9 States With No Income Tax (2025 Complete Guide)

Nine US states do not levy a state income tax on earned wages, meaning residents keep more of each paycheck. But lower income taxes don't always mean a lower overall tax burden — these states typically make up the revenue through other taxes.

The 9 No-Income-Tax States

Pros of Living in a No-Income-Tax State

• Higher take-home pay: Without state income tax, you keep a larger portion of every paycheck. For a $75,000 salary, this could mean an extra $2,000 to $5,000 per year compared to a high-tax state.
• Simpler tax filing: No state income tax return to prepare, saving time and potentially reducing accountant fees.
• Attractive for retirees: Retirement income like Social Security, pensions, and 401(k) withdrawals are not taxed at the state level.
• Business-friendly: Many no-income-tax states also have favorable business tax climates, attracting employers and job growth.

Cons and Trade-Offs

• Higher sales taxes: Tennessee (7%) and Washington (6.5%) have some of the highest sales tax rates in the country, and local add-ons can push total rates above 10%.
• Higher property taxes: Texas is well-known for its high property tax rates, which average around 1.6% to 1.8% of property value — among the highest nationally.
• Regressive tax structure: Sales and property taxes tend to take a larger percentage of income from lower earners compared to a progressive income tax.
• Potentially fewer public services: Some no-income-tax states spend less per capita on education, infrastructure, and social services.
• Cost of living varies: States like Florida and Texas have rapidly rising housing costs that may offset tax savings.

How These States Fund Their Budgets

Without income tax revenue, these states rely on alternative sources:

• Sales tax: The most common replacement. Most no-income-tax states have above-average sales tax rates.
• Property tax: A major revenue source, especially in Texas, New Hampshire, and Alaska (at the local level).
• Natural resources: Alaska, Wyoming, and to some extent Texas benefit from oil, gas, and mineral extraction taxes.
• Tourism and gaming: Nevada and Florida collect significant revenue from tourists through hotel taxes, gaming taxes, and entertainment taxes.
• Corporate and business taxes: Some states impose franchise taxes or gross receipts taxes on businesses instead.

Should You Move to a No-Income-Tax State?

The answer depends on your full financial picture. Consider your total tax burden — including property taxes, sales taxes, and cost of living — not just income tax alone. A state with a moderate income tax and low property taxes might leave you better off than a no-income-tax state with high property and sales taxes.

Use our state-specific paycheck calculators to compare your take-home pay across different states and make an informed decision.