Nine states have no broad-based individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. It's a selling point that attracts retirees, remote workers, and high earners alike. But "no income tax" doesn't tell the whole story. Every state needs revenue, and the money comes from somewhere.
Here's how the nine actually compare in 2026 — and who really benefits.
The Scoreboard
Sales tax figures are combined state-and-average-local rates and property tax figures are effective rates on owner-occupied housing; each state's own revenue department is cited in its profile below.
| State | Sales Tax | Effective Property Tax | Capital Gains Tax | Estate/Inheritance Tax | Notable Other Taxes |
|---|
| Alaska | None (local up to ~7.5%) | 1.04% | None | None | Oil revenue funds state; no state-level sales tax |
| Florida | 6.0% (+local up to 2%) | 0.80% | None | None | Documentary stamp tax on real estate, insurance premium tax |
| Nevada | 6.85% (+local up to 1.53%) | 0.53% | None | None | Commerce tax on businesses over $4M gross revenue, gaming tax |
| New Hampshire | None | 1.57% | None | None | Business profits tax (7.5%), business enterprise tax (0.55%) |
| South Dakota | 4.2% (+local up to 2%) | 1.08% | None | None | Bank franchise tax, insurance company tax |
| Tennessee | 7.0% (+local up to 2.75%) | 0.56% | None | None | Business tax (0.02%–0.1875% on gross receipts), franchise/excise tax |
| Texas | 6.25% (+local up to 2%) | 1.60% | None | None | Franchise (margin) tax on businesses over $2.47M revenue |
| Washington | 6.5% (+local up to 4%) | 0.87% | 7% over $278K | Yes (estate tax, $3M exclusion) | High-earner income tax enacted 2026, effective 2028; B&O tax on businesses |
| Wyoming | 4.0% (+local up to 2%) | 0.55% | None | None | Mineral severance tax, lodging tax |
State-by-State Profiles
Alaska: The True Outlier
Alaska is one of only two states — with New Hampshire — that levy neither an income tax nor a state sales tax. It funds government largely through oil revenue and federal transfers. Some municipalities levy local sales taxes (up to about 7.5% in certain areas), and property taxes are moderate. Alaska also pays residents an annual Permanent Fund Dividend — essentially paying you to live there. The catch: cost of living is high, especially for housing and goods in remote areas.
Florida: The Migration Magnet
Florida attracts more domestic migrants than any other state, and no income tax is a big reason. The Census Bureau's state-to-state flows tell the same story from a different dataset. The state runs on its 6% sales tax (up to 8% with local add-ons) and property taxes that, while below the national average in rate, generate substantial revenue thanks to high property values. Tourism taxes and documentary stamp taxes on real estate round things out. For retirees and high earners, Florida is hard to beat on total state tax burden.
Nevada: Built on Gaming and Tourism
Nevada's 6.85% sales tax (among the highest base rates nationally) combines with gaming taxes and a commerce tax on large businesses. Property taxes are relatively low. No income, estate, or inheritance tax. The economy's reliance on tourism and gaming makes revenue volatile, but for individual residents, the tax picture is straightforward and favorable.
New Hampshire: No Income Tax (Finally, Fully)
New Hampshire eliminated its Interest and Dividends Tax for tax periods beginning on or after 1 January 2025, making 2025 the first year with truly zero income tax on individuals. The tax did not simply switch off — it was phased down over three years: 5% for 2022, 4% for 2023, and 3% for 2024 before repeal. The state now relies heavily on property taxes — at 1.57%, among the highest in the nation — plus business taxes. There's no sales tax either, making New Hampshire one of only two states (with Alaska) lacking both a sales and income tax. The trade-off is steep property tax bills.
South Dakota: Quietly Favorable
South Dakota keeps a low profile but offers one of the most favorable overall tax environments. Sales tax is a moderate 4.2%, property taxes are around the national average, and there are no income, estate, or inheritance taxes. The state has also become a major trust haven, attracting wealthy families with favorable trust laws and no tax on trust income.
Tennessee: Sales Tax Heavy
Tennessee eliminated the Hall income tax (on interest and dividends) for tax years beginning in 2021, completing its transition to a fully no-income-tax state. The trade-off is one of the highest combined sales tax rates in the country — a base of 7.0% that can reach 9.75% with local additions. This makes Tennessee's tax system particularly regressive: lower-income residents pay a higher percentage of their income in sales tax. Property taxes are low, partially offsetting this.
Texas: Property Tax Pain
Texas is the poster child for the income-vs-property tax trade-off. With no income tax, the state leans heavily on property taxes — at 1.60% effective rate, among the highest in the nation. A $400,000 home in Texas generates a roughly $6,400 annual property tax bill. The state has enacted relief measures in recent years, but the underlying rates remain high. Sales tax at 6.25% (up to 8.25% local) adds to the burden.
Washington: The Most Asterisks
Washington technically has no income tax, but the asterisks keep multiplying. The state enacted a capital gains tax on gains exceeding $278,000 (indexed) — 7%, rising to 9.9% above $1 million of taxable gains — upheld by the state supreme court as an "excise tax." A 9.9% high-earner income tax (SB 6346, signed March 2026) takes effect in 2028. The Business & Occupation (B&O) tax hits businesses on gross receipts (not profits). Sales tax reaches over 10% in parts of Seattle. And Washington has an estate tax with a $3 million exclusion — far lower than the federal exemption. For high earners and business owners, Washington's "no income tax" label requires a lot of fine print.
Wyoming: Low-Key and Low-Tax
Wyoming rounds out the list as a genuinely low-tax state across the board. Sales tax is a low 4.0%, property taxes are modest, and there's no income, estate, or inheritance tax. Mineral severance taxes (on coal, oil, and gas extraction) contribute substantially to state revenue. For individuals, Wyoming offers one of the lightest total tax burdens in the country.
Who Actually Benefits from No Income Tax?
The benefit of living in a no-income-tax state is not equal across income levels.
High earners benefit the most.
A household earning $500,000 in California faces a state income tax bill of roughly $40,000+. In Texas, that's $0. Even accounting for Texas's higher property and sales taxes, the net savings are substantial.
Middle-income earners may break even — or pay more.
A household earning $75,000 might pay $3,000 in state income tax in a moderate-tax state. But higher sales and property taxes in a no-income-tax state can easily offset that. The break-even point varies by state and spending patterns.
Lower-income earners often fare worse.
Sales taxes are regressive — everyone pays the same rate regardless of income. Property taxes (passed through in rent) hit lower-income households proportionally harder. Distributional analysis of all fifty state tax systems finds that no-income-tax states impose a higher effective total tax rate on the bottom 20% of earners than many states with progressive income taxes.
The Total Burden Is What Matters
"No income tax" is a powerful headline, but total tax burden is what affects your bank account. Alaska and Wyoming genuinely offer light taxation overall. Florida and South Dakota are favorable for most income levels. Texas trades income tax for painful property taxes. Washington increasingly looks like an income-tax state wearing a disguise.
Use the TaxMath calculator to compare your actual tax burden across states using your real income, property, and spending numbers. The answer may surprise you.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.