9 US states with No Income Tax in 2026. Ranked by Real Cost of Living
There are 9 US states have no income tax in 2026. But which ones actually save you money after property taxes, insurance, and cost of living?
Sarah Jenkins
Staff Writer
Best states with no income tax in 2026: do the savings actually hold up?
Nine US states have no personal income tax in 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For anyone moving from California (13.3% top rate), New York (10.9%), or New Jersey (10.75%), that zero looks incredibly attractive.
But no income tax does not mean no taxes. Every state on this list raises money some other way, through higher property taxes, steep sales taxes, insurance costs, or in Washington's case a capital gains tax on high earners. The correlation between no income tax and actual affordability is weaker than most people expect.
This guide ranks all nine no-income-tax states by what you actually keep after every major expense, not just the headline rate.
The 9 states with no income tax in 2026
| State | Property tax rate | Sales tax (avg) | Cost of living index |
|---|---|---|---|
| Wyoming | 0.56% | 5.36% | ~98 |
| South Dakota | 1.08% | 6.40% | ~92 |
| Tennessee | 0.67% | 9.55% | ~90 |
| Texas | 1.60% | 8.20% | ~95 |
| Florida | 0.86% | 7.05% | ~103 |
| Nevada | 0.57% | 8.24% | ~102 |
| Alaska | 1.19% | 0% | ~130+ |
| New Hampshire | 2.05% | 0% | ~113 |
| Washington | 0.98% | 9.40% | ~115 |
*Washington levies a 7% capital gains tax on gains above $262,000. For W-2 workers it remains effectively income-tax-free.
A few things jump out immediately. Tennessee has zero income tax but the highest combined sales tax in the country at 9.55%. Alaska has zero income tax and zero sales tax but costs 30%+ more than the national average to live in due to remoteness. Washington has no income tax on wages but some of the highest housing and everyday costs in the US.
The headline rate and the lived reality are two different things.
1. Tennessee: best no-income-tax state for most movers
Tennessee is the standout value on this list for people actually relocating to live and work there.
Cost of living index of 90.3 means it sits about 10% below the national average. Housing is genuinely affordable. Nashville has a median home price around $450,000 which sounds high until you compare it to Austin ($625,000) or Seattle ($850,000). Smaller Tennessee states like Knoxville, Chattanooga, and Murfreesboro are dramatically cheaper.
The trade-off is sales tax. At 9.55% combined average, Tennessee has the highest in the country. You notice it at the grocery store, the hardware store, at every purchase. For high earners this still works out well since the income tax savings far outweigh the sales tax burden. For people on modest incomes, the math is tighter.
Tennessee also has no tax on retirement income, Social Security, pensions, or 401(k) withdrawals, which makes it particularly attractive for retirees.
- Property tax: 0.67%
- Best states: Nashville, Knoxville, Chattanooga, Franklin
- Best for: families, retirees, remote workers, anyone moving from the Northeast
2. Texas: best no-income-tax state for job seekers
Texas is the most popular destination for people leaving high-tax states, and with good reason. No income tax, a massive job market across tech, energy, healthcare, and finance, and housing that is still cheaper than coastal states.
The catch is property taxes. At 1.60%, Texas has among the highest property tax rates in the country. On a $400,000 home that is $6,400 per year, nearly double what you'd pay in Florida or Tennessee. For renters this matters less, but for homeowners it is real and it compounds every year.
Cost of living index around 95 puts Texas slightly below the national average overall, though this varies dramatically by city. Austin has gotten expensive (index around 139), while San Antonio and Houston remain genuinely affordable.
For a household earning $150,000 moving from California, the no-income-tax savings in Texas run roughly $10,000-18,000 per year even after accounting for higher property taxes.
- Property tax: 1.60%
- Best states: San Antonio, Houston, Dallas
- Best for: tech workers, corporate professionals, families, people moving from California
3. Florida: best no-income-tax state for retirees
Florida is the classic retirement destination partly because of its tax structure. No income tax, no tax on retirement income, no estate tax, and no inheritance tax. For people drawing Social Security, pension income, or investment distributions, Florida is genuinely one of the most tax-friendly states in the country.
