States With No State Income Tax: The Nine, and What They Cost You Instead

As of 2026, nine states have no broad personal income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, Tennessee, and New Hampshire. That number has been stable for years, and it is the figure to anchor on when someone tells you about a state with no state income tax. The list moves slowly because dropping or adding an income tax is a constitutional or major legislative event, not a routine budget tweak. So while the rules inside these states shift around the edges, the membership of the no-income-tax club rarely turns over. If you are evaluating a move, treat the nine-state list as fixed for planning purposes, but always confirm the current rules on the destination state’s own revenue website before you commit, because the details inside a state can change even when its membership does not.

Two of the nine deserve a footnote, because they used to tax investment income and people still repeat the old rules. Tennessee operated the Hall income tax on interest and dividends, but it was phased down over several years and eliminated entirely by 2021, so a Tennessee resident now pays no state tax on wages or on investment income. New Hampshire ran a parallel interest and dividends tax, and that one finished its phase-out for tax periods beginning after December 31, 2024, under the budget the legislature passed in 2021. The New Hampshire Department of Revenue Administration keeps the historical guidance posted, which is why outdated articles still claim New Hampshire taxes dividends. From the 2025 tax year forward, it does not. So if you are reading something written before 2025 that lists New Hampshire as a partial income tax state, that source is stale and you should ignore it.

Washington is the live exception that catches investors off guard. It has no tax on wages, full stop, but in 2021 the legislature enacted a 7% tax on long-term capital gains above an annual standard deduction, codified at RCW 82.87. The Washington Department of Revenue administers it, the state supreme court upheld it, and for the 2025 tax year the standard deduction sits at $278,000. So a Washington resident who sells a chunk of appreciated stock can owe state tax even though Washington appears on every no-income-tax list ever printed. For a salaried worker with no big asset sales, Washington behaves exactly like a no-income-tax state. For a founder cashing out equity, it does not, and that distinction is the whole reason we tell clients not to treat the nine states as interchangeable.

It helps to understand why these particular states ended up without an income tax, because the reason tells you what they tax instead. Several of them sit on natural resources. Alaska funds itself heavily on oil revenue and even pays residents an annual Permanent Fund Dividend. Wyoming leans on mineral extraction. Texas and Nevada built their models around other levers, with Texas relying on property tax and Nevada on tourism-driven sales and gaming taxes. Florida runs on sales tax, tourism, and property tax. None of these states discovered a magic way to provide services for free. They each picked a different mix of taxes, and the mix is what determines whether the absence of an income tax actually helps you.

Here is a quick worked example to show the spread. Take a single filer earning $200,000 in wages with no large asset sales. In a state with no state income tax, the state income tax line is zero. In New York, that same filer would owe roughly $11,000 to $12,000 in state income tax at current brackets, plus New York City tax on top if they live in the city, which can add several thousand more. So the headline savings of leaving a high-tax state for a no-income-tax state is real and large for a high wage earner. The mistake is assuming that savings is automatic and permanent. It is automatic only if you actually break residency in the old state, and it can be partly clawed back by higher property or sales tax in the new one.

A common misconception worth flagging here: people assume a no-income-tax state must be cheaper across the board, and that is simply not how it works. The same $200,000 earner who saves $12,000 by leaving New York might give a chunk of that back if they buy a large home in Texas, where annual property tax can run well into five figures. The income tax savings is the visible number. The replacement taxes are the quiet ones that show up later. Counting only the income tax line is the single most reliable way to talk yourself into a move that does not actually pencil out.

The forward-looking point is to treat the nine-state list as your starting filter, not your decision. Confirm the current rules on the destination state’s own revenue site, because that is where you will catch the Washington capital gains wrinkle or any future change. Then layer in your own numbers: your income type, your home value, your spending. We walk clients through that full comparison in our state tax questions guide, because the answer that fits a retiree almost never fits a high earner in their peak earning years, even though both are looking at the very same nine states.

One more practical note for anyone comparing the nine states: the absence of a state income tax also changes your federal return in a small way. If you itemize, the state and local tax deduction lets you deduct state income or sales taxes plus property taxes, up to a federal cap. In a state with no state income tax, you fall back on the optional sales tax deduction instead of a state income tax deduction. For most movers this is a minor footnote, but for a high earner who used to deduct a large New York income tax, it is one more piece of the picture that shifts when you relocate to a state with no state income tax. The point, again, is that no single number tells the story.

