9 US states with no income tax: full list & expat guide
Nine US states do not tax individual wage income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For US citizens and green card holders moving abroad, choosing one of these states with no income tax as your domicile before departure can stop your old state from continuing to tax your foreign income for years after you've left.
This guide walks through each state's actual tax picture for 2025–2026, the trade-offs you'll face on sales tax and property tax, and the expat-specific issue most articles miss: "sticky states" that don't let you leave.
Key takeaways
- Nine states now have zero tax on wage income, including Tennessee (Hall Tax phased out in 2021) and New Hampshire (Interest & Dividends Tax fully repealed as of January 1, 2025).
- "No income tax" usually means higher sales or property tax. Total burden is what matters.
- Washington taxes taxable long-term capital gains at 7% after the 2025 standard deduction of $278,000, and taxable gains above $1 million are taxed at 9.9%.
- For expats: establishing domicile in a non-sticky state before going abroad can save thousands in state tax over a multi-year move.
If you've moved abroad and are unsure whether your old state still considers you a resident, our guide to whether expats have to pay state taxes covers the rules state by state.
9 states at a glance: comparison table
Among the nine states without income tax, sales tax ranges from 0% in New Hampshire to 9.61% combined in Tennessee, and effective property tax ranges from roughly 0.50%–0.53% in the lowest states up to roughly 1.40%–1.50% in Texas and New Hampshire.
Below is a complete list of states with no state income tax and how they compare on sales and property taxes.
| State | Income tax | Avg combined sales tax | Effective property tax | Expat status |
|---|---|---|---|---|
| Alaska | 0% | 1.82% | 0.94% | Non-sticky |
| Florida | 0% | 7.02% | 0.78% | Non-sticky |
| Nevada | 0% | 8.24% | 0.50% | Non-sticky |
| New Hampshire | 0% (full repeal Jan 1, 2025) | 0.00% | 1.50% | Non-sticky |
| South Dakota | 0% | 6.11% | 1.17% | Non-sticky |
| Tennessee | 0% | 9.61% | 0.52% | Non-sticky |
| Texas | 0% | 8.19% | 1.40% | Non-sticky |
| Washington | 0% on wages (7%–9.9% on capital gains) | 9.51% | 0.75% | Mostly non-sticky |
| Wyoming | 0% | 5.36% | 0.53% | Non-sticky |
Sales tax figures reflect Tax Foundation population-weighted combined state and average local rates as of July 1, 2025 (published in the 2026 State & Local Sales Tax Rates report). Property tax figures reflect Tax Foundation effective property tax rates from the latest available 2026 state tax data.
"Non-sticky" means the state does not aggressively pursue former residents who establish domicile elsewhere; "sticky" states may continue asserting residency unless domicile is clearly broken.
Alaska
Alaska has no state income tax, no state-level sales tax, and pays residents an annual Permanent Fund Dividend. The trade-off is one of the highest costs of living in the country.
The 2025 Permanent Fund Dividend is $1,000, and it is reported as taxable income for federal purposes. Local sales taxes apply in many boroughs and can push the combined rate above 7% in some communities, though the population-weighted state average is the lowest in the nation at 1.82%.
Effective property tax sits around 0.94% statewide. Alaska's corporate income tax tops out at 9.4%, which matters if you're moving a business rather than just yourself.
Florida
Florida has no individual income tax or estate tax, a 7.02% average combined sales-tax rate, and an effective property-tax rate of about 0.78%. The "no income tax" benefit has narrowed for many residents since 2024 because of sharply higher home insurance premiums and rising property assessments.
What's changed since those figures were set is what sits on top of property tax: Florida homeowners' insurance has been among the most expensive in the country, and many counties have reassessed property values aggressively since 2022.
For a Florida retiree on a fixed income, those two line items can erase a meaningful share of the federal-and-state savings on IRA or 401(k) withdrawals.
TFX client scenario: A retiree relocating from New York to Florida eliminated state income tax on $90,000 of pension and IRA distributions, saving roughly $5,400 a year at New York's typical effective rate. Higher Florida property tax and insurance offset about $3,200 of that, leaving a net annual benefit of roughly $2,200 – real, but smaller than the headline 0% rate suggests.
