States With No Income Tax

Updated for tax year 2025.

While most U.S. states levy a personal income tax, a few do not have a state-level individual income tax. Whether you live in one of these states or are comparing places to work, move, or retire, it helps to know how state budgets are funded without individual income tax as a revenue source. Let’s look at which states don’t tax individual income as of 2025 and how these states fund their budgets in other ways.

For the difference between state and federal IRS rules, start with our article on state income tax vs. federal income tax.

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At a glance:

For tax years 2025 and 2026, nine states have no state individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Retirement income, such as pension payments or Social Security benefits, is tax-free for retirees in these states.

No state income tax is not the same as “no state taxes.” You may still pay significant state and local sales, property, excise, and business taxes depending on where you live.

Which states have no income tax?

Nine states currently have no state individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Note: Until 2025, New Hampshire did not tax wages but did tax interest and dividends for filers over certain thresholds. However, this tax was repealed starting with tax years beginning on or after Jan. 1, 2025.

How do states with no income tax make money?

States without an income tax fund their governments through other ways, including sales and use taxes, property taxes, excise taxes, business taxes, and fees. Each state has its own tax system and tax rules; we’ve given a quick breakdown of each “no income tax” state below.

Alaska

Income tax situation

Alaska does not have a state individual income tax, estate tax, or inheritance tax.

Sales tax

Alaska is also one of the few states without a statewide general sales tax. However, some cities, municipalities, and boroughs may impose their own local sales and use taxes (Alaska’s average combined state and local sales tax rate is 1.82%).

Property taxes and exemptions

The state relies on a mix of property taxes, business taxes, natural-resource-related revenue, and other sources. There is a statewide $150,000 property tax exemption for senior citizens and disabled veterans.

Business taxes

Corporate income tax rates in Alaska are high compared with many other states (anywhere from 0% to 9.4%), but “small corporations” may be exempt if they meet specific criteria.

Learn more

See the Division of Community and Regional Affairs page for more Alaska tax facts and tax policy.

Florida

Income tax situation

Florida has no state individual income tax and no estate or inheritance tax.

Sales tax

Because Florida depends largely on tourism, it generates much of its revenue from consumption taxes, such as sales tax. Still, it has a fairly average statewide sales tax rate of 6%. Local sales taxes can add up to 2.5% more, depending on where you live.

Property taxes

Property taxes are another significant source of income for Florida ($1,686 in state and local property tax collections per capita, according to the Tax Foundation).

Business taxes

Florida also has a corporate income tax rate of 5.5%.

Learn more

See the Florida Department of Revenue for a full list of Florida taxes and tax rates.

Nevada

Income tax situation

Nevada does not have an individual income tax.

Sales tax

Nevada is another state that relies heavily on sales tax to generate much of its revenue. The statewide sales tax rate is fairly high at 6.85%, and its average local sales tax rate can add to that in some places (with a combined average of 8.24%).

Property taxes

The state also has a lower property tax collection at $1,351 per capita.

Business taxes

Nevada does not have a traditional corporate net income tax, but it does impose a commerce tax on businesses with a state gross revenue exceeding $4 million per fiscal year.

Learn more

See the State of Nevada Department of Taxation for a full list of Nevada taxes and FAQs.

New Hampshire

Income tax situation

New Hampshire does not tax individual wages or salaries at the state level, and no longer taxes interest and dividend income following the repeal of its Interest and Dividends Tax (for tax years beginning in 2025 and later).

New Hampshire does not have an estate or inheritance tax.

Sales tax

The state does not have a statewide sales tax.

Property taxes

New Hampshire relies on property taxes for a good portion of its tax revenue ($3,660 in state and local property tax collections per capita).

Business taxes

The state’s corporate income tax rate is 7.5%.

Learn more

See the New Hampshire Department of Revenue Administration for a full list of New Hampshire taxes and how they work.

South Dakota

Income tax situation

South Dakota does not have an individual or corporate income tax, estate tax, or inheritance tax.

Sales tax

The statewide sales tax rate is on the lower side at 4.2%, while the average combined state and local sales tax rate is 6.11%.

Property taxes

South Dakota state and local property tax collections are $1,695 per capita.

Learn more

See the SD Department of Revenue for more info on individual and business taxes in South Dakota.

Tennessee

Income tax situation

Tennessee’s former tax on some investment income was fully phased out in prior years, and the state has no individual income tax on wages today.

