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

Living tax-free is a bit of a dream. It's impossible to avoid all taxes, of course — the IRS has no qualms about going after people who owe the federal government money. However, some states don't impose any of their taxes on income.

Sounds great. Theoretically, if everyone moved to the nine states with no income tax, we would all be able to keep more of our hard-earned cash.

But nothing in life is that simple, and there are reasons why the entire U.S. population hasn't made those areas their home.

Here are the nine states with no income tax ranked.

Alaska doesn't have an income tax or a sales tax, but it makes up for that with high property taxes that account for 3.54% of its 4.93% total tax burden.

Unfortunately, Alaska ranks very poorly for quality of life and has the sixth-highest cost of living in the country, in part due to the expensive cost of goods and services, including groceries and utilities. Filling up the tank is going to run up a high tab too.

Factors to consider

• Total tax burden: 4.93%
• Cost of living index (lower is better; U.S. avg. is 100): 123.4
• Quality of life rank (lower is better): 50
• Median home price: $379,600
• Avg. regular gas price: $3.31
• Weather (average temperature in Fahrenheit): 26.6

Nevada is home to Sin City itself: Las Vegas. And, boy, does it tax those sins — the state has a tax burden of 7.37% that comes from taxes on everything from clothes to booze, gambling, and hotels.

Beyond state and local taxes, Nevada is also hurt by its overall affordability. The cost of living is above average, particularly in terms of groceries and housing, and the average price of gas is just behind Washington, with the fourth-highest in the country.

Factors to consider

• Total tax burden: 7.37%
• Cost of living index (lower is better; U.S. avg. is 100): 100.1
• Quality of life rank (lower is better): 22
• Median home price: $428,100
• Avg. regular gas price: $3.66
• Weather (average temperature in Fahrenheit): 49.9

Wyoming is known for having lower-than-average tax rates for both sales and property taxes, despite relying on them for revenue. 

Additionally, the overall cost of living in Wyoming is about the same as the national average, thanks in part to affordable housing costs. Similar to South Dakota, Wyoming also depends more heavily on special taxes compared to other states.

Unfortunately, Wyoming ranks low for quality of life.

Factors to consider

• Total tax burden: 5.70%
• Cost of living index (lower is better; U.S. avg. is 100): 100.1
• Quality of life rank (lower is better): 39
• Median home price: $276,000
• Avg. regular gas price: $2.94
• Weather (average temperature in Fahrenheit): 42

The bulk of South Dakota's revenue stems from sales and excise taxes, which make up 3.86% of its 6.44% total burden. The rest is from other forms of taxation, like property taxes. 

South Dakota has higher-than-average costs of housing, transportation, and utilities. South Dakota takes a hit here from having a very low quality of life rank.

Factors to consider

• Total tax burden: 6.44%
• Cost of living index (lower is better; U.S. avg. is 100): 101.2
• Quality of life rank (lower is better): 40
• Median home price: $302,800
• Avg. regular gas price: $2.88
• Weather (average temperature in Fahrenheit): 45.2

New Hampshire relies heavily on property taxes, which account for a whopping 4.51% of its total 5.63% tax burden. That gives the "Live Free or Die" state the fourth-highest property tax rate in the country. The state's cost-of-living index is also extremely high.

Factors to consider

• Total tax burden: 5.63%
• Cost of living index (lower is better; U.S. avg. is 100): 111.5
• Quality of life rank (lower is better): 38
• Median home price: $452,700
• Avg. regular gas price: $2.98
• Weather (average temperature in Fahrenheit): 43.8

Tennessee used to have an investment income tax, but that was fully eliminated in 2021. The state makes up for it by having state and local sales taxes of 9.55%.

Despite that, the state's cost of living index makes it highly affordable, thanks in part to its relatively low housing costs.

Factors to consider

• Total tax burden: 6.07%
• Cost of living index (lower is better; U.S. avg. is 100): 90
• Quality of life rank (lower is better): 33
• Median home price: $377,200
• Avg. regular gas price: $2.79
• Weather (average temperature in Fahrenheit): 57.6

Washington is the home of Amazon, Microsoft, and Starbucks, thanks to its lack of corporate income tax. And let us not forget the wild amount of cloudy, rainy weather.

While Washington does not have a personal or corporate income tax, it does have an income tax on investment income and capital gains for higher earners.

Even though the state ranks extremely high for quality of life, it's going to cost you. Washington has the highest tax burden of any state without an income tax, and overall affordability suffers from several factors. 

These include high sales and excise taxes (5.46% of the total), gasoline and home prices among the steepest in the country, and a 7% capital gains tax.

Factors to consider

• Total tax burden: 8.04%
• Cost of living index (lower is better; U.S. avg. is 100): 113.6
• Quality of life rank (lower is better): 9
• Median home price: $618,000
• Avg. regular gas price: $3.93
• Weather (average temperature in Fahrenheit): 48.3

Texas relies on high property taxes to make up for the lost revenue. As a result, it ranks as the eighth-highest state for property taxes overall and second-highest behind Washington for states without income tax.

Nevertheless, Texas remains a relatively affordable state due to its lower housing and grocery costs. Gas prices are among the lowest in the U.S. as well, so you can save more on car costs.

Factors to consider

• Total tax burden: 7.56%
• Cost of living index (lower is better; U.S. avg. is 100): 92.6
• Quality of life rank (lower is better): 8
• Median home price: $357,800
• Avg. regular gas price: $2.70
• Weather (average temperature in Fahrenheit): 64.8

The Sunshine State is one of the most popular destinations for vacationers and retirees for a lot of reasons, and its balancing act on taxes is one of them.

Florida derives a significant portion of its revenue from property and state taxes, with rates roughly in line with the national average, but the overall burden is low. 

Despite being a haven for retirees, the cost of living in Florida is actually a little above average, with the highest expenses being groceries, housing, and utilities.

Factors to consider

• Total tax burden: 6.05%
• Cost of living index (lower is better; U.S. avg. is 100): 102.4
• Quality of life rank (lower is better): 4
• Median home price: $407,200
• Avg. regular gas price: $3.16
• Weather (average temperature in Fahrenheit): 70.7

Paying less in taxes is a common goal for most of us. One way to hit that goal might be living in a state without income tax, but that alone doesn't tell the whole financial story.

States without income tax have to find other ways to fill their coffers. That might mean paying more in property taxes or sales taxes. Some states have struck a balance between low taxes, affordability, and quality of life. Others have not.

Even things like weather and climate, which states obviously have no control over, can impact your decision about where to live, and the weight you put on particular factors might make your rankings totally different from anyone else's.

Just make sure you consider all the variables before you pack up and move to ensure you're making the right move to get ahead financially.