States with no income tax in 2026

Why the no-income-tax list matters in 2026

Nine states skip a tax on wages and salaries: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire joined the fully wage-free club when investment income lost its separate levy in 2025. Washington still deserves a footnote: large capital gains are taxed now, and a millionaire surtax is on the calendar for 2028.

Living where paychecks are not taxed at the state level can shrink a bill, but each jurisdiction recoups dollars through sales, property, business, or severance taxes. Below is a side-by-side look at what each state collects instead, how Washington’s rules differ, what low-rate alternatives exist, and how to establish residency without tripping audit wires.

The nine states at a glance

Every state on this list leaves wages alone, yet combined tax burdens diverge sharply. Tennessee and Washington sit among the highest average sales tax rates nationally, while Alaska skips a statewide sales tax and New Hampshire skips a general sales tax. Use the table to compare headline rates and the detail that usually moves the needle for your household.

Sales tax rates as of July 1, 2026. Source: Tax Foundation.

What each state taxes instead

Without wage taxes, these states lean on a mix of consumption, property, business, and resource taxes. The blend determines whether renters, homeowners, retirees, or business owners actually save.

Alaska

Alaska funds government largely through oil severance taxes on North Slope production. There is no statewide sales tax, though boroughs and cities may add local sales taxes. Property taxes are set locally, so rates swing by community. Eligible residents can receive the Permanent Fund Dividend, an annual payment tied to earnings from the state’s oil wealth savings account.

Florida

Florida’s 6% statewide sales tax rises with tourist spending and local add-ons. Counties depend on property taxes for schools and services. The state also collects a corporate income tax, which helps replace revenue not taken from individual paychecks. The combination draws retirees and remote workers, though homestead rules and insurance costs still shape the real cost of living.

Nevada

Gaming, entertainment, and tourism taxes anchor Nevada’s budget. The statewide sales tax base is 6.85%, and local jurisdictions push effective rates higher in Las Vegas and Reno. Employers may owe the Modified Business Tax, a payroll-based levy of about 1.17% on wages above thresholds that acts like a business-level income substitute.

New Hampshire

New Hampshire never taxed wages. Its Interest and Dividends Tax, 3% for 2024, was repealed for periods beginning January 1, 2025, so 2024 was the last year that investment income faced a separate state levy. With no general sales tax, municipalities fund services through property taxes. Effective rates on owner-occupied homes near 1.50% rank among the nation’s highest. Business profits and business enterprise taxes apply to companies operating there.

South Dakota

South Dakota keeps rates light across the board. A 4.2% statewide sales tax pairs with local options that lift the average combined rate to about 6.1%. That 4.2% rate is temporary and is set to revert to 4.5% on July 1, 2027 unless lawmakers intervene. Tourism around Mount Rushmore and the Black Hills adds sales tax volume that spreads costs across visitors and residents.

Tennessee

Tennessee eliminated its tax on interest and dividends in 2021. Today it relies on a 7% state sales tax plus local add-ons that can push combined rates toward 9.75% in some counties. Franchise taxes on net worth and excise taxes on corporate income capture business activity. High excise taxes on tobacco and alcohol also feed the general fund. Compare how sales tax and income tax feel different in your monthly budget before assuming Tennessee is cheaper overall.

Texas

Voters cemented a personal income tax ban in the Texas Constitution in 2019: the legislature may not impose a tax on net incomes of individuals. Revenue instead flows from a 6.25% sales tax (often 8.25% with locals), among the country’s heavier property tax bills, severance taxes on oil and gas, and business franchise taxes. Energy and technology payrolls help spread fixed costs, but homeowners feel property tax pressure directly.

Washington

Washington still skips wages, yet it is not a pure zero-income-tax jurisdiction anymore. Long-term capital gains above an annual deduction face state tax, and a high-income surtax arrives in 2028. Sales tax remains central: 6.5% at the state level plus locals that can exceed 10% combined. The business and occupation tax hits gross receipts, not net profit, which shapes how retailers and thin-margin firms experience the state.

Wyoming

Wyoming charges no personal or corporate income tax. Severance taxes on coal, oil, and natural gas fill coffers, supplemented by a 4% state sales tax with modest local add-ons. A small population keeps public spending lower per capita, which helps the state maintain its wage-tax-free status.

Does Washington have a state income tax?

Today, Washington does not tax ordinary wages. It does tax certain long-term capital gains above an annual standard deduction ($278,000 for 2025, indexed for inflation). Taxable gains up to $1 million are taxed at 7%; amounts above that threshold face an additional 2.9%, for a 9.9% top rate starting with the 2025 tax year. Real estate, many retirement accounts, and some business assets are excluded, and returns are due with the federal filing deadline.

