9 States With No Income Tax in 2026 — How Much Do You Actually Save?
January 22, 2026 · 5 min read
Moving to a no-income-tax state sounds like a financial win — and it often is. But the savings depend heavily on your income, and some states make up the difference with higher property taxes, sales taxes, or cost of living. Here is what the numbers actually look like.
The 9 States With No Income Tax
No income tax. Also pays residents an annual Permanent Fund Dividend (~$1,300–$2,000/yr).
No income tax. Popular retirement destination. High sales tax (6% + local).
No income tax. High-tax states like CA border NV — many residents cross-commute.
No wage income tax. Historically taxed interest & dividends, but that was phased out.
No income tax. Business-friendly — many corporations domicile here.
No income tax on wages. The Hall Tax (interest/dividends) was repealed in 2021.
No income tax. Offset by higher property taxes (~1.6–2.2% of home value/year).
No income tax. Has a capital gains tax (7%) on gains over $250k since 2022.
No income tax. Low cost of living and low property taxes.
How Much Do You Save vs. High-Tax States?
Here is the annual state income tax savings when choosing Texas (no tax) over four high-tax states, at three income levels:
| Income | vs. California | vs. New York | vs. Illinois | vs. Oregon |
|---|---|---|---|---|
| $50k | +$2,850 | +$2,550 | +$2,475 | +$4,950 |
| $75k | +$5,175 | +$4,200 | +$3,713 | +$7,425 |
| $100k | +$7,775 | +$6,185 | +$4,950 | +$9,900 |
The Hidden Costs — What No-Tax States Do Instead
States still need revenue. Here is how the most popular no-tax states make up the difference:
- Texas: Property taxes average 1.7–2.2% of home value per year — one of the highest in the US. On a $400k home that is $6,800–$8,800/year.
- Florida: 6% state sales tax (+ local). No property tax break on non-homesteaded properties.
- Nevada: 6.85% sales tax + high gaming/tourism taxes fund the state.
- Washington: 6.5% sales tax, plus a 7% capital gains tax on gains over $250,000.
- Tennessee: 7% state sales tax — the highest base rate in the US.
Who Benefits Most From Moving?
The higher your income, the more you save. A $50k earner moving from California to Texas saves about $2,850/year in state taxes. A $200k earner saves over $17,000/year. High earners in California face up to 13.3% state income tax — moving to Nevada or Texas is a common strategy.
However, if you work remotely and your employer is in California, you may still owe California taxes on that income. State tax residency rules are complex — always consult a CPA before relocating for tax purposes.
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