Nevada
Nevada has no individual or corporate income tax, and no estate or inheritance tax. The state has an 8.24% average combined sales-tax rate and an effective property-tax rate of about 0.50%. It remains the leading destination for residents leaving California, particularly remote workers in tech and finance.
Nevada's sales tax is one of the higher rates in the country, but effective property tax is just 0.50% – roughly a third of Texas's rate, which matters if you're buying a higher-value home.
Nevada's Commerce Tax applies only to businesses with Nevada-sourced gross revenue above $4 million, so most individuals and small businesses never see it. A modified business tax on wages also applies to employers.
New Hampshire
New Hampshire fully repealed its Interest & Dividends Tax as of January 1, 2025, making it a true zero-income-tax state on all forms of personal income. It is also one of only two income tax-free states in the USA with no general sales tax – the other being Alaska.
The trade-off shows up in property tax. New Hampshire's effective property tax rate is roughly 1.50% – among the four or five highest in the country – because the state relies heavily on local property tax in place of broader income and sales tax. Business profits and business enterprise taxes still apply to companies operating in the state.
South Dakota
South Dakota has no individual or corporate income tax and no inheritance or estate tax. Beyond tourism and agriculture, the state has built a substantial reputation as a domestic-asset-protection trust jurisdiction.
Combined sales tax averages 6.11%, and effective property tax sits around 1.17%. High-net-worth individuals form South Dakota trusts to take advantage of strong asset-protection statutes, dynasty-trust rules, and the absence of any state income tax on trust income – a combination few other states match.
This is why South Dakota's tax footprint matters disproportionately to the wealth-planning world.
Tennessee
Tennessee fully eliminated its Hall Tax on interest and dividends in 2021, leaving it with no tax on any form of personal income. It has a 9.61% average combined sales-tax rate, an effective property-tax rate of about 0.52%, and no estate tax. The trade-off is the second-highest combined sales tax in the country.
Tennessee's sales tax trails only Louisiana among all US states. For a retiree spending $40,000 a year on taxable goods, the sales tax bite runs roughly $3,800 annually – something to weigh against the income-tax savings on Social Security, pensions, and IRA distributions, all of which Tennessee leaves untouched at the state level.
Texas
Texas has no individual income tax, an average combined sales-tax rate of about 8.2%, and an effective property-tax rate of about 1.40%.
The franchise-tax no-tax-due threshold is $2.47 million for 2025 reports and $2.65 million for 2026 reports, so many small businesses and sole-owner structures will not owe franchise tax, though reporting rules can still apply. The savings depend almost entirely on whether you rent or own – and on how much house you buy.
Property tax runs well above the statewide average in many large counties. Texas funds a substantial share of its government through property tax and energy-sector revenue rather than income tax.
TFX client scenario: A software engineer moving from California to Austin eliminated state income tax on $220,000 of wages, saving roughly $17,500 a year at California's marginal rate. Property tax on a $650,000 Austin home ran about $11,500 annually – meaningful, but net savings still landed near $6,000 a year, plus the elimination of California's tax on RSU vesting.
Washington
Washington has no wage income tax, a 9.51% average combined sales-tax rate, an effective property-tax rate of about 0.75%, and a 7% long-term capital-gains tax on taxable gains after the $278,000 standard deduction, rising to 9.9% above $1 million. Expats with significant investment portfolios need to read this carefully.
Real estate sales and gains inside retirement accounts are exempt from the capital-gains tax. Businesses pay a B&O tax on gross receipts rather than on profit, which can hit unprofitable companies hard.
Wyoming
Wyoming has no individual or corporate income tax, an average combined sales-tax rate of about 5.36%, and an effective property-tax rate of about 0.53% – one of the lowest among the nine zero state income tax states. The Tax Foundation has consistently ranked Wyoming first on its State Tax Competitiveness Index in 2024 and 2025.
