What states have no income tax in 2026?
Nine U.S. states don't tax personal income. Here's which ones, how they compare on other taxes, and what to consider before making a move.
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Key takeaways
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Residents keep more of their paychecks, and retirement income is fully exempt from state taxes.
These states still need revenue. Some compensate with higher sales taxes (Tennessee, Nevada), others with higher property taxes (Texas, New Hampshire), and Washington now taxes capital gains at up to 9.9%.
Your income sources, spending patterns, homeownership plans, and lifestyle goals all affect whether a no-income-tax state actually saves you money.
The nine states with no income tax
As of 2026, these nine states do not impose any personal income tax on wages, salaries, or earned income:
State | Sales tax (state rate) | Avg combined sales tax | Effective property tax rate | Capital gains tax | Estate / inheritance tax |
Alaska | None | ~1-7% (local only) | 0.95% | None | None |
Florida | 6.00% | ~6.98% | 0.78% | None | None |
Nevada | 6.85% | ~8.24% | 0.50% | None | None |
New Hampshire | None | None | 1.50% | None | None |
South Dakota | 4.20% | ~6.11% | 1.0% | None | None |
Tennessee | 7.00% | ~9.61% | 0.52% | None | None |
Texas | 6.25% | ~8.20% | 1.40% | None | None |
Washington | 6.50% | ~9.51% | 0.75% | 7%–9.9% | Estate tax applies |
Wyoming | 4.00% | ~5.56% | 0.53% | None | None |
A note on Washington: While Washington currently has no general personal income tax on wages, it does impose an excise tax on long-term capital gains. As of tax year 2025 (with taxes collected in 2026), this tax applies a 7% rate to gains exceeding a high standard deduction of $278,000 (which is indexed annually for inflation), and a higher 9.9% rate on capital gains in excess of $1 million. Additionally, a new 9.9% personal income tax specifically targeting household income over $1 million was signed into law in March 2026 and is scheduled to take effect on January 1, 2028. Washington is also one of the few states without a broad income tax that imposes a state-level estate tax.
How do these states fund public services?
Without income tax revenue, these states rely on other sources to fund schools, roads, public safety, and infrastructure. The approach varies, and it shapes what residents pay in practice.
Sales and consumption taxes. Tennessee, Washington, and Nevada have some of the highest combined sales tax rates in the country. Texas is also above the national average. If you spend heavily on taxable goods and services, these costs add up, especially on a fixed budget in retirement.
Property taxes. Texas and New Hampshire are among the highest property tax states in the country, even compared to states that do collect income tax. On a $400,000 home in New Hampshire, you could pay roughly $6,000 per year in property taxes. In Wyoming, that same home would cost about $2,120. For homeowners, this difference can outweigh the income tax savings.
Natural resource revenue. Alaska (oil and gas), Wyoming (coal, natural gas, oil), and to a lesser extent Texas and South Dakota, benefit from severance taxes on resource extraction. Alaska goes further, as it distributes part of its oil revenue directly to residents through the annual Permanent Fund Dividend.
Tourism and gaming. Florida and Nevada generate substantial revenue from tourism, entertainment, and gaming industries, which reduces the tax burden on residents.
No sales tax at all. New Hampshire and Alaska are unusual in having neither income tax nor statewide sales tax. New Hampshire funds its operations primarily through property taxes and business taxes. Alaska relies on resource revenue and allows local governments to levy their own sales taxes, which can reach 7% or more in some communities.
What does no income tax mean for retirees?
States with no income tax are especially attractive for retirees because the exemption applies to all income sources, not just wages. That means no state tax on:
Pension and annuity income
Dividends and interest income
For a retiree withdrawing $60,000 per year from retirement accounts, living in a no-income-tax state versus one with a 5% rate means keeping an extra $3,000 per year — or $75,000 over a 25-year retirement.
Federal income taxes still apply regardless of where you live. For more on how specific states treat retirement income, see our guide to the best states to retire for taxes.
What to weigh before moving to a no-income-tax state
Skipping state income tax is a real financial advantage, but it's worth looking at the full picture before relocating.
Here are four factors to consider:
Your total tax burden. Add up what you'd pay in income tax, property tax, sales tax, and any applicable capital gains or estate taxes. A state with no income tax but 9.5% sales tax and 1.5% property tax may cost you more overall than a state with a moderate income tax and lower rates on everything else.
Cost of living. Housing, healthcare, utilities, and everyday expenses vary widely. Washington and Nevada have expensive metro areas like Seattle and Las Vegas. Florida's housing costs have risen sharply. South Dakota and Wyoming are more affordable, but offer fewer urban amenities.
Public services. States that collect less in taxes may spend less on schools, transportation, and social services. This trade-off may not matter to everyone, but it's worth considering if you rely on public healthcare, have school-age children, or value strong public infrastructure.
Interest and investment income. If a meaningful portion of your income comes from savings interest, dividends, or capital gains, confirm how the state treats each one. Eight of the nine no-income-tax states impose no capital gains or dividends tax. Washington is the exception, with a graduated capital gains tax.
Bottom line
Living in a state with no income tax is a meaningful financial advantage, especially for retirees, high earners, and anyone drawing significantly from retirement accounts. But the advantage varies depending on your income sources, your housing situation, and how much you spend on taxable goods.
The nine no-income-tax states each make up the revenue differently — some through sales tax, others through property tax, and a few through natural resource wealth. Looking at the full tax picture, not just the income tax line, helps you understand what you'd actually pay.
If you're looking to grow your savings at a competitive rate, Raisin gives you access to high-yield savings accounts, CDs, and money market accounts across multiple federally insured banks and credit unions, all from a single account.
FAQs about income-tax-free states
Do I still pay federal taxes if I live in a no-income-tax state?
Yes, you still need to pay federal taxes if you live in a state with no income taxes. The IRS still requires you to file and pay federal income tax based on your total income, regardless of where you live. You'll also still owe Social Security and Medicare (FICA) contributions.
Which no-income-tax states also have no capital gains or dividends tax?
Eight of the nine: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, New Hampshire, and Wyoming impose no tax on capital gains or dividends. New Hampshire repealed its tax on interest and dividends in 2025. Washington is the only no-income-tax state that taxes capital gains.
Is it worth moving to a no-income-tax state?
It depends on your full financial picture. If you have a high income or significant retirement withdrawals, the savings can be substantial. But states with no income tax often compensate with higher sales or property taxes, and cost of living varies widely. Climate, healthcare access, proximity to family, and quality of public services all factor into whether a move makes sense.
How do sales and property taxes compare across no-income-tax states?
Sales and property taxes vary significantly across no-income-tax states.
Tennessee and Washington have the highest combined sales tax rates (9.5%+)
New Hampshire and Alaska have no statewide sales tax
For property taxes, New Hampshire and Texas are among the highest in the country, while Nevada and Wyoming are well below the national average.
The right comparison depends on whether you plan to own or rent and how much you spend on taxable goods.
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