The 9 States With No State Income Tax (Ranked Worst to Best)

If you want the feeling of an instant raise, move to a state with no state income tax. Paying less in taxes is a way to put extra cash in your pocket without needing to change jobs or work more hours. 

But tax savings are only part of the story, since housing costs, sales taxes, job markets, and overall quality of life can make a big difference in whether you can stretch your retirement dollars further.

Here's a ranked look at the nine states with no state income tax, from worst to best based on cost of living.

Editor's note: Gas prices were taken from AAA, tax burden data was taken from Wallethub, the cost of living data came from the World Population Review, and housing data came from Zillow.

Alaska

• Total tax burden: 4.92%
• Cost of living index (U.S. avg. = 100): 124.9
• Average home value: $398,663
• Average regular gas price: $5.07 per gallon

Alaska has the benefit of no state income tax, no statewide sales tax, and the lowest effective total tax burden in the country. But don't look at property in the Last Frontier just yet. Those savings are largely offset by 3.32% property taxes. 

Beyond taxes, affordability is a major challenge. Alaska ranks near the bottom nationally for quality of life and has one of the highest costs of living, driven by elevated prices for groceries, utilities, and transportation, including fuel.

Washington

• Total tax burden: 8.47%
• Cost of living index (U.S. avg. = 100): 114.1
• Average home value: $591,879 
• Average regular gas price: $5.57 per gallon

Washington is home to major employers like Amazon, Microsoft, and Starbucks, helped in part by the absence of a traditional corporate income tax. While Washington does not levy a personal income tax on wages, it does impose taxes on investment income and capital gains for higher earners.

Despite ranking very high for quality of life, Washington is expensive. It has the highest overall tax burden among states without a broad-based income tax, driven by high sales and excise taxes, steep gas and housing costs, and a 7% to 9.9% capital gains tax that applies to large long-term capital gains.

New Hampshire

• Total tax burden: 5.38%
• Cost of living index (U.S. avg. = 100): 111.4
• Average home value: $516,306
• Average regular gas price: $4.429 per gallon

New Hampshire makes up for the lack of a broad-based income tax by leaning heavily on property taxes, which account for most of its 5.38% total tax burden. This is one of the highest property tax loads in the country.

Affordability is further strained by a high cost-of-living index, driven largely by expensive housing. While the state offers some tax advantages, homeowners in particular may feel the impact.

Florida

• Total tax burden: 6.27%
• Cost of living index (U.S. avg. = 100): 102.2
• Median home price: $375,470
• Average regular gas price: $4.12 per gallon

Sunny skies and short drives to the beach aside, Florida consistently ranks as a top destination for retirees and vacationers. And its tax structure plays a major role. While the state relies on property and sales taxes for revenue, those rates are generally close to national averages, keeping the overall tax burden relatively low.

Although Florida offers major tax advantages, its cost of living is slightly above average, driven largely by higher grocery, housing, and utility costs.

Nevada

• Total tax burden: 8.37%
• Cost of living index (U.S. avg. = 100): 100.2
• Average home value: $442,027
• Average regular gas price: $5.12 per gallon

Nevada may be best known for Las Vegas, but the state also leans heavily on Vegas-related taxes to generate revenue. While there's no state income tax, Nevada's total tax burden reaches 8.37%, with most of that driven by taxes on goods and services such as clothing, alcohol, gambling, and hotel stays.

Affordability is another drawback, with above-average living costs, especially for housing and groceries, and some of the highest gas prices in the country.

Wyoming

• Total tax burden: 6.7%
• Cost of living index (U.S. avg. = 100): 93.7
• Average home value: $371,854
• Average regular gas price: $4.49 per gallon

Wyoming enjoys lower-than-average sales and property tax rates, which help offset the lack of a state income tax, though the state relies on these taxes for much of its revenue. Overall, the cost of living is near the national average, with affordable housing keeping expenses manageable.

Wyoming relies more heavily on special taxes, and its cost of living index remains relatively low compared to other states without income tax.

Texas

• Total tax burden: 7.69%
• Cost of living index (U.S. avg. = 100): 92.1
• Average home value: $299,367
• Average regular gas price: $3.86 per gallon

Texas makes up for the lack of a state income tax by relying heavily on property taxes. In fact, it ranks as the ninth-highest state for property taxes overall and second-highest among states without an income tax, behind New Hampshire.

Even so, Texas remains relatively affordable. Lower housing and grocery costs help offset the tax burden, and gas prices are among the lowest in the country, keeping transportation costs manageable.

South Dakota

• Total tax burden: 6.38%
• Cost of living index (U.S. avg. = 100): 91.9
• Average home value: $321,574
• Average regular gas price:  $4.16 per gallon

South Dakota has no income tax, but it raises most of its revenue through sales and excise taxes, which account for almost half of its 6.38% total tax burden. The remainder comes largely from property taxes.

While the state benefits from no income tax, its affordability is another advantage. South Dakota's cost of living index of 91.9 puts its overall costs below the national average.

Tennessee

• Total tax burden: 6.21%
• Cost of living index (U.S. avg. = 100): 90.3
• Average home value: $334,108
• Average regular gas price: $3.93 per gallon

Tennessee previously taxed investment income, but that tax was fully repealed in 2021, leaving the state with no income tax on wages or investments.

To offset the loss, Tennessee relies heavily on sales taxes. Even so, the state remains highly affordable overall, largely due to relatively low housing costs and a below-average cost of living.

Bottom line

Living in a state with no state income tax can lower your financial stress and offer meaningful savings, but it rarely means a lower overall tax bill. Many of these states make up for lost income tax revenue through higher sales, property, or excise taxes, and differences in housing costs, gas prices, and everyday expenses can significantly affect affordability.

One additional factor to keep in mind is local variation. Cities and counties often add their own sales and property taxes, meaning your actual tax burden can vary widely depending on where you live within the same state, even in places that advertise themselves as "no income tax" states.

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