Wyoming's third-lowest sales tax among the nine still funds the state heavily through severance taxes on mineral extraction. The state's LLC and trust statutes are also attractive to remote business owners and investors, which is why so many out-of-state holding entities are formed there.
The pros and cons of living in a no-tax state
A state with no income tax raises your take-home pay on wages and shelters your retirement distributions from state tax, but it almost always shifts the burden elsewhere. The best state with no income tax for you depends on what kind of income you have and how you spend it.
Pros
- Higher take-home pay on wages and self-employment income.
- Retirement-friendly: pensions, IRA, 401(k), and Social Security distributions are not taxed at the state level.
- Simpler filing – no state return for residents (you still file federally).
- For expats: a clean break from state residency once domicile is properly established.
Cons
- Higher sales tax in Tennessee (9.61%), Washington (9.51%), and Nevada (8.24%).
- Higher property tax in Texas (~1.40%) and New Hampshire (~1.50%).
- Public service trade-offs in education, transit, and infrastructure funding vary by state.
- Washington's capital gains tax can offset much of the wage-tax savings for investors.
State tax traps for expats: the sticky states
Some states presume you remain a resident until you affirmatively prove otherwise. California, Virginia, New Mexico, and South Carolina are the four most aggressive in this regard, and we see expat clients tangled in their residency rules every year.
A "sticky state" is a state whose tax authority continues to treat you as a resident – and tax your worldwide income – even after you've moved abroad, unless you've taken specific steps to break domicile.
These states look at facts such as where your driver's license was issued, where you are registered to vote, where your real estate sits, where your immediate family lives, and whether you have stated an intent to return.
California is the most aggressive of the four. The Franchise Tax Board has been known to assert residency over taxpayers who moved abroad but kept a California driver's license, a brokerage statement going to a California address, and a US house they rent out.
Foreign earned income exclusion at the federal level does not protect you – California does not conform to the FEIE, so any income you exclude federally is still on the table for California tax purposes.
California's residency rules are the strictest in the country – our article on whether California expats can ever leave tax-wise walks through what it actually takes to break ties.
Domicile vs. residency
Residency is where you physically live; domicile is the one place you intend as your permanent home. For state tax, domicile is what controls – and you only have one at a time.
You can be a physical resident in Portugal for two years and still be domiciled in California if you haven't taken the affirmative steps to establish domicile somewhere else. This is the trap most expats walk into: they assume that leaving is enough. It isn't. Sticky states require you to establish a new domicile, not just be absent.
How you establish domicile in a no-tax state before moving abroad:
- Spend enough real time in the new state to show it is your home, and document the move with dated records like leases, utility bills, and travel logs.
- Change your driver's license to the new state.
- Register to vote in the new state and cancel registration in the old.
- Update your address with the IRS, your bank, your brokerage, and the Social Security Administration.
- Buy or lease a home in the new state, or maintain a long-term lease.
- File a part-year resident return in the old state and a full-year non-resident return going forward.
- Sever as many ties to the old state as practical – sell or rent out real estate, close local bank accounts, cancel club memberships.
Retirement planning: states that won't tax your pension or 401(k)
All nine states without income tax automatically exempt Social Security, pensions, IRA, and 401(k) distributions, because they don't tax any individual income. Several other states tax wages but specifically exempt retirement income, which is worth knowing if your move is driven by family or climate rather than tax alone.
States that fully or partially exempt retirement income while still taxing wages include:
- Illinois – exempts most qualified retirement plan distributions, IRAs, and Social Security.
- Mississippi – exempts qualified retirement income and Social Security.
- Pennsylvania – exempts qualified retirement income for residents 59½ and older, and all Social Security.
- Iowa – as of tax year 2023, Iowa exempts all qualifying retirement income (pensions, IRAs, 401(k)s, annuities) for residents age 55 and older.
- Alabama – exempts defined-benefit pension income; Social Security is also exempt.
- Hawaii – exempts employer-funded pension distributions.
For expats, the layered picture matters: your state may not tax your foreign pension, but the federal rules still apply. If you have a foreign pension, see how foreign pensions are taxed in the US before assuming a state exemption resolves the issue.
