Income tax is one of the biggest deductions from most paychecks. But not all states take a cut. Some states let residents keep more of their income. These are the states with no personal income tax.
Living in a no-income-tax state can change your financial life. You might afford more or save faster. While you’ll still pay other taxes, avoiding income tax gives a clear advantage.
Let’s explore the 9 states with no income tax. See how they make it work and what it means for people who live there.
Nevada
Why Nevada Doesn’t Take Your Paycheck
Nevada is famous for bright casinos, desert views, and no income tax. But how does it pull that off?
The state leans heavily on tourism. Las Vegas and Reno draw millions of visitors each year. These tourists spend money at casinos, hotels, and entertainment spots. That spending fuels the economy and replaces the need for personal income taxes.
Nevada also collects revenue from gaming and sales taxes. Businesses pay fees and taxes that help fill the state’s budget. That way, residents don’t carry the full tax burden.
The cost of living in Nevada varies. Las Vegas is affordable compared to other large cities. Some rural areas are even cheaper. Property taxes are also relatively low.
If you love dry climates and wide-open spaces, Nevada may be worth a closer look.
South Dakota
A Rural State With a Surprising Tax Advantage
South Dakota offers much more than Mount Rushmore. It’s also one of the most tax-friendly places in America.
The state collects no personal income tax. It also avoids corporate income tax, which draws many businesses. Financial and tech firms often choose South Dakota as their legal home.
Sales and property taxes help support public services. The economy relies on agriculture, tourism, and banking. It’s a unique mix that supports the state's financial health.
People in South Dakota enjoy a slower pace of life. Towns are quiet, and housing is affordable. Winters can be tough, but if you prefer calm surroundings and value your income, this state delivers.
Texas
Bigger Paychecks in the Lone Star State
Everything is bigger in Texas—including your take-home pay. That’s because the state doesn’t tax your income.
Instead, Texas makes up the difference with higher property taxes and sales tax. It also benefits from its oil and gas industries. These sectors pour money into the state economy.
Texas has large cities like Houston, Dallas, and Austin. Each offers jobs in tech, healthcare, and energy. The job market is strong, and the cost of living is reasonable in many areas.
Housing prices vary, but there’s no state income tax eating into your earnings. That makes it attractive for workers and retirees alike.
Florida
Sunshine and Tax Savings
Florida offers more than beaches and warm weather. It also offers a break from state income taxes.
Tourism powers Florida’s economy. Theme parks, cruise ports, and beaches draw visitors year-round. Sales taxes from tourists help keep the budget in balance.
The state also earns revenue through real estate taxes and fees. That allows residents to enjoy no income tax and a generally lower tax burden overall.
Florida attracts retirees for good reason. Social Security and pensions aren’t taxed. Combine that with sunshine, and it's easy to see why many move south.
While some areas like Miami are expensive, many towns offer affordable living. That mix of lifestyle and savings is hard to beat.
Alaska
Cold Weather, Warm Wallet
Alaska stands out for many reasons, and one of them is its tax system. Residents pay no state income tax.
Alaska goes even further. It also avoids state-level sales tax. Some local areas charge small taxes, but overall, it’s one of the lowest-tax states in the nation.
How does Alaska afford this? The state gets money from oil production. Revenue from natural resources supports government programs and services.
In fact, residents may receive an annual payment from the state’s oil wealth fund. That’s rare and makes Alaska unique.
Living here isn't for everyone. Winters are long, and distances between towns are great. But if you're seeking low taxes and natural beauty, Alaska delivers.
Tennessee
How Tennessee Became a No-Income-Tax State
Tennessee didn’t always offer a clean break from income taxes. It taxed interest and dividends until 2021. Now, it has fully eliminated income taxes.
The state collects money through sales tax, one of the highest in the country. It also taxes groceries, which few states do. Property taxes are modest, helping balance the overall tax picture.
Nashville and Memphis bring culture, music, and job opportunities. Smaller towns offer charm and lower costs. The state is popular among retirees and young professionals.
Tennessee offers a tax-friendly environment with a mix of urban life and nature. For many, it’s an appealing blend.
Wyoming
The Cowboy State Keeps It Simple
Wyoming offers wide-open spaces and no personal income tax. It’s a state known for its simple tax structure.
Energy production supports the budget. Coal, oil, and natural gas generate major revenue. This helps fund schools, roads, and public services.
Wyoming also avoids corporate income taxes. It’s a favorite among business owners looking for tax relief.
Living in Wyoming means dealing with cold winters and rural communities. But there’s plenty of peace, room to roam, and low taxes.
If you enjoy nature, privacy, and keeping more of your income, Wyoming may feel like home.
Washington
No Income Tax, But Watch Out for Others
Washington State does not collect income tax. However, it has some of the highest sales taxes in the country.
Seattle is a tech hub with giants like Amazon and Microsoft. The economy thrives, but the cost of living is high in urban areas.
Washington balances its budget through taxes on sales, property, and certain business activities. There is also a unique capital gains tax for high earners, passed in recent years.
Still, for most residents, avoiding state income tax is a win. If you work in tech or plan to retire, Washington can make financial sense—despite higher living costs.
New Hampshire
One of the Last Holdouts Against Income Tax
New Hampshire takes a slightly different approach. It doesn't tax earned income but used to tax interest and dividends. That tax is currently being phased out.
By 2027, no personal income will be taxed at all. That puts New Hampshire firmly on this list of no-income-tax states.
How does it survive? The state relies on property taxes and fees. Sales tax? There isn’t one at the state level.
New Hampshire offers scenic towns, good schools, and proximity to Boston. It attracts professionals and retirees alike. The winters are cold, but the tax savings are warm.
Conclusion
Living in one of the 9 states with no income tax can offer big benefits. You keep more of what you earn. These states use creative ways to support services without taxing your paycheck.
Of course, no system is perfect. Some have higher property taxes or sales taxes. Others rely on industries like tourism or oil. But if you value financial freedom, these states offer a solid path.
Want to pay less in taxes and enjoy a better quality of life? Consider making your next move to one of these tax-friendly states.
