Tax-Free States: How Much You Actually Save with No State Income Tax
Updated 30 March 2026
Nine states charge no income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. On a $100,000 salary, living in one of these states instead of California saves approximately $9,300 per year in state income tax. But the full picture includes property taxes, sales taxes, and cost of living, which can offset some or all of those savings.
The 9 States with No Income Tax
These nine states do not tax wage income. Each has a different approach to funding state services, and that affects the total tax burden residents face through other channels like property tax and sales tax.
Alaska
No income tax, no state sales tax. High cost of living in many areas. Permanent Fund Dividend pays residents $1,312 (2025).
Avg. property tax rate: 1.07%
Florida
No income tax. 6% state sales tax (up to 8.5% with local). Major population growth has increased housing costs.
Avg. property tax rate: 0.89%
Nevada
No income tax. 6.85% state sales tax (up to 8.38% with local). High sales tax offsets some savings.
Avg. property tax rate: 0.59%
New Hampshire
No tax on wages. 3% tax on interest and dividends (phasing out by 2027). No general sales tax.
Avg. property tax rate: 1.86%
South Dakota
No income tax. 4.5% state sales tax. Low cost of living statewide.
Avg. property tax rate: 1.22%
Tennessee
No income tax on wages (Hall Tax on investment income fully repealed in 2021). 7% state sales tax, one of the highest.
Avg. property tax rate: 0.66%
Texas
No income tax. 6.25% state sales tax (up to 8.25% with local). Above-average property taxes fund schools.
Avg. property tax rate: 1.80%
Washington
No income tax. 6.5% state sales tax (up to 10.25% with local). 7% capital gains tax on gains above $270,000.
Avg. property tax rate: 0.98%
Wyoming
No income tax. 4% state sales tax. Low population density, low cost of living outside resort areas.
Avg. property tax rate: 0.56%
How Much You Save at Every Salary Level
The value of living in a no-income-tax state scales directly with your salary. At lower incomes, the savings are modest. At higher incomes, the savings become substantial enough to cover a car payment, fund a vacation, or accelerate retirement savings. The table below shows the annual state income tax you avoid by living in a zero-tax state compared to five high-tax states.
| Salary | Save vs CA (9.3%) | Save vs NY (6.85%) | Save vs OR (9.9%) | Save vs MN (9.85%) | Save vs NJ (8.97%) |
|---|---|---|---|---|---|
| $50,000 | $4,650 | $3,425 | $4,950 | $4,925 | $4,485 |
| $75,000 | $6,975 | $5,138 | $7,425 | $7,388 | $6,728 |
| $100,000 | $9,300 | $6,850 | $9,900 | $9,850 | $8,970 |
| $125,000 | $11,625 | $8,563 | $12,375 | $12,313 | $11,213 |
| $150,000 | $13,950 | $10,275 | $14,850 | $14,775 | $13,455 |
| $200,000 | $18,600 | $13,700 | $19,800 | $19,700 | $17,940 |
Savings calculated using simplified top marginal rate applied to gross salary. Actual savings may vary based on state deductions and bracket structure.
At the $100,000 salary level, moving from California to Texas saves $9,300 per year, or $775 per month. Over 10 years, that is $93,000 in tax savings alone. Invested at a 7% average return, the cumulative benefit exceeds $128,000 over that decade. At $200,000, the California savings grow to $18,600 per year ($1,550/month), and the 10-year invested total approaches $257,000.
The Hidden Costs: Property Tax, Sales Tax, and Cost of Living
No-income-tax states are not tax-free states. They fund government services through other revenue sources, and these costs can partially or fully offset the income tax savings, especially for lower-income workers and homeowners.
Property Tax
Texas has the most notable trade-off. Its average effective property tax rate of 1.80% is well above the national average of 1.10%. On a $350,000 home, Texas property tax runs approximately $6,300 per year, compared to $3,850 in the national average. California, despite its high income tax, has property tax averaging just 0.75% thanks to Proposition 13 limits, costing $2,625 on the same $350,000 home. The $3,675 difference in property tax offsets a significant portion of the income tax savings for homeowners earning under $60,000.