Current rate and exemption data across all 50 states is published in the Tax Foundation's state individual income tax rates for 2026.
Conclusion
Choosing among states with no income tax comes down to total tax burden (sales plus property plus, in Washington, capital gains) and, for expats, whether the state will let you leave cleanly. The headline 0% rate is the starting point, not the answer.
For anyone moving abroad, the strategic value of these nine states is in domicile, not just tax savings. A domicile in Florida, Nevada, Texas, or Wyoming, established with real facts before departure, prevents years of state-level fights that can cost more than the federal tax on the same income.
FAQ
Not always. States that don't tax income still collect revenue somewhere – the right comparison is total tax burden, which means income tax plus sales tax plus property tax plus, where applicable, capital gains and estate tax. A Texas homeowner with a $700,000 house pays more in property tax each year than a California renter pays in state income tax at moderate income levels. Run the numbers on your specific situation before assuming a no-income-tax move saves money.
By total state and local tax burden, Wyoming, Tennessee, and South Dakota typically rank as the cheapest tax free states in US. Wyoming combines a low property tax (~0.53%, third-lowest among the nine) with moderate sales tax (5.36%) and consistently tops the Tax Foundation's State Tax Competitiveness Index. South Dakota runs a close second for retirees. Tennessee is cheapest if you own a low-cost home but spend modestly on taxable goods, because of its high sales tax.
All nine no-income-tax states – Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming – exempt Social Security, pensions, IRA, and 401(k) distributions because they don't tax personal income at all. Illinois, Mississippi, and Pennsylvania fully exempt qualified retirement income while still taxing wages. Iowa exempts all qualifying retirement income for residents age 55 and older starting in tax year 2023. Several other states offer partial exemptions on specific pension types.
Sticky states are states that continue to treat you as a resident for income tax purposes after you've moved abroad, unless you've affirmatively broken domicile. California, Virginia, New Mexico, and South Carolina are the most aggressive. The consequence is that your foreign wages, foreign self-employment income, and even excluded FEIE income may still be taxed by your former state. Breaking domicile generally requires establishing a new permanent home somewhere else – not just leaving – and documenting that change with driver's license, voter registration, real estate, banking, and tax filings.
No. A virtual mailbox alone is not domicile. States look at facts and circumstances – where you actually live, work, vote, register vehicles, and maintain your life. A Florida mailbox attached to a person whose driver's license, voter registration, and rental property are all in California will not protect you from California tax. A virtual mailbox is a useful tool in a properly structured domicile change, not a substitute for one. Our guide to the best virtual mailbox for expats covers how to use one correctly.
Yes. For tax year 2025, Washington imposes a 7% tax on long-term capital gains above an inflation-adjusted standard deduction of $278,000 per filer, with an additional 2.9% surtax on gains over $1 million (a 9.9% top marginal rate). Real estate sales and gains inside retirement accounts are exempt. Short-term capital gains, interest, and dividends are not taxed by Washington. The capital gains tax is filed and paid through the Washington Department of Revenue.
The One Big Beautiful Bill Act, signed into law on July 4, 2025, created a federal additional deduction of $6,000 per eligible individual age 65 or older, available for tax years 2025 through 2028 ($12,000 for a married couple where both spouses qualify). The deduction phases out for modified adjusted gross income above $75,000 single or $150,000 joint, and disappears entirely above $175,000 single or $250,000 joint. This is a federal change and does not directly alter how states treat retirement income – but in a state that already exempts retirement income, the federal deduction is pure additional benefit on top of state-level savings.
For 2025, the highest top marginal state income tax rates are in California (13.3%), Hawaii (11%), and New York (10.9%), with New Jersey, Oregon, and Minnesota close behind. New Jersey has the highest effective property tax rate at roughly 2.23%, followed by Illinois at around 2.07% and Connecticut around 1.92%. Total state and local tax burden – which combines income, sales, and property tax – consistently puts New York, California, Hawaii, and New Jersey at the top.
