Why "no income tax" is not the whole picture
States with no income tax shift revenue to other categories:
Property tax: Texas (1.81 percent of home value, highest in US), New Hampshire (1.93 percent, highest), Florida (0.91 percent, modest), Nevada (0.60 percent, low).
Sales tax: Tennessee (combined 9.5+ percent, highest US average), Washington (combined 9.3 percent), Texas (combined 8.2 percent), Nevada (combined 8.2 percent), Florida (combined 7.0 percent).
Natural resources: Alaska + Wyoming fund much of state budget from oil + gas + mineral royalties. Alaska even pays residents a Permanent Fund Dividend annually (about $1,300-$3,500 depending on oil prices).
Excise + sin: Nevada relies on gaming + tourism. Tennessee + Florida tax tobacco + alcohol heavily.
| Total state-local tax burden (2026 estimates as % of personal income) | Compare |
|---|---|
| Wyoming: 5.7 percent | California: 12.4 percent |
| Alaska: 5.9 percent (offset by dividend) | New York: 13.0 percent |
| Tennessee: 6.5 percent | Illinois: 12.6 percent |
| New Hampshire: 7.2 percent | New Jersey: 13.5 percent |
| Florida: 7.5 percent | |
| South Dakota: 7.6 percent | |
| Texas: 8.6 percent | |
| Nevada: 9.1 percent | |
| Washington: 10.3 percent (excluding capital gains tax) |
Savings are real but not "100 percent of state income tax" - typically 60-80 percent of the wage tax difference, net of higher property/sales tax.
Top 5 ranked
1. Wyoming
- Total burden: 5.7 percent of personal income
- No state income tax, no corporate income tax
- 4 percent state sales tax (combined 5.4 percent average with locals)
- 0.61 percent average effective property tax
- Oil, gas, coal royalties fund 60+ percent of state revenue
- Population: 580,000; growth-friendly
- Best for: high earners, remote workers, retirees from CO/CA
2. Alaska
- Total burden: 5.9 percent
- No state income tax, no state sales tax (some local sales)
- Property tax: 1.04 percent average
- Permanent Fund Dividend pays residents annually ($1,300-$3,500)
- Oil + LNG royalties fund the state
- Drawbacks: cost of living high, remote location, harsh climate
3. Tennessee
- Total burden: 6.5 percent
- No state income tax (since 2021 - Hall tax repealed)
- High combined sales tax: 9.5 percent average
- Property tax: 0.66 percent average
- Music + tourism + healthcare anchor economy
- Major metros: Nashville, Memphis, Knoxville, Chattanooga
- Best for: middle earners, music industry, healthcare workers
4. Florida
- Total burden: 7.5 percent
- No state income tax in constitution (highest legal bar to add)
- Sales tax: 7.0 percent average combined
- Property tax: 0.91 percent average
- Homestead exemption: $50,000 off assessed value
- "Save Our Homes" caps annual increase to 3 percent for homestead
- Best for: retirees (homestead protections), high-income FL natives
5. New Hampshire
- Total burden: 7.2 percent
- No state income tax on wages (interest/dividend tax repealed 2025)
- No state sales tax (highest property tax compensates)
- Property tax: 1.93 percent average (highest in US)
- Best for: renters, low-net-worth high earners (avoid property tax bite)
| State | Total burden | Property tax avg | Sales tax avg |
|---|---|---|---|
| Wyoming | 5.7% | 0.61% | 5.4% |
| Alaska | 5.9% | 1.04% | 1.8% |
| Tennessee | 6.5% | 0.66% | 9.5% |
| Florida | 7.5% | 0.91% | 7.0% |
| New Hampshire | 7.2% | 1.93% | 0% (state) |
| Texas | 8.6% | 1.81% | 8.2% |
| Nevada | 9.1% | 0.60% | 8.2% |
| Washington | 10.3% | 0.97% | 9.3% |
| South Dakota | 7.6% | 1.24% | 6.4% |
| (California reference) | 12.4% | 0.74% | 8.85% |
Ranks 6-10
6. Nevada
- Total burden: 9.1 percent
- No state income tax, no corporate income tax
- Sales tax: 8.2 percent average combined
- Property tax: 0.60 percent average (low)
- Tourism + gaming + entertainment anchor economy
- Las Vegas, Reno major metros
- Best for: tourism workers, gamblers, entertainment industry
7. Texas
- Total burden: 8.6 percent
- No state income tax (constitutional, would need amendment)
- Sales tax: 8.2 percent average combined
- Property tax: 1.81 percent average (second-highest in US)
- Strong economy, low cost of living in many metros
- Major metros: Houston, Dallas, Austin, San Antonio
- Best for: high earners, business owners, those willing to trade property tax for wage tax savings
8. South Dakota
- Total burden: 7.6 percent
- No state income tax, no corporate income tax
- Sales tax: 6.4 percent average combined
- Property tax: 1.24 percent average (modest)
- Best for: trust fund management (popular asset protection state), retirees
9. Washington
- Total burden: 10.3 percent (high)
- No state income tax on WAGES but...