New Hampshire has the highest property tax rate of any no-income-tax state at 1.86%. On a $400,000 home (median in many NH areas), that is $7,440 per year. Wyoming and Nevada have the lowest property taxes among zero-tax states, at 0.56% and 0.59% respectively. Alaska is moderate at 1.07% but offsets it with the Permanent Fund Dividend.
Sales Tax
Tennessee has the highest combined state and average local sales tax rate in the country at 9.548%. Washington averages 9.29% combined. Texas averages 8.20%. These sales tax rates affect every purchase you make. A household spending $30,000 per year on taxable goods and services pays $2,460 in sales tax at an 8.2% rate (Texas) or $2,786 at 9.29% (Washington). By comparison, Oregon has no sales tax at all but a 9.9% income tax rate.
The sales tax burden is regressive: it takes a larger share of income from lower earners because they spend a higher percentage of their income on taxable goods. A family earning $50,000 and spending $25,000 on taxable items at Texas rates pays $2,050 in sales tax (4.1% of income), while a family earning $200,000 spending $50,000 on taxable items pays $4,100 (2.1% of income).
Cost of Living
Housing costs dominate the cost-of-living equation. The median home price in Austin, Texas is approximately $435,000, while the median in San Jose, California is $1,350,000. Even accounting for California's 9.3% income tax, a worker earning $150,000 may find that housing costs in Silicon Valley consume far more income than state taxes in a zero-tax state. In contrast, cities like Jacksonville (FL), Nashville (TN), and Reno (NV) offer both zero income tax and moderate housing costs.
Best Overall Tax States for Different Income Levels
The optimal state depends on your income level, whether you own or rent, and your spending habits. Here is a general framework based on total tax burden (income tax plus estimated property and sales tax impact).
Under $60,000: Wyoming, South Dakota, or Nevada
At lower incomes, the income tax savings from a zero-tax state are modest ($2,000 to $4,000 per year), so minimizing property and sales tax matters more. Wyoming (4% sales tax, 0.56% property tax) and South Dakota (4.5% sales tax, 1.22% property tax) offer the lowest overall tax burden. Nevada has slightly higher sales tax at 6.85% but very low property tax at 0.59%. All three have low cost of living outside resort/metro areas.
$60,000 to $150,000: Florida or Texas
In this income range, state income tax savings become substantial ($4,000 to $14,000 vs California). Florida combines zero income tax with moderate property tax (0.89%) and a 6% sales tax. Texas has higher property tax (1.80%) but a strong job market in tech, energy, and healthcare. Both states have large metro areas with plentiful job opportunities and no state income tax. The choice between them often comes down to industry (tech leans Texas, finance leans Florida) and personal preference.
Over $150,000: Washington, Florida, or Nevada
At high incomes, the income tax savings are enormous ($14,000 to $20,000+ vs California or New York). Washington has a thriving tech sector (Amazon, Microsoft, Meta) with no income tax, though it does impose a 7% capital gains tax on realized gains above $270,000. Florida has become a hub for finance and remote workers. Nevada offers proximity to California with zero income tax and lower property taxes than Texas. For workers earning $200,000+, the annual tax savings of $18,000+ versus California compound dramatically over a career.
The Full Picture: When Tax Savings Alone Are Not Enough
State income tax is one factor among many. A worker earning $100,000 in Seattle (Washington, no income tax) saves $9,300 per year compared to the same salary in San Francisco (California, 9.3%). But Seattle rents average $2,100/month for a one-bedroom, while San Francisco averages $2,800/month. The $700/month rent difference ($8,400/year) nearly offsets the entire state tax savings. When you factor in that many California employers pay higher salaries to compensate for the tax and cost-of-living burden, the net benefit of relocation shrinks further.
The strongest case for a zero-tax state is a remote worker earning a high-tax-state salary while living in a low-cost zero-tax state. A software engineer earning $180,000 remotely in Austin, Texas instead of San Francisco saves approximately $16,740 per year in state income tax plus $12,000 or more per year in housing costs. Combined, that is nearly $29,000 per year in additional disposable income, or over $2,400 per month. Over a decade with investment returns, this amounts to roughly $400,000 in additional wealth.
Use the salary calculator on the homepage to model your specific situation. Enter your salary, select your current state, then compare the results to a zero-tax state to see your exact potential savings.