The problem in 2026 is everything else. Homeowners insurance has exploded, particularly in coastal areas. Miami homeowners pay an average of $8,345 per year in premiums. Fort Lauderdale and Tampa are not far behind. The cost of living index sits around 103, above the national average, driven by insurance costs and housing prices that have risen sharply since 2020.
Florida is a better deal if you are renting or living inland away from hurricane-exposed areas. The further from the coast, the more the tax savings hold up.
- Property tax: 0.86%
- Best states: Ocala, St. Augustine, The Villages, Jacksonville (inland/northern FL)
- Best for: retirees, high earners, people with investment income
If you are weighing Florida against Texas, our moving from Florida to Texas guide breaks down the full financial comparison.
4. Wyoming: best no-income-tax state overall on paper
Wyoming wins the pure tax comparison. No income tax, the fourth lowest property tax rate in the country (0.56%), a modest sales tax, and a cost of living around the national average. On paper it is the best deal on this list.
The trade-off is everything else about living in Wyoming. It is rural, sparsely populated, and has limited job opportunities outside of energy, agriculture, and government. The largest city, Cheyenne, has about 65,000 people. If you are a remote worker who wants wide open spaces, low taxes, and do not need a dense urban environment, Wyoming genuinely delivers. For most people moving for career reasons, it is not realistic.
- Property tax: 0.56%
- Best states: Cheyenne, Jackson, Laramie
- Best for: remote workers, retirees with investment income, people who want rural life
5. South Dakota: best no-income-tax state for budget-conscious movers
South Dakota is the least talked about state on this list and arguably the best value for people who do not need a major metro. Cost of living index around 92, below the national average. Sioux Falls is a functioning mid-sized city with a real job market in healthcare, finance, and manufacturing. Housing is genuinely cheap.
No income tax, low property taxes, and a sales tax of 4.2% that is modest compared to Tennessee or Texas. South Dakota has become quietly popular with retirees and remote workers who want low costs without complete rural isolation.
- Property tax: 1.08%
- Best states: Sioux Falls, Rapid City
- Best for: retirees, remote workers, budget-focused movers
6. Nevada: good for Las Vegas, less clear elsewhere
Nevada gets the no-income-tax benefit and a sales tax that is below Tennessee and Texas. The problem is housing and insurance costs in the Las Vegas metro, which is where most people end up, have risen considerably. The overall cost of living index sits around 102.
Las Vegas itself has a genuine job market in hospitality, healthcare, and an expanding tech sector. For people moving from California, it is geographically close and familiar. The summers are brutal, topping 115°F, but it is dry heat rather than the humid heat of Texas or Florida.
- Property tax: 0.57%
- Best states: Henderson, Summerlin (Las Vegas suburbs), Reno
- Best for: California transplants, hospitality/gaming industry workers, retirees
7. Washington: no income tax on wages, but expensive
Washington state has no income tax on wages, which saves significant money if you are a W-2 employee. However, a 7% capital gains tax applies to gains above $262,000, and starting soon income over $1 million will also be taxed, making it a partial exception on this list.
More practically, Washington is expensive. Seattle and the surrounding areas have some of the highest housing costs in the country. The cost of living index sits around 115. Sales taxes average 9.4%. The income tax savings are real for workers, but they get absorbed quickly by housing and everyday expenses.
- Property tax: 0.98%
- Best states: Spokane (much cheaper than Seattle), Tacoma, Bellingham
- Best for: tech workers already in the Seattle ecosystem, not necessarily for movers from cheaper states
8. Alaska: technically no tax, practically expensive
Alaska has zero income tax and zero sales tax, and even pays residents an annual dividend from oil revenues (roughly $1,300-$3,300 per year depending on oil prices). That sounds remarkable.
Then you look at the cost of living. Alaska is 30-40% more expensive than the national average for most everyday items due to its remoteness and the cost of shipping goods. Groceries, utilities, and consumer goods all cost more. Housing varies by city. Anchorage is manageable; many remote communities are not.
Unless you have a specific reason to move to Alaska, the tax benefits are largely negated by higher costs.
