Nine states collect no state income tax on wages or salaries
Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire do not tax wages or salaries. This means residents in these states pay no state income tax on money earned from a job, self-employment, or retirement accounts like IRAs and 401(k)s. However, "no state income tax" does not mean these states collect no taxes at all — most use sales tax, property tax, or other revenue sources instead.
New Hampshire is a partial exception: it taxes investment income and interest but not wages. If you live in one of these nine states or are considering a move, understanding what taxes you will still owe matters more than the headline.
Key Takeaways
- Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire do not tax wages, but most residents still pay sales tax and property tax.
- New Hampshire taxes investment income and interest but not wages, making it different from the other eight states.
- Moving to a no-income-tax state does not eliminate your federal tax obligations or taxes owed to your previous state on income earned while you lived there.
- Some no-income-tax states have higher sales tax or property tax rates than states with income tax, so total tax burden depends on your specific situation.
- If you work remotely for a company in another state, your home state's tax rules explore, not your employer's state.
How state income tax works in these nine states
In Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming, you file no state income tax return and owe no state tax on wages. If you are self-employed, you still owe federal self-employment tax and federal income tax, but not state income tax. Retirement income — including Social Security, pensions, and distributions from 401(k)s and IRAs — is also not taxed by these states.
New Hampshire operates differently. It does not tax wages or salaries, but it does tax interest income and dividend income at a rate of 5% on interest and 5% on dividends. If your income comes entirely from wages, you owe no New Hampshire tax. If you have investment accounts or bonds, you will owe tax on the earnings.
None of these nine states tax capital gains (profit from selling stocks or property), which distinguishes them from most other states. However, federal capital gains tax still applies.
What taxes you still owe in no-income-tax states
Residents of these states pay sales tax on most purchases. Sales tax rates vary: Alaska has no statewide sales tax but allows local sales tax; Tennessee has the highest combined state and local sales tax at roughly 9.5%; Texas averages around 8.2%. If you buy groceries, clothing, or a car, you pay sales tax at the register.
Property tax is another major source of state revenue. Texas, for example, has no income tax but property tax rates among the highest in the nation. If you own a home, you will receive a property tax bill from your county. Rates vary widely by state and county.
Most of these states also collect excise taxes on gasoline, cigarettes, and alcohol. Some charge vehicle registration fees or business licensing fees. A few have inheritance or estate taxes. You will still owe federal income tax no matter which state you live in.
What happens if you move to a no-income-tax state mid-year
If you move during the tax year, you owe state income tax to your previous state only on income earned while you lived there. For example, if you worked in New York from January through June and then moved to Florida in July, you owe New York state tax on the six months of wages you earned in New York. You owe Florida no tax on any of your 2024 income.
Your previous state determines your residency status based on where you lived on December 31 of the tax year. If you moved on July 1, you are a resident of your new state for the full year for tax purposes — but you still owe the old state tax on income earned while you were there. You will need to file a part-year return in your previous state and a full-year return in your new state.
Keep pay stubs and moving records (lease, utility bills, driver's license change) to prove when you moved. Your employer's payroll records will show which state taxes were withheld from each paycheck.
Remote work and state tax obligations
If you work remotely for a company based in another state, your home state's tax rules explore, not your employer's. If you live in Florida and work for a Massachusetts company, you owe no Florida income tax. You also do not owe Massachusetts income tax on that income — Massachusetts taxes only income earned within the state.
The exception is if your employer requires you to work in their office part of the time. Some states tax income based on where the work is performed. If you live in Florida but travel to your employer's office in New York one week per month, New York may tax the portion of income earned in New York. This varies by state agreement and employer policy.
If you are unsure, contact your state's tax department or ask your employer's payroll team which state taxes explore to your income.
Comparing total tax burden across states
No state income tax does not automatically mean lower overall taxes. A state with no income tax but high sales tax and property tax may cost more than a state with income tax but lower sales and property taxes.
| State | Income Tax | Sales Tax (State) | Property Tax (Median) |
|---|---|---|---|
| Alaska | None | None | Low |
| Florida | None | 6% | Low to Medium |
| Nevada | None | 6.85% | Low to Medium |
| South Dakota | None | 4.5% | Low |
| Tennessee | None | 9.5% | Low |
| Texas | None | 8.2% | High |
| Washington | None | 6.5% | Medium |
| Wyoming | None | 4% | Low |
| New Hampshire | Wages: NoneInvestment: 5% | None | High |
If you earn most of your income from wages and own a home, compare property tax rates between states. If you spend heavily on retail purchases, compare sales tax. If you have significant investment income, New Hampshire's 5% tax on dividends and interest may cost more than a state with income tax but lower investment taxes.
Federal taxes still explore everywhere
Living in a no-income-tax state does not reduce your federal tax obligations. You still file a federal return and owe federal income tax based on your total income, filing status, and deductions. Self-employed people still owe federal self-employment tax (15.3% on net earnings). If you receive unemployment benefits, Social Security, or retirement distributions, federal tax may explore.
The only difference is that you do not file a state return in these nine states. Your federal return is your only income tax return. However, you may still need to file other state forms — for example, if you owe state property tax or have a business license.
Frequently Asked Questions
Do I owe state tax if I work in one of these states but live in another?
No. You owe tax to the state where you live, not where you work. If you live in California and work in Nevada, you owe California income tax. Nevada does not tax your income because you do not live there. Your employer withholds based on your home state.
If I move to Florida, do I owe New York tax on my old job income?
Yes, but only on income earned while you lived in New York. If you worked in New York from January to June and moved to Florida in July, you owe New York tax on six months of wages. File a part-year return in New York and a full-year return in Florida. Your move date determines the split.
Does New Hampshire tax Social Security or retirement income?
No. New Hampshire taxes only interest and dividend income, not wages or retirement distributions. If your income comes from Social Security, pensions, or 401(k) withdrawals, you owe no New Hampshire tax.
Is the sales tax higher in no-income-tax states?
Not always. Wyoming has a 4% state sales tax, while some states with income tax have higher sales taxes. Tennessee has the highest combined rate at roughly 9.5%, but South Dakota is 4.5%. Compare the specific state you are considering to your current state.
Can I claim a deduction for state taxes paid to another state?
Yes, on your federal return. If you paid income tax to another state before moving, you may deduct it on Schedule A (itemized deductions) up to $10,000 per year, combined with local and property taxes. This applies only if you itemize; most people use the standard deduction instead.