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What to Consider Before Moving to a State With No Income Tax
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do not influence our editors’ opinions or ratingsWhat to Consider Before Moving to a State With No Income Tax
Living in a state without income tax might allow you to hold on to more of your hard-earned money. However, it won’t necessarily shield you from other taxes or a higher cost of living.
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Editor & Content Strategist
Expertise Taxes InvestingSabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York.
Sabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her previous experience includes five years as a copy editor and associate editor in academic and educational publishing. She is based in Brooklyn, New York. Published in Editor & Content Strategist + more + more
Head of Content, Investing & Taxes
19 years of experience Expertise Retirement planning investment management investment accountsArielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia.
Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia. Published in Head of Content, Investing & Taxes + more + more
Content Management Specialist
2 years of experience Expertise Personal income taxes Investing basics Investment fundsBella Avila is a content management specialist on the investing and taxes team at NerdWallet. Previously, she was a copy editing intern at NerdWallet through the Dow Jones News Fund internship program. Bella graduated from The University of Oklahoma with a bachelor's degree in journalism. She lives in Minneapolis, Minnesota.
Bella Avila is a content management specialist on the investing and taxes team at NerdWallet. Previously, she was a copy editing intern at NerdWallet through the Dow Jones News Fund internship program. Bella graduated from The University of Oklahoma with a bachelor's degree in journalism. She lives in Minneapolis, Minnesota. Content Management Specialist + more + moreThere are nine states without a state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
There are nine states without a state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.That said, Washington is a bit of an exception. While it does not tax most earned income, some long-term capital gains may be taxed.
That said, Washington is a bit of an exception. While it does not tax most earned income, some long-term capital gains may be taxed.What does it mean to live in a state with no income tax?
What does it mean to live in a state with no income tax?At the most basic level, living in a state with no personal income tax means that you’ll get to keep a little bit more of your paycheck. However, there are certain pros, cons and good-to-knows to consider before booking a one-way ticket.
At the most basic level, living in a state with no personal income tax means that you’ll get to keep a little bit more of your paycheck. However, there are certain pros, cons and good-to-knows to consider before booking a one-way ticket.No state taxes on retirement benefits
No state taxes on retirement benefitsMost people can expect to pay at least some taxes during retirement, whether on 401(k) distributions or pensions. If you live in a state without personal income tax, you generally get to skip paying state taxes on retirement income. This can mean more money for your golden years.
Most people can expect to pay at least some taxes during retirement, whether on 401(k) distributions or pensions. If you live in a state without personal income tax, you generally get to skip paying state taxes on retirement income. This can mean more money for your golden years.Avoiding state taxes can be a nice retirement perk, but you'll want to weigh it against other important costs. For example, some states have fewer public transportation options or less affordable health care. You also might not want to live far away from friends or family.
Avoiding state taxes can be a nice retirement perk, but you'll want to weigh it against other important costs. For example, some states have fewer public transportation options or less affordable health care. You also might not want to live far away from friends or family.» Other ways to lower your taxes in retirement
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You still have to pay other taxes
You still have to pay other taxesState taxes are often used to generate revenue for services such as health care or to fund infrastructure. Without this money, some states end up relying more heavily on other taxes, such as property or sales, to recoup the loss.
State taxes are often used to generate revenue for services such as health care or to fund infrastructure. Without this money, some states end up relying more heavily on other taxes, such as property or sales, to recoup the loss.If you're a homeowner who currently lives in a state with relatively affordable property taxes, it may not be worth giving that up. Living in a state with no income tax also means you might not be able to take full advantage of the state and local tax deduction, which recently doubled to $40,000.
If you're a homeowner who currently lives in a state with relatively affordable property taxes , it may not be worth giving that up. Living in a state with no income tax also means you might not be able to take full advantage of the state and local tax deduction , which recently doubled to $40,000.On the plus side, except for Washington, living in an income-tax-free state means any capital gains you earn aren't taxed at the state level. This means you’ll only be responsible for federal capital gains taxes.
On the plus side, except for Washington, living in an income-tax-free state means any capital gains you earn aren't taxed at the state level. This means you’ll only be responsible for federal capital gains taxes .Establishing domicile is important
Establishing domicile is importantSeveral conditions need to be met to reap the benefits of living in an income-tax-free state. Establishing domicile, or the intention of making a state your permanent home, is the most critical one. Rules vary by state, but generally, you must live in a place for at least 183 days to begin qualifying as a permanent resident. In addition, states conduct residency audits, so this will require proof.
Several conditions need to be met to reap the benefits of living in an income-tax-free state. Establishing domicile, or the intention of making a state your permanent home, is the most critical one. Rules vary by state, but generally, you must live in a place for at least 183 days to begin qualifying as a permanent resident. In addition, states conduct residency audits, so this will require proof.Tread carefully here. Say you live in one state but spend a good part of the year in another state. You could be considered a permanent resident of one state and a “statutory resident” of the other. This means you could end up paying taxes on earned income in both states. Tax planning with a professional, such as a financial advisor, is one of the best ways to avoid finding yourself in a sticky tax situation.
