee has a low 0.49% property tax, ranking in 43rd place. While the state ranks well when it comes to affordability, there is a category where it’s taxes are much higher than average: Beer. The state has the highest beer tax, at $1.29 per gallon.

Texas

They say everything is bigger in Texas, and in this case, we’re talking about their 1.36% property tax rate, ranking them 7th highest in the nation. The state’s sales tax sits at a slightly elevated 6.25%, but combined with an average local sales tax, adds up to 8.2%.

On the other hand, Texas has a low cost of living index of 91.1, making it the 11th most affordable state. The state ranks #29 on the Best States Ranking with its business-friendly environment and strong economy. While ranking well in infrastructure, Texas rates lower in areas such as healthcare and crime rate.

Washington

With 124 state parks, Washington is a nature lover’s dream. For reasons such as good air & water quality, healthcare and education, the state ranks in 10th place according to the Best States Rankings.

While ranking well for quality of life, Washington has the highest tax burden of the other eight states. The state comes in 9th highest place for sales tax at 6.5%, but adds up to 9.51% when combined with average local sales tax. Washington also has a moderate 0.75% property tax, ranking in 29th place. While there is no typical income tax, it is important to note the tax on capital gains income for high-earning individuals with a top rate of 9.9%.

Another expense to be aware of is the gas tax of 59.04 cents per gallon, ranking in 3rd highest in the nation. The expenses may outweigh the absence of state income tax, but that doesn’t stop Washington from being a beloved and popular state.

Wyoming

Rated 1st overall on the 2026 State Tax Competitiveness Index, Wyoming is one of the most tax-friendly states. The state has a low property tax rate of 0.55%, ranking in 12th lowest; as well as a 4% sales tax, ranking in 10th lowest. When combined with average local sales tax though, that number adds up to 5.56%, but still ranks 7th lowest average sales tax in the nation. Wyoming has a cost of living index of 94.6, making it the 22nd most affordable state.

At #23 on the Best State Rankings, Wyoming offers beautiful landscapes, including the gorgeous Yellowstone Nation Park, and it has a low population density. To those who are attracted to a more relaxed way of life, this income tax-free state is free of the big city bustle.