Nine states collect no income tax on wages or salaries

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire do not tax income from wages or salaries. This means if you work in one of these states, your paycheck is not subject to a state income tax, though you still owe federal income tax to the IRS.

New Hampshire is a partial exception: it taxes interest and dividend income but not wages. The other eight states tax neither wages nor investment income. If you move to one of these states or are considering a job there, understanding how they replace that lost tax revenue matters for your overall tax picture.

No state income tax does not mean no state taxes. These states fund schools, roads, and services through sales tax, property tax, excise tax on specific goods, and business taxes. Your total tax burden depends on where you live, what you buy, and what you own—not just on income tax alone.

Key Takeaways

  • Nine states impose no income tax on wages: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes investment income only).
  • States without income tax typically rely on higher sales taxes, property taxes, and excise taxes to fund government services.
  • Moving to a no-income-tax state does not lower your federal tax bill, which applies everywhere in the United States.
  • Your actual tax burden depends on your income type, spending habits, and property ownership, not income tax rate alone.
  • If you work remotely for a company in another state, you may owe income tax to your home state even if you live in a no-income-tax state.

How no-income-tax states replace that revenue

States without income tax make up the difference through other taxes. Sales tax is the most visible: Tennessee, Washington, and Louisiana have the highest state sales taxes in the country, ranging from 7 to 9.5 percent depending on the county. Alaska and New Hampshire have no state sales tax, but they offset this with higher property taxes and business taxes.

Property tax varies widely. Texas and Florida have moderate property tax rates, which is one reason they attract retirees. Wyoming has low property tax. New Hampshire's property tax is among the highest in the nation because it has neither income tax nor sales tax.

Excise taxes on gasoline, cigarettes, and alcohol are another source. Alaska and Washington both tax fuel heavily. Some states also tax business income, corporate profits, or specific industries like oil and gas extraction.

The point: a state with no income tax is not necessarily a state with low overall taxes. A high earner in Texas might pay less total tax than in California, but a low-income person who spends most of their money on goods might pay more in sales tax than they would have paid in income tax elsewhere.

Remote work and state income tax obligations

If you live in a no-income-tax state but work remotely for a company based in another state, the rules depend on where your employer is located and where you live. Most states tax income earned by residents, regardless of where the employer sits. If you are a resident of Florida and work remotely for a New York company, Florida does not tax you—but New York might.

The key question is your state of residence. If you move to Florida and change your driver's license, voter registration, and mailing address, you establish residency there. Your employer may need to update your W-4 form to reflect your new state, and you will owe taxes to Florida (none) instead of your old state.

If you are still considered a resident of your old state—because you kept a home there, did not update your address, or the state has other ties to you—you may owe income tax to both states. Some states offer a credit for taxes paid to another state to avoid double taxation, but the rules vary. If you are planning a move and work remotely, contact your state tax authority or a tax professional before the move to understand your obligations.

Retirement income and investment income in no-income-tax states

Most no-income-tax states also do not tax retirement income like Social Security, pensions, or distributions from IRAs and 401(k)s. This is a major draw for retirees. If you retire in Florida or Texas, your pension and Social Security are not subject to state income tax.

The exception is New Hampshire, which taxes interest and dividend income but not wages or retirement income. If you have significant investment income and are considering New Hampshire, you will owe state tax on that income even though wages are untaxed.

Alaska and Nevada also do not tax investment income, making them attractive for people with substantial savings or rental property income. However, you still owe federal tax on all of this income, and you may owe property tax or other state taxes depending on the state.

Federal taxes are the same everywhere

Moving to a no-income-tax state does not change your federal income tax. You still file a federal return with the IRS and owe the same federal tax rate as someone in California or New York. The federal tax brackets, standard deduction, and tax credits explore to all fifty states.

The benefit of a no-income-tax state is only the state portion. If your federal tax bill is $5,000 and you would have owed $2,000 in state income tax in your old state, moving to a no-income-tax state saves you that $2,000—but only if you do not end up paying it in sales tax, property tax, or other state taxes instead.

Comparing total tax burden across states

To know whether a no-income-tax state is actually cheaper for you, compare your total state tax burden, not just income tax. A useful starting point is your state's tax foundation or revenue department website, which publishes tax rates for income, sales, and property tax.

Consider your personal situation: If you earn $80,000 a year, spend $30,000 on taxable goods, and own a home worth $250,000, your tax bill will look different in Texas than in Tennessee, even though both have no income tax. Texas has lower property tax; Tennessee has higher sales tax. Your actual bill depends on the mix.

If you are retired and living on Social Security and a pension, a no-income-tax state is almost always cheaper than a state that taxes retirement income. If you are a high earner with significant investment income, the comparison is more complex and may benefit from a conversation with a tax professional who knows both states' rules.

How to verify your state's tax status

Your state's department of revenue or tax authority publishes current tax rates and rules. The IRS also maintains a list of state tax agencies on its website. If you are moving or considering a move, start there rather than relying on general information, because tax laws change and edge cases vary by situation.

If you are self-employed or have income from multiple sources, a tax professional in your new state can walk you through what you owe. Many offer a free initial consultation and can answer questions about residency, remote work, and how your specific income will be taxed.

Frequently Asked Questions

Do I have to move to a no-income-tax state to benefit from it?

You must establish residency in the state. This typically means updating your driver's license, voter registration, and mailing address, and spending more time there than in any other state. straightforward owning property or working there is not enough. If you keep your old state's driver's license and maintain a home there, you may still owe income tax to your old state.

If I work in a no-income-tax state but live in another state, do I owe income tax?

You owe income tax to your state of residence, not the state where you work. If you live in New York and work in Florida, you owe New York income tax. If you live in Florida and work in New York, you owe Florida income tax (none). Your employer withholds based on where you live, not where the job is located.

Are property taxes higher in no-income-tax states?

It varies. Texas and Florida have moderate property taxes. New Hampshire has very high property taxes because it has no income tax and no sales tax. Alaska has low property taxes. Compare the specific state and county you are considering, not the state category.

Does Social Security count as income in no-income-tax states?

No. All nine no-income-tax states do not tax Social Security benefits. This is one reason they are popular with retirees. You still owe federal tax on Social Security if your combined income exceeds certain thresholds, but state tax is not owed.

What if I move mid-year—which state do I owe taxes to?

You owe income tax to the state where you were a resident for each day of the year. If you moved from New York to Florida on July 1, you owe New York income tax for January through June and Florida income tax (none) for July through December. Your employer will need to adjust your withholding when you move. File a part-year resident return in both states.