- Best for: people with specific job opportunities or lifestyle reasons for living in Alaska
9. New Hampshire: no income tax since 2025, but expensive
New Hampshire fully eliminated its tax on interest and dividends on January 1, 2025, making it genuinely income-tax-free for the first time. The catch is property taxes, among the highest in the country at 2.05%, and an overall cost of living around 13% above the national average.
New Hampshire is a good option for people who want to stay in New England, enjoy access to Boston (about an hour from Manchester), and want to reduce their tax burden. It is not a budget option.
- Property tax: 2.05%
- Best states: Manchester, Concord, Portsmouth
- Best for: New England residents looking to reduce taxes while staying in the region
How much do no-income-tax states actually save you?
The savings depend entirely on your income level. At lower incomes, the sales and property tax trade-offs can actually make no-income-tax states more expensive. At higher incomes, the savings become dramatic.
| Annual income | California tax saved by moving to Texas |
|---|---|
| $75,000 | ~$4,500 |
| $150,000 | ~$10,000 |
| $300,000 | ~$28,000 |
| $500,000 | ~$66,500 |
The Tax Foundation notes that the correlation between no income tax and overall affordability is weak. Run the full numbers before you move.
Which no-income-tax state is right for you?
For most people relocating for work: Tennessee or Texas. Both have strong job markets, no income tax, and a cost of living below the national average in most states. Tennessee wins on overall affordability; Texas wins on job market breadth.
For retirees: Florida or Tennessee. Florida has no tax on any retirement income and a warm climate. Tennessee has a lower cost of living and less exposure to hurricane insurance costs.
For remote workers who want space: Wyoming or South Dakota. Low taxes, low costs, and a quality of life that is genuinely good if you do not need an urban environment.
For California transplants who want to stay near the West Coast: Nevada. Geographically close, familiar climate, and no income tax. Just budget carefully for Las Vegas housing and insurance costs.
For tech workers in Seattle: Washington. Already there, already saving on income taxes. Just do not count on the state staying fully income-tax-free forever as legislation is trending toward broader taxation on high earners.
States trending toward no income tax
The no-income-tax club may grow. Several states are actively reducing income tax rates:
North Carolina cut its flat rate to 4.5% and continues declining toward potential elimination. North Carolina is worth watching, because it combines the tax direction of a no-income-tax state with states like Raleigh and Charlotte that have strong job markets and relatively affordable housing. Read more in our guide to moving to Raleigh, NC.
Iowa, Georgia, and Louisiana have all cut income tax rates significantly in recent years and are discussing further reductions.
Mississippi has announced a plan to eliminate income taxes by 2040 if certain economic conditions are met.
FAQ
Which states have no income tax in 2026?
The nine states with no personal income tax in 2026 are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire completed its transition to fully income-tax-free status on January 1, 2025. Washington does not tax wages but levies a 7% capital gains tax on gains above $262,000.
Is it worth moving to a state with no income tax?
For high earners, almost always yes. A household earning $200,000 moving from California to Texas saves roughly $15,000-20,000 per year in state income tax, even after accounting for Texas's higher property taxes. For lower incomes, the trade-offs with sales and property taxes can narrow or eliminate the advantage.
Which no-income-tax state has the lowest cost of living?
Tennessee and South Dakota consistently rank as the most affordable no-income-tax states. Tennessee has a cost of living index around 90 and a strong job market anchored by Nashville. South Dakota runs around 92 with lower costs but fewer large-city job options.
Do no-income-tax states have other taxes?
Yes. No state operates without revenue. Tennessee has the highest combined sales tax in the US at 9.55%. Texas has some of the highest property taxes at 1.60%. Washington has a capital gains tax for high earners. Alaska is the only state with neither income tax nor sales tax, but compensates with significantly higher costs of living.
Which no-income-tax state is best for retirees?
Florida, Tennessee, and Wyoming are the top picks for retirees. Florida has no tax on any form of retirement income, no estate tax, and no inheritance tax. Tennessee matches that on retirement income with a much lower cost of living. Wyoming offers the lowest total tax burden of any state but has limited urban amenities.
Does moving to a no-income-tax state affect federal taxes?
No. Federal income tax applies to all US workers regardless of state. Moving to Texas, Florida, or any other no-income-tax state eliminates state income tax only. You still owe federal income tax at standard rates.