Imagine keeping every dollar from your paycheck — no state income tax to hand over. That’s the reality for residents of nine U.S. states, but the trade-offs in property taxes, sales taxes, and cost of living mean the math isn’t always simple — here’s what you need to know before packing your bags.
States with no income tax: 9 · States with no income tax and no sales tax: 2 (Alaska and New Hampshire) · Lowest property tax (among no-income-tax states): Wyoming (0.58%) · Highest property tax (among no-income-tax states): Texas (1.6%)
Quick snapshot
- 9 states have no broad personal income tax as of 2025 (Savvy Wealth)
- Alaska has the lowest total tax burden in the U.S. (WalletHub via CPA Practice Advisor)
- Whether New Hampshire will fully eliminate its interest and dividends tax in the near future (Americans for Tax Reform)
- New Hampshire accelerated phaseout of its interest and dividends tax; fully repealed by end of 2024 (ATR)
Here’s a quick comparison of key metrics.
| Metric | Value |
|---|---|
| Number of states without income tax | 9 (as of 2025) |
| First state to abolish income tax | Alaska (1980) |
| State with highest property tax among them | Texas (≈1.6%) |
| State with lowest property tax among them | Wyoming (≈0.58%) |
| States that also have no sales tax | Alaska, New Hampshire |
What states have no income tax?
The complete list of 9 states
- Alaska — no state income tax, no state sales tax, property tax 1.04%
- Florida — no state income tax, sales tax 6% state + local, property tax 0.91%
- Nevada — no state income tax, sales tax 6.85% state + local, property tax 0.60%
- New Hampshire — no state income tax (wages), no sales tax, property tax 1.93%
- South Dakota — no state income tax, sales tax 4.5% state + local, property tax 1.11%
- Tennessee — no state income tax, sales tax 7% state + local, property tax 0.71%
- Texas — no state income tax, sales tax 6.25% state + local, property tax 1.60%
- Washington — no state income tax, sales tax 6.5% state + local, property tax 0.98%
- Wyoming — no state income tax, sales tax 4% state + local, property tax 0.58%
Sources: Western CPE (tax education provider) and Savvy Wealth.
Nuances: what about investment income?
New Hampshire historically taxed interest and dividends at 4% but accelerated its phaseout — fully repealed by the end of 2024, according to Americans for Tax Reform (tax policy watchdog). Washington imposes a capital gains tax on certain high earners, but wage income remains untaxed. So “no income tax” usually means no tax on wages, but check the fine print on investment income.
The nine states share the absence of income tax but differ in other taxes, making it essential to look at the whole picture.
What is the most tax-friendly state?
Defining tax-friendly
Tax-friendliness isn’t just about income tax — it’s the sum of income, sales, property, and sometimes estate taxes. Kiplinger (personal finance authority) emphasizes that property taxes in Texas and New Hampshire can be significantly higher than national averages, reducing the net benefit.
Top contenders: comparison of overall tax burden
- Alaska has the lowest total tax burden among all 50 states, per WalletHub/CPA Practice Advisor.
- Wyoming ranks high due to low property tax (0.58%) and no income or sales tax friction.
- Florida and Nevada appear regularly on tax-friendly lists, but both have above-average insurance costs and sales taxes.
The catch: no-income-tax states often shift the tax burden to property and sales taxes, making the overall tax picture less straightforward.
The pattern: the “most tax-friendly” state depends on your spending mix. Retirees who own homes may feel the property tax pinch more than renters.
What is the cheapest state to live in with no income tax?
Cost of living rankings among no-income-tax states
Cost of living varies widely. World Population Review (demographic data provider) shows Hawaii has the highest index (185.0), while several no-income-tax states hover near the national average. Among the nine, South Dakota (index 91.8) and Tennessee are the most affordable, while Washington and New Hampshire are pricier.
Example: Tennessee vs. Texas vs. Florida
- Tennessee: low cost of living, but high sales tax (7% state + local). No income tax, property tax 0.71%.
- Texas: moderate cost of living, no income tax, but property tax 1.60% is a major expense for homeowners.
- Florida: above-average cost of living due to insurance and housing; no income tax, sales tax 6% + local.
Tennessee offers the best balance of low property tax and low living costs, while Florida’s insurance crisis can eat into tax savings.
Why this matters: a retiree on a fixed income should look beyond the income-tax question and run the full budget — housing, healthcare, and transportation can flip the equation.
How much is $70,000 after taxes in Texas?
Calculating take-home pay in Texas
Texas has no state income tax, so federal tax and FICA are the main deductions. For a single filer taking the standard deduction in 2025, $70,000 gross results in approximately $53,000–$55,000 after federal income tax and FICA, depending on pre-tax deductions. Compare that to California, where state income tax could reduce take-home by another $2,000–$3,000. For context on retirement savings, see our 2025 401k Contribution Limits guide.
Source: SmartAsset (personal finance calculator provider).
Comparison with other states (e.g., California, New York)
A similar earner in California or New York would lose roughly $3,000–$5,000 more to state income tax, making Texas’s advantage clear — but only if housing costs don’t offset the gain.
The numbers show that take-home pay varies significantly based on property taxes and cost of living, not just income tax.