Tread carefully here. Say you live in one state but spend a good part of the year in another state. You could be considered a permanent resident of one state and a “statutory resident” of the other. This means you could end up paying taxes on earned income in both states. Tax planning with a professional, such as a financial advisor , is one of the best ways to avoid finding yourself in a sticky tax situation.» Learn about the tax implications of dual residency
» » Learn about the tax implications of dual residencyYour cost (and quality) of living might change
Your cost (and quality) of living might changePerhaps the most critical number to crunch is your cost of living. This includes tallying up the costs of housing (rental or purchase), food, wages, health care and lifestyle. The savings you gain on state taxes might not be worth the extra cost incurred to live comfortably in another state.
Perhaps the most critical number to crunch is your cost of living. This includes tallying up the costs of housing (rental or purchase), food, wages, health care and lifestyle. The savings you gain on state taxes might not be worth the extra cost incurred to live comfortably in another state.Think about your job as well. Remote work has made it easier than ever to envision moving without risking job security. But if you were to live in a state with limited opportunities in your industry and lose your job, you could face difficulties securing another one.
Think about your job as well. Remote work has made it easier than ever to envision moving without risking job security. But if you were to live in a state with limited opportunities in your industry and lose your job, you could face difficulties securing another one.» Thinking about a move? Use our cost of living calculator to compare two cities
» Thinking about a move? » Thinking about a move? Use our cost of living calculator to compare two citiesHow affordability and other taxes stack up
How affordability and other taxes stack upThe table below compares income-tax-free states using other important factors like sales taxes, property taxes and affordability. Affordability, in this case, reflects housing costs and overall cost of living.
The table below compares income-tax-free states using other important factors like sales taxes, property taxes and affordability. Affordability, in this case, reflects housing costs and overall cost of living.While this data won't capture every expense, it can give you some more insight into whether moving states to avoid an income tax could result in meaningful savings.
While this data won't capture every expense, it can give you some more insight into whether moving states to avoid an income tax could result in meaningful savings.State
State
StateState sales tax
State sales tax
State sales taxAverage local sales tax
Average local sales tax
Average local sales taxEffective property tax rate
Effective property tax rate
Effective property tax rateAffordability rank
Affordability rank
Affordability rankAlaska
AlaskaNone.
None.1.82%.
1.82%.0.91%.
0.91%.35 out of 50.
35 out of 50.Florida
Florida6%.
6%.0.98%.
0.98%.0.74%.
0.74%.44 out of 50.
44 out of 50.Nevada
Nevada6.85%.
6.85%.1.39%.
1.39%.0.49%.
0.49%.34 out of 50.
34 out of 50.New Hampshire
New HampshireNone.
None.None.
None.1.41%.
1.41%.42 out of 50.
42 out of 50.South Dakota
South Dakota4.20%.
4.20%.1.91%.
1.91%.0.99%.
0.99%.4 out of 50.
4 out of 50.Tennessee
Tennessee7%.
7%.2.61%.
2.61%.0.49%.
0.49%.19 out of 50.
19 out of 50.Texas
Texas6.25%.
6.25%.1.95%.
1.95%.1.36%.
1.36%.30 out of 50.
30 out of 50.Washington
Washington6.50%.
6.50%.3.01%.
3.01%.0.75%.
0.75%.46 out of 50.
46 out of 50.Wyoming
Wyoming4%.
4%.1.56%.
1.56%.0.55%.
0.55%.17 out of 50.
17 out of 50.Sources: Tax Foundation and U.S. News & World Report.
Sources: Tax Foundation and U.S. News & World Report. Sources: Tax Foundation and U.S. News & World Report. AD Get reliable back tax relief with our team of A+ rated tax professionals Trusted & Top-Rated Nationwide — 4.9★ Google rating. Learn moreon Priority Tax Relief's website
AD Owe $10,000+ in IRS Back Taxes? Get Trusted Tax Help Today BBB Accredited, $500M+ tax debt resolved, free consultation. Learn moreon Alleviate Tax's website
About the authors Sabrina Parys Sabrina Parys Sabrina Parys is an editor and content strategist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her work has appeared in The Associated Press, The Washington Post and Yahoo Finance. See full bio. Bella Avila Bella Avila Bella Avila is a content management specialist on the investing and taxes team at NerdWallet. See full bio.Helpful resources
Helpful resources How Federal Tax Brackets and Rates Work Capital Gains Tax: Long and Short-Term Rates for 2025-2026 How to Fill Out Your W-4 Form and When to Adjust It More like this Taxes 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Get started Get startedon Anthem Tax Services's website
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