Sales tax

Tennessee has a higher statewide sales tax of 7%, with an average combined state and local sales tax rate of 9.61%.

Property taxes

The state has very low property tax collections per capita at $976.

Business taxes

Tennessee has a 6.5% corporate income tax rate, plus gross receipts taxes for certain business activities.

Learn more

See the TN Department of Revenue for a complete list of state taxes and Tennessee tax laws.

Texas

Income tax situation

Texas has no state income taxes for individuals.

Sales tax

The state relies on a mix of sales and use tax and property taxes for the bulk of its revenue. Texas has a statewide sales tax rate of 6.25%, with an average combined state and local rate of 8.2%.

Property taxes

Texas state and local property tax collections are $2,248 per capita.

Business taxes

While Texas does not have a corporate income tax, it levies a franchise tax on many businesses.

Learn more

See the Texas Comptroller for a complete list of Texas taxes, tax rates, and related FAQs.

Washington

Income tax situation

Washington doesn’t have an individual income tax. However, the state does apply a 7% capital gains tax for high-earners on the sale or exchange of long-term capital assets (for gains in excess of $278,000 per year, as of 2025). It also has an estate tax.

Sales tax

Washington has a 6.5% statewide sales tax rate (the average combined state and local sales tax rate is 9.47%).

Property taxes

Washington state and local property tax collections are $1,999 per capita.

Business taxes

The state doesn’t have a traditional corporate income tax, but it does have other business taxes, such as the B&O tax.

Learn more

See the Washington State Department of Revenue for a full list of information about various Washington tax rules.

Wyoming

Income tax situation

Wyoming doesn’t have an individual income tax.

Sales tax

Sales tax rates are on the lower side compared with many other states — the statewide sales tax rate is 4%, with a combined average state and local sales tax rate of 5.56%.

Property taxes

Wyoming uses property taxes to make up for lower sales tax and no income tax, with state and local property tax collections of $2,152 per capita.

Business taxes

Wyoming also does not have a traditional corporate income tax.

Learn more

See the Wyoming Department of Revenue for more info about Wyoming taxes and how they work.

FAQs

What states have no state income tax?

As of tax years 2025 and 2026, there are nine states with no state individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

New Hampshire is included for 2025 because it repealed its tax on interest and dividend income for taxpayers beginning in 2025.

Note: Always confirm the latest state statute and DOR guidance, especially if you have multi-state income.

Is it cheaper to live in states without income tax?

If you currently live in a state that taxes income, moving to a no-income-tax state can feel like an easy win, but it is not always cheaper overall. States without income tax often fund services through higher property taxes, higher sales and excise taxes, or “other taxes” like vehicle registration fees, inheritance taxes, business license taxes, etc. Plus, the cost of living and affordability can vary widely for things like housing, insurance, and utilities.

No income tax revenue can also mean the state spends less on public services like infrastructure, healthcare, and education, which can increase certain costs for residents. For example, less spending on education can increase higher education costs.

What states are the “best” for lower taxes overall?

“Best” depends on multiple factors, including your income mix (wages, investment, business, etc.), your family, whether you own or rent, and how you spend. A state with no income tax can still be expensive on a total state and local tax basis. If you’re considering a move, it’s helpful to compare tax facts and figures with your own situation to see how the potential trade-offs might affect your overall tax bill. Make sure you consider property tax rates, sales tax rates, and other tax rates, plus the cost of living and quality of life in each state.

Do states with no income tax make up the money somewhere else?

Usually, yes. States without a broad individual income tax tend to rely more on sales and excise taxes, property taxes, business taxes, and fees for roads, schools, and public services, but the exact mix varies widely by state.

Can I file my state tax return with TaxAct®?

Yes, we can help you e-file your state income tax return! When you file with TaxAct®, our tax preparation software automatically pulls your federal information into your state tax return (if required) for a quick filing process.

The bottom line

While living in a state with no income tax may sound appealing, it doesn’t mean you’ll be able to avoid taxes altogether. No income tax states still generate revenue through sales tax, property tax, and other types of taxes, so while your overall tax burden may look different, it won’t necessarily always be lower.

No matter where you live, TaxAct can help you file your federal income tax return (and any required state income tax return) with confidence. We’ll help streamline the tax filing process and ensure you’re taking advantage of every tax credit and deduction available to you.

This article is for informational purposes only and not legal or financial advice.

All TaxAct offers, products and services are subject to applicable terms and conditions.

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