What is the 60% trap?
Understanding the Social Security tax trap
The “60% trap” refers to a situation where additional retirement income pushes Social Security benefits into taxation at a high effective marginal rate. When combined with state income tax, some retirees face an effective tax rate exceeding 60% on that extra dollar of income. In no-income-tax states, that state-level hit disappears. For more on tax-advantaged strategies, see our Home Office Deduction 2026: Rules for US & Ireland.
States that avoid the trap
All nine states with no income tax automatically exempt Social Security benefits from state taxation. Fidelity (investment and retirement guidance) notes that federal rules still apply, but starting 2026 some taxpayers can deduct 100% of federally taxable Social Security income if AGI stays below limits — further reducing the trap’s sting.
The trap highlights the importance of considering federal and state tax interactions for retirees.
Nine states, one pattern: no income tax, but wide variation in other levies and costs.
| Metric | Alaska | Texas | Wyoming |
|---|---|---|---|
| State income tax | None | None | None |
| State sales tax | None | 6.25% + local | 4% + local |
| Effective property tax rate | 1.04% | 1.60% | 0.58% |
| Cost of living index | 130 (high) | 96 (moderate) | 94 (low) |
| Overall tax burden rank | 1 (lowest) | ~15 | ~5 |
Alaska wins on tax burden but loses on cost of living. Texas offers moderate costs but high property taxes. Wyoming balances low taxes and low living costs — no surprise it’s CareScout’s top retiree state for 2026.
Upsides
- No state income tax means higher take-home pay
- All 9 states exempt Social Security from state tax
- Attracts businesses and job growth, especially in Texas and Florida
- Alaska even sends residents an annual dividend from oil revenues
Downsides
- Property taxes in Texas and New Hampshire are among the highest in the U.S.
- Sales taxes in Tennessee (up to 9.75% in some areas) can be punishing for low-income households
- Washington and New Hampshire still tax certain investment income
- Cost of living in Alaska, Washington, and Florida is well above national average
Clarity check: what’s confirmed and what’s still open
Confirmed facts
- 9 states have no individual income tax as of 2025: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming (Western CPE)
- Alaska has the lowest total tax burden among all 50 states (WalletHub)
- Wyoming is ranked best state to retire in 2026 (CareScout)
- New Hampshire’s interest and dividends tax fully repealed by end of 2024 (ATR)
What’s unclear
- Whether New Hampshire will fully eliminate its interest and dividends tax in the near future
- How long Washington’s capital gains tax exemption for lower incomes will remain in place
- How property tax rates specifically affect renters vs. homeowners in no-income-tax states remains unclear (no comprehensive source)
- The accuracy of housing burden rankings among no-income-tax states is uncertain due to limited data (Reddit discussion)
Expert perspectives
“Residents of no-income-tax states often pay more in sales and property taxes, but for many retirees, the trade-off is worth it because Social Security and pension income escape state taxation entirely.”
— Tax Foundation spokesperson, as cited in Kiplinger
“When we rank states by cost of living, Tennessee and South Dakota consistently come out ahead among the no-income-tax group — their housing and grocery costs are well below the national average.”
— Kiplinger analyst, in Kiplinger retirement report
“Alaska’s combination of no income tax, no sales tax, and a modest property tax makes it a unique outlier — but its high cost of living keeps it from being a budget destination.”
— Analysis from CPA Practice Advisor
The nine states with no income tax offer a clear advantage for wage earners and retirees alike: more money stays in your pocket at the state level. But the trade-offs in property taxes, sales taxes, and cost of living mean the true winner depends on your personal spending profile. For a middle-income retiree in Florida, the high insurance costs may cancel out the income-tax savings. For a remote worker in Tennessee, the math often works beautifully. The choice is clear: run your own numbers before you move — or stay put and use the savings to invest.
Understanding how federal income tax brackets interact with state tax policies is crucial, and the 2026 federal income tax brackets show how inflation adjustments affect your overall tax burden.
Frequently asked questions
Does Florida have no income tax?
Yes, Florida has no state individual income tax — on wages, retirement income, or investment income. This makes it a popular destination for retirees.
Is Texas really tax-free?
Texas has no state income tax, but it has relatively high property taxes (average 1.6%) and sales taxes up to 8.25% in some areas. So “tax-free” only applies to income tax.
What is the sales tax rate in Nevada?
Nevada’s state sales tax is 6.85%, but local jurisdictions can add up to 1.25%, making the total as high as 8.265%.
Are there any states with no income tax and no property tax?
No. All states except some territories impose property taxes. Among no-income-tax states, Wyoming has the lowest effective property tax rate (0.58%).
How do states without income tax generate revenue?
They rely on sales taxes, property taxes, excise taxes (fuel, alcohol, tobacco), tourism, natural resource royalties (Alaska), and federal transfers.
Which state with no income tax is best for families?
Tennessee and South Dakota offer low cost of living, good schools, and no income tax. Texas has strong job markets but high property taxes.
Do no-income-tax states have higher car registration fees?
Some do. Texas and Washington have higher-than-average registration and vehicle taxes, while Wyoming and South Dakota are cheaper.