The 9 States With No Income Tax in 2026 (and What They Cost You Instead)
Published June 10, 2026
Nine states take zero income tax out of your paycheck in 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
That sounds like an automatic raise. Sometimes it is. But states still have to pay for roads, schools, and police, and the ones that skip income tax collect the money somewhere else, usually through higher sales taxes, higher property taxes, or payroll programs you’ll see deducted from your check anyway.
Here’s where the money actually comes from in each state, and three worked examples showing whether a move really pays off.
The 9 states at a glance
| State | Income tax on wages | How it funds government instead |
|---|---|---|
| Alaska | None | Oil and gas revenue; no state sales tax (some local sales taxes) |
| Florida | None | Sales tax plus tourism-driven revenue |
| Nevada | None | Sales tax plus gaming and tourism taxes |
| New Hampshire | None (repealed its interest/dividends tax in 2025) | High property taxes; no sales tax |
| South Dakota | None | Sales tax |
| Tennessee | None | One of the highest combined sales tax rates in the US |
| Texas | None | High property taxes plus sales tax |
| Washington | None on wages (taxes only large capital gains) | High sales tax plus employee payroll programs |
| Wyoming | None | Mineral and energy revenue; sales tax |
Two clarifications worth knowing:
- Washington has no tax on wages or salaries, but it does tax large capital gains. For a paycheck, it counts as a no-income-tax state.
- New Hampshire used to tax interest and dividends. That tax was repealed in 2025, so as of 2026 New Hampshire taxes neither wages nor investment income.
Where the money comes from instead
Sales taxes
Per the Tax Foundation’s 2026 data, Tennessee’s average combined state and local sales tax rate is 9.61%, second-highest in the country behind Louisiana (10.11%). Washington sits at 9.47%, also in the national top five. Texas averages roughly 8.2% combined.
On the other end, New Hampshire has no sales tax at all, and Alaska has no state sales tax (some localities add their own). Those two states genuinely don’t recapture much from you at the register.
What this means in dollars: if you spend $20,000 a year on taxable goods in Tennessee, you pay about $1,922 in sales tax. The same spending in a 6.5%-tax state costs $1,300, a difference of roughly $620 a year. Real money, but small next to what income tax would take.
Property taxes
Texas and New Hampshire lean hard on property taxes. The Tax Foundation’s 2026 figures put the effective rate on owner-occupied housing at roughly 1.4% in Texas and 1.5% in New Hampshire, well above the national average.
On a $400,000 home, that’s about $5,600 a year in Texas. The same home in a 0.85%-rate state costs $3,400, a $2,200 annual difference. Homeowners feel this; renters feel it indirectly through rent, but far less directly.
Washington’s payroll programs
Washington has no income tax, but two state programs come straight out of employee paychecks in 2026:
- Paid Family and Medical Leave (PFML): the 2026 total premium is 1.13% of gross wages (up to the $184,500 Social Security cap), and employees can be charged up to 71.43% of it, about 0.81% of your pay.
- WA Cares (long-term care): 0.58% of gross wages, paid entirely by the employee, with no wage cap.
Combined, that’s roughly 1.39% of wages. It’s not an income tax, but it shows up on your pay stub like one.
Does moving actually save money? Three worked examples
The honest answer: it depends on what you earn, what you own, and what your current state charges. Run your own numbers with your state’s paycheck calculator, but here are three realistic scenarios.
Example 1: $85,000 homeowner moves to Texas
Say your current state takes an effective 4.5% of your $85,000 salary in income tax, about $3,825 a year. Texas takes $0. So far, you’re up $3,825.
Now the house. You buy a $400,000 home:
| Old state (0.85% effective) | Texas (~1.4% effective) | |
|---|---|---|
| Annual property tax | $3,400 | $5,600 |
The Texas property tax bill eats $2,200 of your income-tax savings.
Net result: about $1,625 ahead per year, roughly $135 a month. A win, but a much smaller one than “no income tax” suggests. And if you buy a more expensive home, the gap shrinks further.
Example 2: $120,000 earner moves to Washington
No income tax on your $120,000 salary, but Washington’s payroll programs still take a cut in 2026:
| Deduction | Rate | Annual cost |
|---|---|---|
| PFML (employee share) | ~0.81% | ~$968 |
| WA Cares | 0.58% | $696 |
| Total | ~1.39% | ~$1,664 |
That’s about $64 per biweekly paycheck. If your old state charged an effective 5% income tax ($6,000 a year), you’re still roughly $4,300 ahead. But you’re not at zero deductions, and Washington’s 9.47% combined sales tax claws back more at the register.
Net result: a clear win for high earners, just smaller than advertised.
Example 3: $60,000 renter moves to Tennessee
Renters are the cleanest case, because high property taxes hit them only indirectly.
- Income tax saved (assuming your old state took an effective 5%): $3,000 a year
- Extra sales tax: 9.61% in Tennessee vs. 6.5% before, on roughly $18,000 of taxable annual spending = about $560 more per year
Net result: roughly $2,440 ahead, about $94 per biweekly paycheck. For renters with solid wage income, the no-income-tax math usually works.
Who wins and who doesn’t
The pattern across these examples:
- High earners who rent win biggest. Income tax savings scale with income; sales tax doesn’t scale nearly as fast.
- Homeowners in Texas and New Hampshire give a meaningful chunk back through property taxes. The move can still pay, but compare your full housing cost, not just the income tax line.
- Lower earners save less in absolute dollars, and high sales taxes (Tennessee, Washington) take a proportionally bigger bite from their spending.
- Retirees and investors now do well in all nine states. New Hampshire’s 2025 repeal of its interest and dividends tax removed the last asterisk.
One more thing income tax savings can’t fix: federal taxes are identical everywhere. In 2026 you’ll pay Social Security tax of 6.2% on wages up to $184,500 and Medicare tax of 1.45% (plus 0.9% above $200,000 single / $250,000 married filing jointly) no matter which state you live in. The 2026 federal brackets and the $16,100 single / $32,200 married standard deduction follow you across state lines.
Before you decide to move
Moving to a no-income-tax state usually saves money, but rarely the full amount of your old state tax bill. Sales taxes, property taxes, and (in Washington) payroll programs recover part of it. Before you decide:
- Calculate your current state income tax with your state’s paycheck calculator.
- Compare property tax on the home you’d actually buy, not the state average.
- If you’re hourly, convert your wage with the hourly to salary converter so you’re comparing annual figures; salaried workers can sanity-check the per-hour value with the salary to hourly converter.
The nine no-income-tax states aren’t a free lunch. But for most wage earners (especially renters) they’re a genuinely cheaper lunch.