Capital gains tax (in effect now)

• Rate: 7% on taxable Washington capital gains after the standard deduction, plus 2.9% on the portion above $1 million (9.9% top rate).
• Threshold: Annual deduction adjusts yearly for inflation from the $278,000 base for 2025.
• Exemptions: Primary home sales, qualified retirement accounts, and certain business assets among others.
• Filing: State return due the same day as the federal income tax return.

Tax on income over $1 million (starts 2028)

Engrossed Substitute Senate Bill 6346, signed March 30, 2026, adds a 9.9% tax on Washington taxable income after a $1 million standard deduction. Married couples and state-registered domestic partners share one $1 million deduction pool. The tax applies to tax years beginning on or after January 1, 2028, so the first returns land in 2029.

What could change the schedule

Initiative 645, on the November 3, 2026 ballot, would repeal the upcoming millionaire tax and bar new state or local taxes on individual income. Separately, a lawsuit filed in Klickitat County Superior Court in April 2026 challenges the tax on constitutional grounds. Unless a court or voters block it, the 2028 start date remains in place.

Other taxes to weigh before you move

Zero state income tax does not guarantee a lower total tax bill. High earners who rent often keep more of each paycheck; homeowners with moderate wages may watch property and sales taxes eat the savings.

• Sales tax. Tennessee (9.61% average combined) and Washington (9.57%) rank high nationally. Alaska has no statewide sales tax; New Hampshire has no general sales tax. See our hidden costs of moving to a no-income-tax state for how consumption taxes stack up.
• Property tax. Texas and New Hampshire lean heavily on property taxes, so owners can pay far more annually than they would in Tennessee, where sales tax does more of the work.
• Retirement income. None of these nine states tax Social Security, pensions, or IRA and 401(k) withdrawals today. Compare broader options in our guide to tax-friendly states for retirees.
• Fees and insurance. Vehicle registration, tolls, and hazard insurance, especially in coastal Florida or wildfire-prone areas, can offset part of the income tax savings.

Lowest income tax states if none of the nine fit

Several states still tax wages but at modest rates near 3% or below for 2026. Arizona uses a flat 2.5% rate. North Dakota’s brackets top out at 2.5%. Ohio switched to a flat 2.75% on income above $26,050. Others in the low-rate camp include:

Headline rates tell only part of the story. Credits, deductions, and local add-ons can make a nominally higher-rate state cheaper for some filers than a flat low-rate neighbor.

How to change your state of residence for taxes

Unpacking a moving truck is not enough. Your old state may treat you as a resident until you establish domicile, your true fixed home, in the new one. Auditors in California, New York, and similar high-tax states review where you sleep, work, vote, and bank.

1. Obtain a driver’s license and register vehicles in the new state.
2. Register to vote there and cancel the prior registration.
3. Move financial accounts, insurance, medical providers, and mailing addresses; file for a homestead exemption if available.
4. Spend most days in the new state and keep travel logs, leases, or utility bills that prove it.
5. File a part-year resident return in the former state for the year of the move, reporting income earned while you still lived there.

Day-count rules and telework add wrinkles. If you will keep earning from an employer in the old state, read how taxes work when you live in one state and work in another, and review multi-state residency filing before you commit to a move date.

Moving does not erase state taxes you already owe

Relocating to Wyoming or Florida does not cancel balances owed to California, New York, or any prior state. Back taxes, penalties, and interest remain collectible, and statutes often give revenue departments many years to act. California’s Franchise Tax Board, for example, may pursue liabilities for up to 20 years.

Your former state can also tax income earned there before the move, even if you now file as a nonresident elsewhere. Missed deadlines make the problem worse. See what happens after a missed state tax filing deadline.

If a state balance is following you, Valor can help you review options for back tax relief and state settlement paths such as a state offer in compromise where programs exist.

How Valor Tax Relief can help

Choosing a no-income-tax state is a planning decision; fixing old state debts is a collection problem. Valor helps taxpayers respond to state notices, organize part-year returns, and explore payment plans or settlements when balances outpace cash flow. Start with a consultation if a move triggered a residency audit or if multiple states claim you at once.

Pick the state that matches your tax profile

The nine no-wage-tax states share one trait: no tax on paychecks. They diverge on sales, property, business, and investment levies. Run the numbers for how you earn, spend, and own property before changing your address.

Document domicile carefully, file part-year returns the year you move, and resolve any old state balance before assuming a fresh start. Federal filing rules still apply no matter which state license plate you carry.