Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

States With No Income Tax 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Nine states currently impose no individual income tax, making them popular destinations for workers, retirees, and business owners looking to keep more of their earnings. However, these states must generate revenue through other means — typically higher sales taxes, property taxes, or specialized business taxes. Understanding the trade-offs is essential before making a relocation decision based on income tax alone.

The 9 States With No Income Tax (2026)

State	Sales Tax (State)	Avg. Combined Sales Tax	Avg. Property Tax Rate	Other Notable Taxes
Alaska	None	~1.76% (local only)	~1.04%	Oil revenue, no state sales tax
Florida	~6.00%	~7.02%	~0.80%	None
Nevada	~6.85%	~8.23%	~0.53%	Commerce Tax, Modified Business Tax
New Hampshire	None	None	~1.57%	Interest/dividends tax repealed
South Dakota	~4.20%	~6.40%	~1.08%	None
Tennessee	~7.00%	~9.55%	~0.56%	None (Hall Tax repealed)
Texas	~6.25%	~8.20%	~1.60%	Franchise Tax on businesses
Washington	~6.50%	~9.29%	~0.84%	Capital gains tax (~7.00%)
Wyoming	~4.00%	~5.34%	~0.55%	Mineral severance taxes

How No-Income-Tax States Generate Revenue

Sales Tax

Most no-income-tax states rely heavily on sales tax. Tennessee and Washington have among the highest combined sales tax rates in the nation at ~9.55% and ~9.29% respectively. This disproportionately affects lower-income residents who spend a larger percentage of their income on taxable goods.

Property Tax

Texas stands out with an average effective property tax rate of ~1.60%, among the highest nationally. A ~$350,000 home in Texas generates approximately ~$5,600 in annual property taxes, which can exceed what many states collect in combined income and property taxes.

Natural Resource Revenue

Alaska and Wyoming fund a significant portion of their state budgets through oil and mineral severance taxes. Alaska’s Permanent Fund even distributes an annual dividend to residents (approximately ~$1,300 to ~$3,200 per person in recent years), effectively creating a negative tax rate for those who receive it.

Specialized Taxes

Washington: Enacted a ~7.00% tax on capital gains exceeding ~$270,000 in 2022, upheld by the state Supreme Court as an excise tax rather than an income tax
Nevada: The Commerce Tax applies to businesses with Nevada gross revenue over ~$4,000,000
Texas: The franchise (margin) tax applies to most business entities
New Hampshire: Previously taxed interest and dividend income, but repealed the Hall Tax effective January 1, 2025

Detailed State Profiles

Florida

Florida is the largest no-income-tax state by population and the most popular destination for retirees. It generates revenue primarily through sales tax (~6.00% state, ~7.02% average combined) and tourism-related taxes. Property taxes are moderate at ~0.80%, and the state has no estate or inheritance tax. The homestead exemption reduces property tax for primary residences by up to ~$50,000 of assessed value.

Texas

Texas compensates for no income tax with some of the highest property taxes in the nation (~1.60% average). The franchise tax applies to most business entities, and combined sales tax rates average ~8.20%. However, Texas offers significant property tax relief through homestead exemptions and over-65 freezes.

Washington

Washington relies on a ~6.50% state sales tax (averaging ~9.29% with local rates) plus the newer capital gains tax of ~7.00% on gains above ~$270,000. The state has no personal income tax on wages, making it attractive for high-wage earners. However, the business and occupation (B&O) tax applies to gross business receipts.

Nevada

Nevada funds its government through gaming taxes, sales taxes (~6.85% state rate), and the Commerce Tax on large businesses. Property taxes are comparatively low at ~0.53%. The state’s tax structure is particularly favorable for individuals without significant business revenue.

Comparison: No-Income-Tax States vs. Income-Tax States

Metric	No-Income-Tax State Avg.	Income-Tax State Avg.
Average combined sales tax	~7.23%	~6.84%
Average property tax rate	~0.95%	~1.12%
Overall tax burden (% of income)	~7.50%	~9.60%
Quality of public services index	Varies widely	Varies widely

On average, no-income-tax states have a lower overall tax burden, but the gap narrows for middle-income homeowners in states like Texas and New Hampshire where property taxes are high.

Tips for Evaluating No-Income-Tax States

Calculate your total tax burden. Use your actual income, spending, and property value to compare total taxes in your current state versus the no-income-tax state you are considering.
Consider your income level. No-income-tax states provide the greatest benefit to high-income earners. Lower-income residents may pay more through sales tax than they would in income tax elsewhere.
Factor in property taxes. If you plan to buy a home, high property tax states like Texas can offset income tax savings significantly.
Review business taxes. If you are self-employed or own a business, state franchise, B&O, or commerce taxes may apply even without an income tax.
Establish domicile properly. If leaving an income-tax state, maintain clear domicile documentation (voter registration, driver’s license, estate planning documents) in your new state to avoid continued taxation.
Evaluate public services. Some no-income-tax states have fewer public services, less funding for schools, or higher out-of-pocket costs for services funded by taxes elsewhere.
Monitor legislative changes. Some states are considering implementing income taxes, while others are eliminating theirs. Stay informed about pending legislation.

Key Takeaways

Nine states have no individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
These states compensate through higher sales taxes (Tennessee, Washington), property taxes (Texas, New Hampshire), or natural resource revenue (Alaska, Wyoming).
Washington’s ~7.00% capital gains tax applies to gains over ~$270,000, creating a partial exception.
New Hampshire fully repealed its interest and dividends tax, becoming a true zero-income-tax state.
The total tax burden in no-income-tax states averages ~7.50%, compared to ~9.60% in income-tax states.
High-income earners benefit most from no-income-tax states.

Next Steps

Federal Income Tax Guide 2026 — Federal taxes still apply regardless of your state.
State Income Tax Rates Comparison 2026 — Compare all 50 states’ income tax rates.
Tax Bracket Calculator — Model your tax savings from a state move.
Self-Employment Tax Guide — Business taxes in no-income-tax states.
Find a CPA Near You — Get professional help with multistate tax planning.