9 States With No Income Tax in 2026

In 2026, there are nine states with no income taxes, meaning residents may enjoy a major tax break when they go to file each year.

However, these states typically earn revenue in other ways, including higher sales and property taxes for residents.

Read on to learn more about the states without income tax, and how living in one of these places can impact an individual’s finances and quality of life.

Which States Have No State Income Tax?

Across the U.S., there are only nine states without income tax:

•   Alaska

•   Florida

•   Nevada

•   New Hampshire

•   South Dakota

•   Tennessee

•   Texas

•   Washington

•   Wyoming

Here’s some specific information on each of these states with no income taxes.

Alaska

Not only does Alaska have no state income taxes, but the state is also devoid of state-level sales taxes. (Localities can leverage their own sales taxes, however.)

But Alaska isn’t exactly a cheap place to live. The median home price in Alaska is approximately $375,626 (compared with the national figure of $359,241). The state also has a cost of living that’s approximately 25% higher than the national average.

Florida

While Florida has no state income tax, its sales taxes (6.00%) and property taxes (0.74%) are considered average. If you can withstand hurricane season, you might appreciate Florida’s cost of living. With a cost of living index of 102.2, it’s just above the national average of 100.

The state’s wallet-friendly profile may allow residents to have enough cash left after paying the bills to stash in a high-yield savings account.

Nevada

Known for the Las Vegas Strip as well as natural wonders like Lake Tahoe, Nevada also is recognized for the fact that it has no income tax. However, Nevada’s sales tax is 6.85% and its average state and local tax rate is 8.24%.

The state’s cost of living is essentially equal to the national average cost of living, with a score of 100.2 versus the U.S. average of 100. Perhaps this is why Nevada is one of the country’s fastest-growing states.

New Hampshire

If you’re thinking about moving to New Hampshire because it doesn’t have income tax — or a sales tax — consider this: Overall, New Hampshire doesn’t fare that well in terms of cost of living, with a current index of 111.4 vs. the national average of 100. And the median New Hampshire home price is $493,517, far above the national average of $375,626.

However, New Hampshire no longer charges state income tax on interest and dividends earned in the 2025 tax year and beyond.

South Dakota

Not only does South Dakota have no state income tax, but the state’s overall cost of living is below the national average at 91.9. The median home price of $310,014 is also well below the national average. However South Dakota does have a 4.20% sales tax, and its property taxes are average.

Tennessee

Tennessee has its Nashville music scene and Smoky Mountains — and no state income tax.

While Tennessee’s 7% sales tax is among America’s most expensive, its overall cost of living is low. Tennessee ranks as the eighth affordable state in the country with a cost of living index of 90.3.

Texas

Everything’s bigger in Texas, except residents’ state income tax bills. Not only does Texas have no state income tax, the cost of living in Texas is low — it comes in at 92.1 vs. the national average of 100 in terms of affordability.

However, property taxes in Texas are the 7th highest in the U.S. — the state has an effective property tax rate of 1.36% — and there is a 6.25% sales tax.

Washington

The state of Washington also boasts no state income tax. While property taxes are average (ranking 24th in the nation), the state’s sales tax rate is 6.50%. And high earners will have to pay taxes on capital gains.

Another factor to be aware of is the state’s cost of living: Washington’s is high at 114.1 compared with the national average of 100. Some residents, including retirees, may have to find ways to budget on a fixed income.

Wyoming

The wide-open state of Wyoming has no state income taxes and some of the lower property tax rates in the country. The state’s sales tax is 4.00%, and the cost of living in Wyoming is under the national average (93.7 vs. the average of 100), making it fairly affordable.

What Does No State Income Tax Mean?

“No state income tax” means that a state does not charge tax on income earned in (or from) the state. However, while a resident of a state with no income tax typically gets to keep more of their paycheck — which they might keep in their online checking account or use to pay off debt, for example — it doesn’t mean that they pay no taxes. For instance, some states with no income tax have high sales tax; others have high property taxes.

Essentially, living in a state with no income tax might lower a resident’s overall tax burden, but other taxes charged by the state, and/or the cost of living in the state, could add to the expense of living there.

Recommended: When to Use a Debt vs. Credit Card

Pros and Cons of State Income Tax

Before packing up the boxes and budgeting for moving expenses, it’s important to weigh the pros and cons of states with no income tax. Here are some of the advantages and disadvantages.

Pros of Living in a No-Tax State

Some of the potential benefits of residing in a state with no income tax include:

•  Saving money: Not having to pay state income tax could add extra money to a family’s budget. Retirees may especially appreciate living in one of the nine states without income taxes, as these states also don’t tax retirement distributions. (Illinois, Iowa, Mississippi, and Pennsylvania also give this tax break to retirees.)

