The 9 States with No Income Tax: Pros and Cons

Nine U.S. states have no state income tax, which can mean thousands of dollars in savings annually. But is moving to one of these states always the best financial decision?

The No-Income-Tax States

• Alaska - Also pays residents an annual dividend
• Florida - Popular with retirees
• Nevada - Relies heavily on tourism taxes
• New Hampshire - No income tax but taxes investment income
• South Dakota - Low overall tax burden
• Tennessee - Recently eliminated tax on investment income
• Texas - Second-largest economy in the U.S.
• Washington - High sales tax compensates
• Wyoming - Lowest population density

The Pros

• More take-home pay from your salary
• Simplified tax filing
• Attractive for high earners
• No need to track state tax deductions

The Cons

• Higher sales taxes (often 7-9%)
• Higher property taxes in some states
• Fewer public services in some areas
• Other fees and taxes may be higher

Who Benefits Most?

High-income earners typically benefit most from living in no-income-tax states. If you earn over $100,000 annually, the savings can be substantial. However, if you're a lower-income earner, high sales taxes might offset any benefits.

Making the Decision

Consider the total tax burden, not just income tax. Factor in sales tax, property tax, and the cost of living. Use our calculator to compare your take-home pay across different states.