Often yes, at least for a while, and that surprises people who think a moving truck ends their New York obligation. New York taxes its residents on all income from every source, and it taxes nonresidents on income sourced to New York. Moving changes which of those two buckets you fall into, but it does not erase income you already earned in New York, and it does not free income that keeps coming from New York sources. So the honest answer to whether you still owe New York after a move to a state with no state income tax is: it depends on what you left behind and how cleanly you left. People who treat the move as a clean break with no follow-through are the ones who end up with an audit notice.

Start with the year of the move itself. If you were a New York resident for part of the year and a nonresident for the rest, you file a part-year resident return and pay New York tax on everything earned while you were a resident, plus New York-source income earned after. There is no clean January 1 cutover unless your move happened to land on January 1. The New York Department of Taxation and Finance defines a part-year resident as someone who meets the resident definition for only part of the year, and the part-year return splits your income accordingly. So in the transition year, leaving for a state with no state income tax does not zero out your New York bill. It only stops the clock partway through.

Now the part that bites after the move is complete. Certain income stays taxable by New York no matter where you live, because it is New York-source. That includes wages for work physically performed in New York, income from a business or partnership operating in New York, rent and gain from New York real estate, and income from a New York S corporation. If you keep a Manhattan rental property after moving to Florida, the rental income and the eventual sale gain go on a New York nonresident return every year you own it. Florida has no income tax to credit you for, so there is no offset. The New York tax on that New York-source income is simply a cost of keeping the asset, and it is a cost many movers forget to price in.

The bigger trap is the statutory residence rule, which can pull you back into full New York residency even after a genuine move. Under the New York definitions, you are a resident if you maintain a permanent place of abode in New York for substantially all of the year and spend 184 days or more in the state, regardless of where you are domiciled. Any part of a day counts as a full day. So if you moved to a state with no state income tax but kept your New York apartment and you commute back frequently, you can be taxed as a full New York resident on all your income, including the income you thought you moved away from. That is the worst outcome: you pay for two homes and still owe New York on everything.

There is also a credit mechanic that quietly hurts people moving to no-income-tax states specifically. When you live in a state that has an income tax and earn income in another state, you usually get a credit for taxes paid to the other state, so you are not taxed twice. But a state with no state income tax has no tax against which to apply a credit. So if New York taxes your New York-source income and your new home state has no income tax, there is no second state tax to credit and nothing to offset the New York bill. The lack of an income tax in your new state, which is the whole reason you moved, is also the reason you get no relief on the New York-source income that follows you.

A worked example makes the stakes concrete. Say you move to Florida in 2026, keep your $5,000-a-month Manhattan apartment, and spend 190 days in New York for work and family. Your domicile may now be Florida, but you blew through the 184-day line while maintaining a permanent place of abode, so you are a New York statutory resident for 2026. New York taxes your entire income, which on $400,000 could mean roughly $25,000 or more in state tax, plus city tax if the apartment is in the five boroughs. The Florida move saved you nothing for that year. Drop to 180 days or give up the apartment, and the analysis flips entirely, which is exactly why the planning has to happen before the move, not after the first audit letter.

The common mistake is treating the move as a one-time event instead of an ongoing discipline. Breaking New York residency is not a form you file once. It is a pattern you have to maintain, with day counts you actually track and a New York footprint you actually shrink. Going forward, if you keep any New York property or income source, plan on a nonresident New York return for as long as that source exists, and keep a contemporaneous log of every day you set foot in the state. Our tax strategy consulting work with relocating clients almost always starts with that day-count system, because it is the single piece of evidence an auditor cannot argue with.

One question we get constantly is whether changing your voter registration and driver’s license alone is enough to stop owing New York tax. It is not. Those documents help build a domicile case, but they do nothing for the statutory residence test, and they do not touch New York-source income at all. A person can hold a Florida license, vote in Florida, and still owe New York as a statutory resident if they kept the apartment and crossed 184 days. Treat the paperwork as supporting evidence, never as the finish line, especially when the new state has no state income tax to give you any offsetting credit.

The 183-day rule is the rough idea that if you spend more than half the year in a state, that state can treat you as a resident and tax your worldwide income. Half of 365 is about 182.5, so most people round to 183 and call it the half-year line. It is a useful mental model, but the exact number is set by each state’s own law, and New York is the one that matters most for people leaving the city, because New York uses 184 days for its statutory residence test, not 183. That one-day difference is the kind of thing that decides an audit, so it is worth getting exactly right.

