9 States With No Income Tax—Should You Move There?
Moving to a state with no income tax sounds great, but is it really the financial jackpot it seems?
- Sophia Zapanta
- 4 min read
Ten U.S. states have no income tax, which can mean more money in your paycheck—but it’s not that simple. These states often make up for lost revenue through higher sales taxes, property taxes, or fewer public services. Before packing your bags, you need to weigh the full cost of living and the trade-offs involved.
1. Texas
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Texas keeps your paycheck intact, but it makes up for lost tax revenue with high property taxes. Homeowners often face hefty bills, making it one of the most expensive states for property owners. The booming economy and no income tax attract businesses and job seekers, but the housing market can be brutal. If you’re renting and earning well, Texas might be a smart financial move.
2. Florida
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Florida’s no-income-tax policy is a major draw, especially for retirees. However, the trade-off is a high cost of living in popular areas like Miami and Orlando. Sales and property taxes can also add up, making it less of a bargain than it seems. If you love sunshine, and beaches, and can handle the hurricane season, it might still be worth it.
3. Tennessee
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Tennessee officially became income-tax-free in 2021, removing taxes on investment income as well. But it has one of the highest sales tax rates in the U.S., making everyday purchases more expensive. The cost of living remains reasonable, especially outside of Nashville, which has seen rapid growth. If you’re looking for a balance between affordability and entertainment, Tennessee is a solid pick.
4. Nevada
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No income tax in Nevada is largely thanks to tourism and casino revenue. However, housing prices in cities like Las Vegas and Reno have climbed significantly in recent years. The desert climate means scorching summers, which can lead to high utility bills. If you can handle the heat and love an entertainment-filled lifestyle, Nevada has a lot to offer.
5. Washington
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Washington state skips the income tax but makes up for it with high sales taxes and rising housing costs. Seattle, in particular, is one of the most expensive cities in the U.S., though the state has a booming tech industry. The lack of a state income tax benefits high earners, but property owners may feel the pinch. If you don’t mind the rain and want access to high-paying jobs, Washington could be worth it.
6. South Dakota
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South Dakota offers a low cost of living and no income tax, making it attractive for retirees and small business owners. The state has strong economic sectors in finance and agriculture, but job opportunities can be limited outside these fields. Winters are brutal, with heavy snowfall and frigid temperatures, which isn’t for everyone. If you value wide-open spaces and a slower pace of life, South Dakota might be your ideal spot.
7. Wyoming
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Wyoming is one of the most tax-friendly states, with no income tax, low sales tax, and low property tax. However, it’s extremely rural, with few big cities and limited job opportunities outside of energy and agriculture. Harsh winters and long distances between towns make it less appealing for those used to urban living. If you love nature, low taxes, and don’t mind isolation, Wyoming is a great option.
8. Alaska
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Alaska not only has no income tax, but it also gives residents an annual check from its oil fund. The downside? The cost of living is high due to its remote location, with expensive groceries, utilities, and housing. The long, dark winters and cold temperatures aren’t for everyone, but if you love outdoor adventures, Alaska has incredible perks.
9. New Hampshire
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New Hampshire has no tax on wages, but it does tax interest and dividends, which can be tough for investors. Property taxes here are among the highest in the country, making homeownership expensive. However, there’s no sales tax, which helps balance costs on everyday purchases. If you want an income-tax-free life but still crave an East Coast lifestyle, New Hampshire is a good option.