Nine states charge 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, salaries, or self-employment. If you live or work in one of these states, you will not owe state income tax on money you earn. New Hampshire is a partial exception — it taxes interest and dividend income but not wages.

The absence of income tax does not mean these states collect no revenue. Most fund schools, roads, and services through sales tax, property tax, corporate tax, or some combination. The tax burden straightforward falls on different sources. A state with no income tax may have a higher sales tax or property tax than a neighboring state that taxes income.

If you are considering a move or have recently relocated, knowing whether your new state taxes income affects how much of your paycheck you take home and how you file taxes each year.

Key Takeaways

  • Nine states impose no tax on wages or salaries: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes investment income but not wages).
  • States without income tax typically rely on sales tax, property tax, or corporate tax to fund government services, so your overall tax burden depends on where you spend and what you own.
  • If you move to a no-income-tax state mid-year, you may still owe income tax to your previous state for the months you lived there.
  • Federal income tax applies in all states regardless, so living in a no-income-tax state does not eliminate your federal tax filing requirement.

How income tax works in these nine states

In Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming, you receive your full paycheck without state income tax withheld. When you file federal taxes, you report your income to the IRS as usual, but you do not file a state income tax return because there is no state income tax to calculate.

New Hampshire requires a state tax return if you have interest or dividend income above a certain threshold, but wages are never taxed. If your income comes entirely from a job, you file only your federal return in New Hampshire.

The practical effect is straightforward: if you earn $50,000 in Tennessee, you keep the full $50,000 before federal withholding. In a state like California that taxes income, you would lose a percentage to state tax before federal withholding even begins.

What these states tax instead

No state survives on zero revenue. The nine no-income-tax states fund schools, highways, police, and courts through other sources. The mix varies by state.

Sales tax is the most visible alternative. Florida, Tennessee, Texas, and Washington have sales tax rates between 5 and 10 percent, depending on the county. Every time you buy groceries, gas, or clothing, you pay a small percentage to the state. Over a year, this adds up significantly for residents who spend heavily.

Property tax is another major source. Texas, for example, has no income tax but charges property tax to homeowners. If you own a house, you pay annually based on the home's assessed value. Renters do not pay property tax directly, but landlords pass the cost along in rent.

Corporate tax and taxes on specific activities — such as fuel taxes, hotel taxes, or gambling taxes — round out the revenue in these states. Alaska, which has significant oil revenue, also uses oil taxes and a sovereign wealth fund to support the state budget.

Moving to a no-income-tax state mid-year

If you relocate partway through the year, your tax situation becomes more complex. You typically owe income tax to your previous state for the months you lived there, even if you move to a no-income-tax state by December.

For example, if you lived in New York from January through June and then moved to Florida, you owe New York state income tax on the income you earned while living there. You file a part-year resident return with New York for those six months. Florida does not tax your income for the second half of the year.

Some states offer credits to prevent double taxation, but the rules vary. If you are planning a move, contact your current state's tax department to understand your obligations before you leave.

Federal income tax still applies everywhere

Living in a state with no income tax does not exempt you from federal income tax. The IRS collects federal tax in all 50 states. You must file a federal return and pay federal withholding based on your income, regardless of where you live.

The benefit of a no-income-tax state is that you avoid the state portion only. Your federal obligation remains the same as someone living in New York or California. If you are self-employed or have investment income, you still owe federal self-employment tax or capital gains tax.

How to verify your state's tax status

Your state's department of revenue or taxation website lists the current tax rates and rules. If you are unsure whether your state taxes income, search "[your state] income tax" and look for the official state government site.

If you have recently moved or are planning to move, contact the tax department of both your old and new state. They can tell you what forms you need to file and when. Many states offer free phone support during tax season to answer questions about residency and filing requirements.

If you are self-employed or have complex income, a tax professional in your state can walk you through the specific rules that explore to your situation.

Frequently Asked Questions

Do I still have to file taxes if I live in a no-income-tax state?

Yes, you must file federal taxes with the IRS. You do not file a state income tax return in the nine no-income-tax states, but federal filing is required for all residents. If you have self-employment income or investment income, you may also owe federal self-employment tax or capital gains tax.

Is the cost of living lower in no-income-tax states?

Not necessarily. While you save on income tax, you may pay more in sales tax or property tax. Texas has no income tax but high property taxes in many areas. The overall cost of living depends on your spending habits and whether you own property. Compare the specific taxes you would pay in each state before deciding.

Can I claim residency in a no-income-tax state if I work remotely?

Possibly, but the rules are strict. Most states require you to actually live there, not just claim it for tax purposes. If you work remotely for a company in another state, that state may still tax your income depending on where your employer is located. Consult a tax professional before relocating for remote work.

What happens to my refund if I move states during the year?

You file a part-year resident return with your old state for the income earned while you lived there. Any refund from that state goes to the address you provide on the return. Your new state does not issue a refund because it does not tax income. File both returns to may support you receive any refunds owed.

Does New Hampshire really not tax wages?

Correct. New Hampshire taxes interest and dividend income, but wages and salaries are never taxed. If your income comes entirely from a job, you have no New Hampshire state tax liability. If you earn interest on savings or own stocks that pay dividends, you may owe New Hampshire tax on that income above a threshold.