The difference sounds trivial and is not. Under the New York income tax definitions, you are a statutory resident if you maintain a permanent place of abode in New York for substantially all of the taxable year and spend 184 days or more in the state. So the safe ceiling in New York is 183 days, and the moment you hit 184 you cross into resident territory. People who anchor on the generic 183-day rule sometimes plan to spend exactly 183 days in New York and think they are clear, when they have actually given themselves zero margin and one airport delay away from a problem. The smart target is well under the line, not flush against it.

Notice that the day count is only half of the statutory residence test. You also have to maintain a permanent place of abode in New York for substantially all of the year. If you do not keep a residence in New York at all, the 184-day count does not make you a statutory resident, though it can still feed into a domicile argument. This is why giving up the New York apartment is so powerful. It does not just reduce your nights in the state. It removes one of the two required elements of the statutory residence test entirely. A person who moves to a state with no state income tax and sells the New York home has a far stronger position than one who keeps the home and simply tries to count days.

The day-counting mechanics are stricter than people expect, and this is where audits are won and lost. New York counts any part of a day spent in the state as a full day. There is no minimum hours threshold, no exemption for being in transit through the state, and no pass for a quick business stop. If your plane lands at JFK at 11 p.m. and you sleep in New Jersey, that is still a New York day under the part-of-a-day rule. The New York residency FAQ and the state’s nonresident audit guidelines lay out the limited exceptions, such as days spent solely traveling through the state or certain medical confinement, but they are narrow and you have to be able to prove them with documentation, not just assert them.

Because the count is so unforgiving, the only defense is contemporaneous records. Auditors will pull your cell phone location data, your E-ZPass records, your credit card charges, and your calendar to reconstruct where you actually were. If your records say 180 days and the toll data says 188, the toll data wins. So the practical version of the 184-day rule is not just keep it under 184. It is keep it under 184 and be able to prove it from independent sources you do not control, because the auditor will use those same sources against you. The people who lose these audits are usually the ones who kept no log and tried to reconstruct their year from memory after the fact.

Here is a worked example of how thin the margin is. Suppose you move to Texas, a state with no state income tax, but you keep a New York apartment because your job still requires frequent visits. You target 180 New York days to stay safely under the line. Over the year you make 40 trips, and a handful run long because of weather and meetings. Your real count comes in at 185. You are now a New York statutory resident, taxed on 100% of your income, even though you spent more nights in Texas. If your income is $350,000, the New York resident tax can run past $20,000, plus city tax. All of it because the count slipped one day over the line while you were maintaining a New York abode. The move to a no-income-tax state delivered no benefit for that year, and the apartment you kept for convenience is what cost you.

The mistake is treating 183 as a national constant. It is not. New York uses 184, some states use other figures, and a few use different residency triggers entirely. Looking ahead, anyone splitting time between New York and a no-income-tax state should set a personal target well under the New York line, give up the New York abode if the days cannot be controlled, and keep a daily log from day one of the move. We help clients build that count into a simple tracking habit, and you can read more in our state tax questions guide on how the residency tests interact across states.

It is worth separating the two residency tests one more time, because conflating them is the root of most confusion. Domicile is about intent and your true permanent home, and it follows you until you prove you replaced it. Statutory residence is purely mechanical: a permanent place of abode plus 184 days, intent irrelevant. You can win the domicile argument and still lose on statutory residence, or vice versa. When someone moves to a state with no state income tax, they tend to focus all their energy on the domicile story and forget that the mechanical 184-day test can tax them regardless of how convincing that story is.

The bottom line on the day count: precision beats intention. Auditors do not care that you meant to stay under the line. They count the days you can prove and the days they can prove, and the higher number tends to win. Anyone living partly in New York and partly in a state with no state income tax should run a personal tally every single month, not once at year end, so a slow drift toward 184 gets caught while there is still time to cancel a trip rather than after the year has closed and the count is locked.

Sometimes a lot, sometimes nothing, and occasionally it costs you more. A state with no state income tax has to raise the same kind of revenue any state needs, so it shifts the burden onto sales tax, property tax, and a grab bag of fees and excise taxes. Whether the trade works in your favor depends entirely on how you earn, spend, and own. The blanket claim that a no-income-tax state is cheaper is one of the most repeated and least accurate things in personal finance, and it costs people real money when they act on it without running their own numbers.