•  More business: Businesses are often attracted to tax-friendly states. While they’ll likely be paying more attention to states that offer corporate tax breaks, there’s a lot of overlap between the two. (Six of the 10 most tax-friendly states for businesses don’t have state income taxes.)

States that attract businesses might have more job opportunities, possibly making them attractive if you’re looking for job options, or to start your own business.

•  Easier tax filing: Living in a state without income taxes makes tax season a little simpler and less stressful. After all, it’s one less thing to file.

It also means you may save money on filing your taxes. Tax software and accountants may charge more if you file both state and federal taxes each year.

Cons of Living in a No-Tax State

But living in a state with no income tax has downsides as well. These include:

•  Other taxes may be high: When states have no income tax, they may make up that lost revenue through other types of taxes, like higher sales taxes and property taxes.

•  Public services and infrastructure may suffer: Revenue for taxes is often used to pay for things like schools and roads, and community safety.

•  Cost of living may be higher: Some states with no income taxes, such as Alaska and New Hampshire have a cost of living that’s significantly higher than the national average. That means things like housing and food might cost more.

Recommended: Marginal vs. Effective Tax Rate

Considerations Before Moving to a State With No Income Tax

Clearly, living in a state without income tax has benefits. But it’s important to consider the full picture of a no-income-tax state.

As mentioned above, while it varies by state, some of the states without income tax get their revenue through higher sales and/or property taxes. Researching sales and property tax rates, as well as the cost of living by state, can give you a fuller sense of how expensive it might be to live in a state beyond the income tax rate.

In addition, if states are earning less revenue from income taxes, that can sometimes mean there’s not as much budget to tackle government projects. State taxes often help fund important priorities, like education and infrastructure.

How Does No Income Tax Impact Cost of Living?

Income taxes are just one of many factors used to calculate a state’s cost of living. Without having to budget for state income tax, residents in these states without income tax already have an advantage.

But cost of living depends on more than just state income taxes. Economists also consider factors like housing, food, transportation, gas, and healthcare when calculating a state’s cost of living.

For example, Washington state may not have income tax, but it has some of the highest home prices in the U.S. Currently, the average home value there is $587,696 versus the national average of $359,241. As a resident, you might have to find creative ways to stretch your money.

The Trade-Off: Sales and Property Taxes

Remember: Though some states don’t have income tax, they may charge higher sales and property taxes. For example, Tennessee’s sales tax is one of the highest in the country, while Texas’ property taxes are the seventh highest in the U.S.

And some no-income-tax states may have other taxes and fees residents have to pay, such as a gas tax or a utility tax. Before moving, it’s generally a good idea to look into all the different taxes and fees residents may need to pay, as well as the state’s cost of living, to see if you will save money.

How Does No Income Tax Impact Your Tax Return?

If you live in a state that doesn’t require you to file a tax return, you’ll still have to file a federal return. However, you don’t have to file a state income tax return.

No state income tax also means your paycheck will have fewer taxes withheld throughout the year — generally leading to higher take-home pay.

The Takeaway

Living in a state without income tax might be beneficial for some, but not necessarily for everyone. For certain groups, such as retirees or high earners, it might mean serious savings that they could put into the bank for future financial goals. But it’s important to consider other taxes, like sales and property taxes, as well as a state’s cost of living, when making any big decisions about where to live.

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FAQ

Is it better to live in a state with no income tax?

People may find more flexibility in their budget when they don’t have to worry about paying state tax. They’ll also likely have an easier (and potentially more affordable) experience when it’s time to file their taxes.That said, residents may find they’re paying more in other taxes — such as sales and property taxes — and may encounter higher costs outside of things like housing and food.

What is the most tax-friendly state?

Alaska is objectively the most tax-friendly state, as it places the lowest tax burden on its citizens overall. However, that may be balanced by the state’s higher cost of living.

Keep in mind that the most tax-friendly state for your situation depends on a few factors, like your main source of income (paycheck, capital gains, etc.), your propensity for spending (how often you’ll encounter sales tax), and property ownership (do you own or rent your home?).

Which states have no state taxes at all?

Only two states — Alaska and New Hampshire — have no state income taxes or statewide sales taxes. However, in Alaska, local municipalities can impose their own sales taxes, and in New Hampshire, property taxes are high.

What happens to public services if there is no income tax?

Without a state income tax, states must use other funding to pay for public services. These include state sales taxes; property taxes; excise taxes on specific goods and services, such as alcohol and fuel; and fees for utilities, among other things. These taxes can add to an individual’s overall tax burden.

Does living in a no-income-tax state affect my federal taxes?

Living in a state with no income tax does not directly affect your federal taxes since federal taxes are calculated based on federal tax laws. You’ll pay federal income tax on your taxable income.

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Photo credit: iStock/Martina Birnbaum

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