Nine U.S. states levy no general income tax on wages. Living in one of them can save thousands of dollars a year compared to high-tax states. But the picture is more complicated than the headline rate — most no-income-tax states make up the revenue elsewhere. Here's the full list and what the trade-offs actually look like.
The Nine States
- Alaska
- Florida
- Nevada
- New Hampshire (taxes interest and dividends until 2027, but not wages)
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Washington has a capital gains tax on high earners (7% on gains over a threshold), but no tax on ordinary wage income. New Hampshire's interest-and-dividends tax is being phased out — it dropped to 3% in 2024 and ends entirely after 2026.
How Much Does It Actually Save You?
To get a rough sense, here's what a single filer earning $100,000 would pay in state income tax in 2025 across a few different states:
| State | Est. State Income Tax |
|---|---|
| California | ~$6,200 |
| New York | ~$5,200 |
| Oregon | ~$8,000 |
| Massachusetts | ~$4,400 |
| Illinois | ~$4,200 |
| Texas, Florida, Tennessee, etc. | $0 |
So moving from a high-tax state to a no-income-tax state could save a $100,000 earner roughly $4,000–$8,000 per year on state income tax alone. Doubled for a working couple earning $200,000.
The Catch: Other Taxes
States need revenue. Without income tax, they typically lean harder on other sources:
- Property taxes — Texas has some of the highest effective property tax rates in the country (around 1.6% of home value annually). New Hampshire also has very high property taxes.
- Sales taxes — Tennessee has one of the highest combined state-and-local sales tax rates (~9.5%). Washington is similar.
- Excise taxes — Alaska and Wyoming lean on severance taxes from oil, gas, and mining. Nevada relies heavily on gaming and tourism taxes.
- Vehicle and registration fees — often noticeably higher.
Cost of Living and Wages
Tax is one variable in a much bigger equation:
- Cost of housing in places like Seattle, Austin, Denver, and Miami has climbed sharply over the past decade, partly because of the tax migration itself.
- Wages in tax-free states are sometimes lower for the same role, particularly outside major metros. Employers know they don't have to gross up for state tax.
- Healthcare costs and insurance vary widely across states regardless of income tax policy.
What About Remote Workers?
The pandemic-era remote work boom created new opportunities — but also new complications. Key rules to know:
- You generally owe income tax to the state where you physically live and work.
- Some states (NY, CT, NE, DE, PA) use a "convenience of the employer" rule that can tax you as if you worked in the employer's state, even if you live elsewhere.
- If you split time between states, you may need to file part-year or non-resident returns.
- Establishing residency in a no-income-tax state requires real moves — driver's license, voter registration, primary residence — not just an Airbnb stay.
States to Watch on the Other End
For context, the highest top marginal state income tax rates in 2025:
- California — 13.3% (top bracket over $1M)
- Hawaii — 11%
- New York — 10.9% (top bracket over $25M); New York City adds another 3.9%
- New Jersey — 10.75%
- Oregon — 9.9%
- Minnesota — 9.85%
Should You Move?
The math on tax savings alone isn't the whole story. Family, career, climate, and lifestyle all matter — usually more than tax brackets. But if you're already considering a move, the income tax differential is worth quantifying. For a mid-to-high earner, it can mean keeping an extra full paycheck or two every year.