Look at how the replacement taxes land on different households. Property tax is a wealth-on-paper tax: it hits you on the value of what you own, every year, whether or not you have income. Sales tax is a consumption tax: it hits you on what you spend. Income tax, the thing these nine states skip, hits you on what you earn. So a high earner who rents and saves wins big by dropping the income tax, because the replacement taxes barely touch them. A retiree with no wage income but a paid-off house gets little benefit from killing an income tax they barely pay and instead eats a large annual property tax bill. The same state, with the same rules, helps one household and hurts the other.

Texas is the clearest illustration of the trade. It has no income tax, but property taxes are among the highest in the nation, with effective rates that often exceed 1.6% of a home’s value. On a $700,000 home that is roughly $11,200 a year, indefinitely, with no relationship to your income. A retired couple on a fixed income in that house might pay more in Texas property tax than they would have paid in state income tax somewhere with a moderate rate and lower property taxes. Compare that to Florida, which also has no income tax but pairs it with more moderate property taxes and a homestead exemption that caps annual assessment increases, which is a big reason Florida pulls so many retirees while Texas pulls more working families. Two no-income-tax states, two very different retirement math problems.

Sales tax is the other replacement lever, and it falls hardest on households that spend a high share of their income. Washington and Tennessee both run combined state and local sales tax rates that can top 9%. For a family spending $80,000 a year on taxable goods, a 9% rate is about $7,200 annually in sales tax, though groceries and some essentials are often exempt or taxed at a lower rate depending on the state. A frugal saver in the same state pays far less, because they are taxed on consumption they are choosing not to do. So sales-tax-heavy states quietly reward savers and penalize big spenders, which is the opposite of how an income tax behaves.

Do not forget the smaller line items, because they add up. Vehicle registration, annual excise taxes on cars, higher insurance premiums in some of these states, and various fees can erase a chunk of the income tax savings. Some no-income-tax states also run higher fuel taxes or special district levies. None of these is dramatic on its own, but a household that moves expecting to pocket the full income tax savings often finds several hundred to a few thousand dollars a year leaking back out through fees that never made it into the comparison. The income tax line is loud. The fee lines are quiet, and they are real.

Here is a worked comparison. Take a couple earning $250,000, owning an $800,000 home, and spending $90,000 a year on taxable purchases. In New York, their state income tax might run around $15,000 and their property tax depends heavily on the county. Move them to Texas with the same house: state income tax drops to zero, a $15,000 savings, but property tax on the $800,000 home at 1.7% is about $13,600 a year. So the net improvement is closer to $1,400, not the full $15,000 they expected, before you even count the move and the higher Texas insurance costs. Move that same couple to Florida instead, where property tax on the home might be closer to $7,000 with the homestead cap, and the net savings is much larger. Same income, same no-income-tax category, very different outcomes, decided almost entirely by property tax.

The mistake is comparing only the income tax line and ignoring the rest. The fix is to build a full side-by-side: income tax, property tax on your actual home, sales tax on your actual spending, plus vehicle and other state fees, for your current state versus each candidate. Looking ahead, the household profile that benefits most from a no-income-tax state is a high earner in peak earning years who rents or owns modestly and saves heavily. The profile that benefits least is an asset-rich, income-light retiree in a high-property-tax state. Our lowest property tax states guide pairs naturally with this one, because for many people property tax, not income tax, is the number that actually decides the move.

A useful gut check before any move to a state with no state income tax: estimate your annual property tax and sales tax in the new state, add the state fees, and compare that total to what you currently pay in state income tax. If the replacement taxes come close to your old income tax bill, the move is about lifestyle and weather, not tax savings, and you should be honest with yourself about that. If the replacement taxes are clearly lower for your profile, the savings are real. Either way, run the actual numbers for your household rather than trusting a ranking that averages everyone together, because you are not the average.

Retirees deserve a special caution here, because the conventional wisdom aims at the wrong target for them. A retiree drawing modest income but sitting on a valuable home gets very little from killing an income tax and can get badly hurt by a high property tax in a state with no state income tax. The headline that a no-income-tax state is a retiree’s dream is true in low-property-tax Florida and often false in high-property-tax Texas. Match the state’s replacement taxes to your actual financial shape before you assume the move helps.

Washington threads a needle that confuses almost everyone: it has no tax on wages or ordinary income, yet it taxes certain long-term capital gains at 7%. The state insists it is an excise tax rather than an income tax, which is the legal distinction that let it survive a constitutional challenge, but the practical effect is that a Washington resident who sells appreciated assets can owe state tax even though Washington sits on every no-income-tax list. If you are moving to Washington partly for its lack of income tax, this is the detail that can undo the plan, and it is the reason we never lump Washington in with the other eight states.

