You’ve probably seen the headlines or heard that one friend at a BBQ bragging about their "massive" paycheck since moving to Florida. They talk about it like they found a legal cheat code for life. No state income tax. Zero. Zilch.
But honestly, the idea of a state where you just... don't pay taxes? It's kinda a myth.
Uncle Sam always gets his cut, obviously. We’re talking federal taxes there. But even on the state level, these governments have to pave the roads and pay the teachers somehow. If they aren't taking it out of your Friday paycheck, they're grabbing it when you buy a toaster or pay your annual property bill.
In 2026, the map of what states don’t pay taxes—specifically personal income tax—has shifted a bit. Some states are getting more aggressive with their "tax-friendly" branding, while others, like Washington, are adding weird new layers that make the "zero tax" label feel a little bit like a technicality.
The "Big Nine" List for 2026
Right now, there are exactly nine states that don't hit your wages with a state-level income tax.
- Alaska
- Florida
- Nevada
- South Dakota
- Tennessee
- Texas
- Wyoming
- New Hampshire (The final piece of the puzzle just clicked here.)
- Washington (Mostly. We’ll get to the "mostly" in a second.)
New Hampshire is the big news for this year. For a long time, they were the "asterisk" state. They didn't tax your salary, but they did tax your interest and dividends. As of January 1, 2025, that tax was fully repealed. So, for the 2026 tax season, New Hampshire is officially, finally, completely out of the income tax game.
The Washington "Asterisk"
Washington is the weird one. They don't have a personal income tax. You’ll see $0.00 in that box on your W-2. But if you’re a high-flyer selling off a lot of stocks or business interests, watch out.
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The state now has a 7% tax on long-term capital gains. For 2026, the standard deduction has been adjusted for inflation to around $278,000. If your gains are under that, you're fine. If you're over? You aren't just paying 7% anymore. There’s a new tiered system where gains over $1 million get hit with an extra 2.9% excise tax.
So, basically, if you're wealthy in Seattle, you're definitely paying a form of "income" tax, even if they call it an "excise tax" to keep it legal under the state constitution.
How They Actually Pay the Bills
Let's be real. States aren't charities. If they don't tax your income, they usually hammer you somewhere else.
Take Texas. No income tax sounds great until you get your property tax bill. It’s legendary for being one of the highest in the country. You might save $5,000 a year on income tax but end up paying that exact same $5,000 (or more) to the county just for the privilege of owning a house.
Then there’s Tennessee and Washington. They have some of the highest combined state and local sales taxes in the US. In some parts of Tennessee, you’re looking at almost 10% every time you buy a gallon of milk or a new pair of shoes. It’s a "consumption-based" model. If you spend a lot, you pay a lot.
Alaska is the true outlier. They have no state income tax and no state sales tax. How? Oil. They tax the extraction of natural resources so heavily that they actually pay you to live there via the Permanent Fund Dividend. It’s the closest thing to a tax haven we have, assuming you don't mind the 40-below winters.
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The Hidden Costs Nobody Mentions
I talked to a guy who moved from California to Nevada to save on taxes. He was thrilled. For six months. Then he realized his car insurance doubled, his registration fees were hundreds of dollars higher, and his electricity bill in the summer—thanks to the AC running 24/7 in 110-degree heat—ate up half his tax savings.
You have to look at the Total Tax Burden.
The Tax Foundation puts out a "Competitiveness Index" every year. For 2026, Wyoming and South Dakota usually top the list because they keep almost everything low. But states like Florida are becoming victims of their own success. As more people flock there for the "no tax" lifestyle, the cost of everything else—insurance, housing, tolls—skyrockets.
Does it actually save you money?
It depends on your "tax profile."
- The High Earner: If you make $500k a year in wages and live in a modest apartment, moving to a no-income-tax state is a massive win. You’re shielding a huge chunk of money.
- The Retiree: Many states (like Illinois) actually tax regular income but don't tax Social Security or pension 401(k) withdrawals. You might not need a "no-tax" state to live tax-free in retirement.
- The Average Joe: If you spend most of what you earn, a high sales tax state might actually leave you worse off than a state with a low, flat income tax.
Real Examples of the Trade-off
| State | No Income Tax? | The "Catch" |
|---|---|---|
| Texas | Yes | Massive property taxes (often 1.8% or higher). |
| Florida | Yes | Insurance crisis. Homeowners' insurance is triple the national average. |
| New Hampshire | Yes | High property taxes, but zero sales tax. |
| Washington | Yes | High sales tax and a 7%-9.9% capital gains tax. |
| Nevada | Yes | High "sin" taxes and expensive car registration. |
Why "Tax-Free" Might Be a Bad Deal
There is a quality-of-life argument here.
States that don't collect income tax often have "leaner" public services. Maybe the roads have more potholes. Maybe the public schools are struggling for funding because they rely entirely on local property taxes.
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In some cases, the "savings" are just shifted to your private budget. If the public schools are bad, you might pay for private school. If the public transit is non-existent, you're paying for a car and gas and tolls.
Honestly, the "best" state for you is rarely just the one with the lowest tax rate. It’s the one where the cost of living matches your lifestyle.
Actionable Steps Before You Move
Don't just pack the U-Haul because you saw a TikTok about Florida.
First, look at your last three years of tax returns. How much did you actually pay in state income tax? Compare that number to the estimated property tax on a home in your destination city. You can use sites like Zillow or Redfin to see the actual tax history of specific houses.
Next, check the sales tax. If you're a big spender, that 9.5% in Tennessee is going to sting.
Finally, consider the "fee" structure. Some states love to nickle-and-dime you with "user fees" for everything from parks to driver's licenses to compensate for the lack of income tax revenue.
The grass is green in the nine states that don't pay taxes, but someone has to pay for the sprinkler system. Make sure it isn't costing you more than the grass is worth.
Your 2026 Tax Strategy
- Calculate your Total Tax Burden, not just the income tax rate.
- Factor in "lifestyle" costs like insurance and utilities which vary wildly by region.
- Check the 2026 updates for Washington and New Hampshire, as their rules have fundamentally changed in the last 24 months.
- Consult a pro if you have a complex portfolio, especially with Washington's new tiered capital gains rates.