- 7 percent capital gains tax (over $250K threshold) since 2022
- Sales tax: 9.3 percent average combined
- Property tax: 0.97 percent average
- Major metros: Seattle, Tacoma, Spokane
- Best for: salaried tech workers (gets full wage tax savings); NOT for high-net-worth selling investments
- (Tennessee, Nevada tied; see top 5 + 6)
Worked example: California to Texas move
Aria, 35, software engineer, $250,000 base salary + $50,000 bonus + $50,000 RSU vest.
Total compensation: $350,000.
| In California | In Texas |
|---|---|
| Federal tax (single): roughly $79,000 | Federal tax: $79,000 (same) |
| California state tax: 10.3 percent average effective on $350K = $36,000 | Texas state tax: $0 |
| FICA (Social Security + Medicare): $14,000 | FICA: $14,000 |
| Net take-home: $221,000 | Net take-home: $257,000 |
| Property tax on $1.5M Bay Area home (1.13 percent): $17,000 | Property tax on $750K Austin home (2.03 percent): $15,200 |
| Sales tax: ~$3,000 on $50K spending | Sales tax: ~$4,100 on $50K spending |
| Total tax: $149,000 (federal + state + property + sales + FICA) | Total tax: $112,300 |
Net annual savings: $36,700.
But wait
- Home prices: Bay Area $1.5M+ vs Austin $750K - much lower mortgage
- Cost of living: ~25 percent lower groceries, dining, transit
- Lifestyle: hot summers, less public transit, different culture
After 5 years in Texas: $183,500 saved on tax alone, plus ~$1M in lower housing costs. The move is a meaningful wealth lever for high earners.
Reverse case: Texas to California for $400K compensation. Lose $40K/year in state tax, gain weather + walkable cities + tech ecosystem. Tradeoff worth different things to different people.
How to actually move + change tax domicile
Establishing tax domicile in a new state is more than just renting an apartment. States that lose tax revenue (CA, NY, NJ) audit aggressively.
| What establishes domicile in your new state | What to avoid |
|---|---|
| Driver license + state ID | Keeping a home in old state (audit risk) |
| Vehicle registration | Returning frequently for "work" - days count |
| Voter registration | Maintaining old state bank accounts as primary |
| Primary home (own or lease) | Receiving mail at old state address |
| Bank accounts moved to local branches | Old state professional licenses (lawyers, doctors) |
| Doctor + dentist + accountant in new state | |
| Children school enrollment | |
| Mail forwarding + new address on all accounts | |
| Days spent: 183+ in new state per year (“statutory residency” test) | |
| Tax filings: file part-year resident return for the year of move; full-year for following years |
NY and CA both run "residency audits" - auditors examine credit card receipts, EZPass records, social media check-ins, gym attendance, even cellphone tower pings to challenge claimed domicile change.
Timeline
- Best move month: January (full year in new state)
- Worst: November/December (only 1-2 months in new state for tax year)
Remote workers: source-of-work rules vary. CA taxes income earned WHILE PHYSICALLY IN CA, even by non-residents. New employer + remote work agreement should reflect work location in new state.
Personalized advice: consult state-specific tax pro before moving high net worth or business.
Run the math for your situation
Use our 🇺🇸 United States calculator to plug in your own numbers.