The structure comes from ESSB 5096, passed in 2021 and codified at RCW 82.87, and it is administered by the Washington Department of Revenue. The tax applies to the sale or exchange of long-term capital assets such as stocks, bonds, and business interests, but only to the gains allocated to Washington. There is a generous annual standard deduction, set at $278,000 for the 2025 tax year, up from $270,000 in 2024, and the department adjusts it for inflation each year. So you only owe the tax on long-term gains above that deduction in a given year. A resident with $250,000 of long-term gain owes nothing, because the whole gain fits under the deduction. A resident with $1,278,000 of long-term gain owes 7% on the $1,000,000 above the deduction, which is $70,000.

Several large categories are exempt, and they matter for planning. Real estate is exempt, so selling a Washington home does not trigger this tax, and neither does the gain attributable to real estate owned directly by a pass-through entity. Assets held in retirement accounts are exempt. Assets used in a trade or business that are depreciable under IRC Section 167 or expensable under Section 179 are exempt. Certain livestock, timber, and commercial fishing privileges are also carved out. The Washington DOR exemption list is the authority to check before assuming a sale is taxable, because the carve-outs are broad enough that many ordinary asset sales fall outside the tax entirely. A retiree selling a Washington house, for instance, owes nothing under this tax no matter how large the gain, because real estate is exempt.

There is also a credit feature that matters for people with multi-state exposure. Washington allows a credit for income or excise tax legally paid to another taxing jurisdiction on capital gains derived from assets in that jurisdiction, to the extent those gains are included in your Washington capital gains. So if another state taxed the same gain, you are not necessarily taxed twice on the full amount. This is the kind of detail that only surfaces in a real return, and it is one more reason the Washington rule deserves its own analysis rather than being waved away as a footnote on the no-income-tax list.

Filing follows the federal calendar. Only individuals who actually owe the tax must file a Washington capital gains return, and it is due the same day as the federal return, with electronic filing and electronic payment required. An extension to file requires a federal extension and must be requested through MyDOR by April 15, and it extends the filing date but not the payment date. So the planning rhythm mirrors the federal one, which is convenient, but it means a big sale in one year produces a Washington bill the following April that a new resident may not see coming. If you substantially underpay, the state applies a penalty, so estimating the liability before the deadline matters.

A worked example shows why this catches founders and investors specifically. Imagine a startup employee relocates to Seattle, drawn partly because Washington has no state income tax, and the next year sells $2,000,000 of long-term-held company stock. The first $278,000 is covered by the standard deduction. The remaining $1,722,000 is taxed at 7%, for a Washington capital gains tax of $120,540. That same person, had they moved to Texas or Florida instead, would owe zero state tax on the sale. So among the nine no-income-tax states, Washington is uniquely expensive for someone whose wealth comes from a large one-time gain rather than a steady salary. For a salaried engineer with no big asset sales, Washington still behaves like a true no-income-tax state, which is why the answer depends so heavily on where your money actually comes from.

The common mistake is lumping Washington in with the other eight and assuming all capital gains escape state tax there. They do not, once you clear the annual deduction with non-exempt long-term assets. Looking ahead, anyone moving to Washington with a large unrealized gain should map out the timing and the exemptions before they sell, because spreading sales across years to stay under the deduction, or confirming an asset qualifies for a carve-out, can change the bill by tens of thousands of dollars. Our capital gains tax strategies guide goes deeper on how the timing and location of a sale interact, and this Washington rule is a clean example of why location alone is not the whole answer.

For multi-state filers the Washington rule interacts with your other states in ways that are easy to miss. If you spent part of the year in a state that taxes income and then realized a gain after moving to Washington, allocation between the states determines how much of the gain Washington can reach, since the tax applies only to gains allocated to Washington. The same is true in reverse if you leave Washington before a sale. Timing a large sale around a move, in either direction, can change which state taxes it, so the calendar matters as much as the dollar amount when a state with no state income tax taxes capital gains the way Washington does.

If you take one thing from the Washington example, let it be this: a state with no state income tax can still tax a specific slice of your finances through a tax that goes by another name. Excise tax, gross receipts tax, business tax, capital gains excise tax. The label is chosen partly for legal reasons, but the dollars come out of the same pocket. Read the destination state’s revenue site for what it actually taxes, not just whether the words income tax appear, before you decide a move solves your tax problem.