You’re looking at your paycheck. It’s a Friday. You see that massive chunk of change disappear into "state withholding," and you start wondering why you’re paying for a road in a city you never visit. It’s a common frustration. Moving to one of the states in usa with no income tax feels like giving yourself an immediate 5% or 7% raise.
But here is the thing.
The government always gets its pound of flesh.
If a state isn’t taking a bite out of your salary, it’s probably taking a bigger bite out of your groceries, your car registration, or the house you worked so hard to buy. Living in a "tax-free" state is a chess move, not a magic trick. You have to know where the hidden costs are buried before you hire the moving van.
The 2026 List: Where Your Paycheck Stays Whole
As of early 2026, there are nine states where you won't see a state income tax line item on your standard W-2.
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington (mostly—we'll get to the "Millionaire's Tax" drama in a second)
- Wyoming
- Tennessee
- New Hampshire New Hampshire is the newest "pure" member of the club. For years, they had this annoying "Interest and Dividends" tax. It was a 5% tax on your investments, which basically meant it was a "no income tax" state only if you were broke. That’s gone now. As of January 1, 2025, they fully repealed it. If you live in Concord or Nashua today, your investment portfolio is just as safe from the state as your salary.
Tennessee followed a similar path a few years back, killing off its "Hall Income Tax." Now, it’s a total haven for retirees and remote workers.
The Washington "Millionaire" Catch
Washington is a weird one. Honestly, it’s barely a no-income-tax state anymore if you’re wealthy.
They’ve had a 7% capital gains tax on high-earners for a bit. But in 2025, things got spicy. They added a tiered system. Now, if you’re pulling in more than $1 million in capital gains, you’re looking at a 9.9% rate. Even crazier? As we speak in early 2026, there’s a massive push in Olympia for a "Millionaire's Tax" on regular annual income.
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Governor Bob Ferguson signaled he’s all in on a 9.9% tax for people earning over seven figures.
So, if you’re a tech worker at Microsoft or Amazon making $300k, you’re still golden. But if you’re planning to sell a company or you're a high-level exec, Washington might start looking a lot like California very soon.
How Do They Pay for the Potholes?
States aren't charities. If they don't tax your income, they have to be "creative."
Take Texas. People move there for the 0% income tax and then nearly faint when they get their first property tax bill. Texas has some of the highest property taxes in the country, often exceeding 2% of the home's value. In a place like Austin where home prices have stayed high, you might save $8,000 in income tax but pay an extra $10,000 in property tax.
You’re basically trading one bill for another.
Then you have Nevada and Florida. They rely on you—and everyone else—going on vacation.
Nevada funnels gambling revenue and massive "sin taxes" into its budget. Florida uses its 6% sales tax (plus local surcharges) and the sheer volume of tourists buying $15 margaritas to keep the lights on. It works out great if you’re a resident who doesn't shop much. It sucks if you’re trying to buy a fleet of cars.
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Alaska is the ultimate outlier. They don’t have an income tax or a state sales tax.
How? Oil.
They tax the extraction of natural resources. In fact, they usually pay you to live there through the Permanent Fund Dividend. But don't get too excited—milk costs $8 a gallon in some parts of the state because everything has to be flown in. The "cost of living" tax is real, even if the government isn't the one collecting it.
The High Cost of "Free"
Let's talk about insurance. This is the "hidden" tax no one mentions in the brochures.
Florida is the prime example. You save a ton on taxes, but your homeowners insurance might be $10,000 a year because of hurricanes. In 2025, Florida had some of the highest car insurance rates in the country, too.
Nevada is in a similar boat with auto insurance.
When you add up the high sales tax in Tennessee (which can hit nearly 10% in some cities) or the sky-high utility bills in New Hampshire, the math starts to look a lot different.
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Expert Insight: If you earn $60,000 a year, moving to a no-income-tax state might actually make you poorer if that state has high sales and property taxes. These systems are "regressive." They hit the middle class harder than the wealthy.
Who Actually Wins?
If you're a high-income earner, these states are a gold mine.
If you make $500,000 a year in New York City, you’re losing a staggering amount to state and city taxes. Moving to Florida or Wyoming is a life-changing financial move for you.
Retirees also win big.
Most of these states don't tax Social Security or pension withdrawals. If you’re living on a fixed income, not having the state take a 5% cut of your 401(k) distribution is huge.
But if you’re a renter making $45,000? You might find that the higher cost of groceries and gas in a state like Washington or Alaska completely eats your tax savings.
Actionable Steps Before You Pack
Don't just look at the 0% number. You've got to do a "Total Tax Burden" audit.
- Calculate your current state tax paid. Look at last year's return. That’s your "savings" target.
- Estimate your new property tax. Look up the "effective tax rate" for the specific county you're moving to, not just the state average.
- Check the insurance "tax." Get a quote for car and home insurance in the new zip code. This is where most people get blindsided.
- Factor in the commute. States like Texas and Florida are huge. If you're driving 40 miles a day because you moved to a cheaper area, your gas and maintenance costs are just another form of tax.
- Review the "Sales Tax Base." Some states, like South Dakota, tax groceries. Others don't. If you have a big family, a 4% or 7% tax on every gallon of milk and loaf of bread adds up to thousands over a year.
Moving to a state with no income tax can be a brilliant move, but only if you play the whole board. It’s about the "net-net," not just the headline.