If you're considering a move, planning your retirement, or just curious why your paycheck looks different than a friend's in another state, understanding which states skip income tax entirely can genuinely change your financial picture. As of 2026, nine US states impose no broad-based personal income tax on wages, salaries, or retirement income. This guide breaks down exactly which states these are, what they tax instead, and whether "no income tax" actually translates to lower overall costs.
The 9 States With No Income Tax in 2026
Here's the complete, current list:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
This means no state tax on wages, salaries, 1099 income, pensions, IRA withdrawals, or Social Security benefits in any of these nine states. It's worth noting this list has actually shifted in recent years — Tennessee fully phased out its Hall Tax on interest and dividends back in 2021, and New Hampshire completed its own phase-out of the Interest and Dividends Tax as of January 1, 2025, making it a genuine, complete no-income-tax state for the first time. A lot of older articles still describe New Hampshire as only "partially" tax-free — that's now outdated.
Two Important Exceptions to Understand
"No income tax" isn't always as absolute as it sounds, and two states deserve a closer look:
Washington's Capital Gains Tax
Washington doesn't tax wages or salaries at all, but it does apply a capital gains tax to profits from selling stocks, bonds, and other assets above a certain threshold. There's also a separate high-income tax scheduled to take effect in 2028. So while your paycheck is safe from state tax, investors with significant capital gains should factor this in.
New Hampshire's Property Tax Trade-Off
New Hampshire now taxes no form of personal income whatsoever — but it carries one of the highest property tax rates in the country, among the top handful nationally. For homeowners, this can meaningfully offset the benefit of paying no income tax.
How Do States Without Income Tax Fund Public Services?
This is one of the most common questions, and it makes sense — states still need revenue for roads, schools, and public services. States without income tax typically lean more heavily on:
- Sales tax: Tennessee and Washington both have combined state and local sales tax rates approaching or exceeding 9%, among the highest in the country.
- Property tax: Texas and New Hampshire compensate with notably high property tax rates — a $500,000 home in Texas can carry an annual property tax bill well into five figures.
- Severance and natural resource taxes: Alaska and Wyoming rely heavily on oil, gas, and mineral extraction revenue, which also makes their budgets more volatile depending on commodity prices.
- Business-specific taxes: Washington's B&O tax, Texas's franchise tax, and New Hampshire's Business Profits Tax function similarly to income tax, just applied at the business level rather than the individual level.
The bottom line: no income tax rarely means no taxes overall. It means the tax burden shifts to a different category, and which category matters most depends heavily on your personal financial situation — a renter with no investments experiences this very differently than a homeowner with significant capital gains.
Which No-Income-Tax State Is Best for Retirees?
For retirees specifically, a few of these states stand out:
- Florida and Tennessee are popular for retirees partly due to warmer climates combined with no tax on pensions, Social Security, or retirement account withdrawals.
- South Dakota and Wyoming offer low overall tax burdens with relatively low cost of living compared to coastal no-tax states.
- New Hampshire, despite zero income tax, tends to be less popular purely for retirement income purposes due to its high property tax rate, which disproportionately affects homeowners on fixed incomes.
If you're weighing a retirement relocation, it's worth running your specific numbers — pension income, expected home value, and typical spending — through an income tax calculator rather than assuming the headline "no income tax" label alone tells the full story.
Only Two States Have No Income Tax AND No Sales Tax
If you're looking for the rare combination, Alaska and New Hampshire are the only two states with neither a statewide income tax nor a statewide sales tax. That said, Alaska allows local municipalities to levy their own sales taxes, so this isn't absolute depending on where specifically you live within the state.
Comparing Total Tax Burden, Not Just Income Tax
The most financially sound way to evaluate these states isn't to stop at "no income tax" — it's to compare the total tax burden, combining income, sales, and property tax together. Here's a general pattern worth understanding:
- Lower overall burden: Wyoming and Alaska tend to rank among the lowest combined tax burden states once everything is factored in.
- Higher offsetting costs: Texas and New Hampshire shift much of the burden into property tax, while Tennessee and Washington lean more heavily on sales tax.
- Cost of living matters separately: A state with genuinely low taxes can still have a high overall cost of living due to housing prices, which is a completely separate factor from the tax question itself.
If you're comparing a potential move against your current state's rates, our US state income tax calculator can help you see the real difference for your specific income level, rather than relying on general assumptions.
Do You Still Pay Federal Income Tax?
Yes, unambiguously. Living in a no-income-tax state has zero effect on your federal tax obligations — federal income tax is calculated the same way regardless of which state you live in. The savings from living in one of these nine states apply only to state-level taxation, not the federal return you file with the IRS each year.
Common Mistakes People Make When Considering a Move
- Assuming "no income tax" means an overall low-tax state without checking property and sales tax rates first.
- Overlooking capital gains implications in Washington specifically, for those with significant investment income.
- Underestimating property tax in Texas or New Hampshire, which can rival or exceed what someone would have paid in income tax elsewhere.
- Not accounting for "sticky state" rules — some high-tax states you're leaving may continue trying to tax your income for a period after you move unless you properly establish domicile in your new state.
Frequently Asked Questions
Which US states have no income tax in 2026? Nine states have no broad-based personal income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Is New Hampshire a true no-income-tax state now? Yes. New Hampshire's Interest and Dividends Tax was fully phased out as of January 1, 2025, meaning it now taxes no form of personal income at all, though it does have notably high property taxes.
Does Washington State have any income tax? Washington doesn't tax wages or salaries, but it does apply a capital gains tax to investment profits above a set threshold, with an additional high-income tax scheduled for 2028.
Do no-income-tax states have higher sales or property tax? Generally yes, in some form. Texas and New Hampshire compensate with high property taxes, while Tennessee and Washington lean more on higher sales tax rates to fund public services.
Do you still pay federal income tax if you live in a no-income-tax state? Yes. Federal income tax applies identically regardless of your state of residence — only state-level income tax is affected by living in one of these nine states.
Which no-income-tax state has the lowest overall tax burden? Wyoming and Alaska generally rank among the lowest combined tax burden states once income, sales, and property taxes are all factored in together.
Final Thoughts
"No income tax" is a genuinely valuable benefit for many people, but it's only one piece of a much larger financial picture. The nine states on this list each make up the difference in their own way — through property tax, sales tax, or reliance on natural resource revenue — so the right state for you depends on your income type, homeownership plans, and spending habits, not just the headline tax rate.
Before making any relocation decision, run your actual numbers through our income tax calculator to see a realistic comparison based on your specific situation, and explore more free tools at Free Calculator to plan your finances with real numbers instead of assumptions.