Quick Answer
Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire taxes only interest and dividend income above $2,400 (single) or $4,800 (married filing jointly). These states save residents an average of $3,000-8,000 annually compared to high-tax states.
Best Answer
Robert Kim, Tax Return Analyst
People considering relocation or establishing residency in low-tax states for tax savings
The 9 states with no income tax
Nine states impose no state income tax on wages, salaries, or business income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. However, each has unique characteristics that affect your overall tax burden.
Complete state-by-state breakdown
Real savings examples
Example 1: $100,000 salary comparison
Example 2: $250,000 household income
Important caveats and hidden costs
New Hampshire's interest and dividend tax:
While NH has no tax on wages, it taxes investment income above $2,400 (single) or $4,800 (married) at 5%. For retirees with significant investment portfolios, this can add up:
Higher property and sales taxes:
No-income-tax states often compensate with higher other taxes:
State revenue alternatives
Who benefits most from no-income-tax states
Residency requirements and establishment
Establishing residency isn't automatic. You must:
1. Spend majority of year in the new state (183+ days)
2. Register to vote in the new state
3. Get driver's license within required timeframe
4. File tax return as resident of new state
5. Establish financial ties (banks, investment accounts)
6. Document intent to make permanent change
Warning: High-tax states aggressively audit residency changes. California, New York, and other states may challenge your move years later.
What you should do
1. Calculate total tax impact including income, property, and sales taxes
2. Consider cost of living differences beyond just taxes
3. Plan the residency change carefully with proper documentation
4. Consult with professionals before making major moves
Use our refund estimator to calculate potential savings from relocating to a no-income-tax state.
Key takeaway: The 9 no-income-tax states can save high earners $10,000-20,000+ annually, but consider total tax burden including property and sales taxes when choosing your residence.
*Sources: [Tax Foundation State Tax Rankings](https://taxfoundation.org/), [IRS Publication 17](https://www.irs.gov/pub/irs-pdf/p17.pdf)*
Key Takeaway: The 9 no-income-tax states can save high earners $10,000-20,000+ annually, but consider total tax burden including property and sales taxes when choosing your residence.
Tax savings comparison: No-income-tax states vs. high-tax states
| Income Level | California Tax | Texas/Florida Tax | Annual Savings | 10-Year Savings |
|---|---|---|---|---|
| $50,000 | $1,575 | $0 | $1,575 | $15,750 |
| $100,000 | $4,650 | $0 | $4,650 | $46,500 |
| $200,000 | $11,900 | $0 | $11,900 | $119,000 |
| $500,000 | $34,500 | $0 | $34,500 | $345,000 |
More Perspectives
Michelle Woodard, Tax Policy Analyst
People who recently relocated to or from no-income-tax states and need to understand filing requirements
Filing requirements when moving to/from no-income-tax states
Moving between states with different tax structures creates complex filing obligations. You may need to file part-year resident returns in multiple states and prove your residency change is legitimate.
Example: Mid-year move from California to Texas
Software engineer earning $120,000 annually moves from California to Texas on July 1st:
California obligations:
Texas obligations:
Common filing mistakes after moving
1. Filing full-year nonresident returns: Don't file as nonresident for entire year if you were ever a resident
2. Missing reciprocity benefits: Some states have agreements that prevent double taxation
3. Incorrect apportionment: Income must be properly allocated to each state
4. Forgetting estimated payments: May owe penalties if quarterly payments weren't adjusted
Establishing residency in no-income-tax states
High-tax states scrutinize moves to no-tax states. Document your change thoroughly:
Proper documentation prevents costly audits and ensures you receive the full tax benefit of your move.
Key takeaway: Moving to no-income-tax states requires careful part-year filing and thorough residency documentation to maximize savings and avoid audits.
Key Takeaway: Moving to no-income-tax states requires careful part-year filing and thorough residency documentation to maximize savings and avoid audits.
Robert Kim, Tax Return Analyst
People who live in no-income-tax states but earn income from other states that may still be taxable
Multi-state income complications for no-tax-state residents
Living in a no-income-tax state doesn't automatically eliminate all state tax obligations. States can still tax income earned within their borders, even for nonresidents.
Common multi-state scenarios
Scenario 1: Texas resident working remotely for New York company
Scenario 2: Florida resident with rental property in California
Scenario 3: Nevada resident with business clients nationwide
Source-based taxation rules
States can tax income "sourced" to their state:
Planning tip: Structure investments and business activities to minimize source-based taxation in high-tax states while maintaining your no-income-tax state residency.
Key takeaway: No-income-tax state residents may still owe taxes to other states on income earned there, but proper planning can minimize these obligations.
Key Takeaway: No-income-tax state residents may still owe taxes to other states on income earned there, but proper planning can minimize these obligations.
Sources
- Tax Foundation State Tax Rankings — Comprehensive analysis of state tax policies and burdens
- IRS Publication 17 — Federal tax guidelines including state tax deduction rules
Reviewed by Robert Kim, Tax Return Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.