Nine states currently impose no broad personal income tax. Washington is a partial exception: it taxes long-term capital gains above $262,000 at 7%, with a 9% rate on gains over $1 million effective 2026.
| State | Income Tax Rate | Sales Tax | Property Tax Rank | Key Notes |
|---|---|---|---|---|
| Alaska | 0% | 0% (no state tax) | Mid-range | Annual Permanent Fund Dividend; no state sales tax |
| Florida | 0% | 6% + local | Mid-range | Constitutional prohibition on income tax; high relocation volume |
| Nevada | 0% | 6.85% + local | Low | Commerce Tax on gross receipts >$4M; no corporate income tax |
| New Hampshire | 0% | 0% (no state tax) | High | Interest/dividends tax repealed Jan 1, 2025; very high property taxes |
| South Dakota | 0% | 4.5% + local | Mid-range | No corporate income tax; major trust jurisdiction |
| Tennessee | 0% | 7% + local | Low | Hall Tax repealed Jan 1, 2021; highest sales tax in nation combined |
| Texas | 0% | 6.25% + local | High | Franchise margin tax on businesses; very high property taxes |
| Washington | 0% (7% on cap gains >$262K) | 6.5% + local | Mid-range | Capital gains tax upheld by WA Supreme Court 2023; B&O gross receipts tax |
| Wyoming | 0% | 4% + local | Mid-range | No corporate income tax; energy severance taxes; favorable LLC laws |
Residents of no-income-tax states still owe federal income tax to the IRS on worldwide income. Moving to Florida or Texas eliminates state income tax only - federal liability is unchanged.
States without an income tax typically compensate through other revenue sources. New Hampshire and Texas have among the highest property taxes in the country. Tennessee and Washington have high sales tax rates. Alaska funds itself through oil revenue and has neither sales nor income tax, but costs of living in many areas are high.
Business owners should also be aware that several no-income-tax states impose gross receipts taxes on business revenue regardless of profit. Nevada's Commerce Tax, Texas's Franchise Tax (margin-based), and Washington's B&O Tax are not income taxes but can represent meaningful costs for businesses with thin margins.
Changing your state of domicile to a no-income-tax state is a legitimate and common tax planning strategy, but it must be executed correctly. A nominal address change is not sufficient.
For taxpayers seeking to eliminate both federal and state income tax on investment income, Puerto Rico Act 60 and the USVI Economic Development Commission program offer more comprehensive solutions than simply relocating to a no-income-tax state. Under Puerto Rico Act 60 (for applications filed before December 31, 2026), qualifying bona fide residents pay 0% Puerto Rico tax on post-move capital gains, dividends, and interest - and qualify for exclusion from federal income tax on Puerto Rico-source income under IRC §933.
The trade-off is a genuine relocation requirement: 183+ days per year in the territory, tax home in the territory, and closer connection to the territory than to any U.S. state. The IRS has an active audit campaign targeting territorial tax benefit claims.