Last Updated: April 2026
For high earners, moving to a state with no income tax can save tens of thousands of dollars per year. A $500,000 income in California (13.3% top rate) costs $66,500 in state income tax annually — in Florida or Texas, that tax is zero. But “no income tax” does not mean no state taxes: every no-tax state has alternative revenue sources, and some are significantly more expensive on other dimensions than residents expect.
This guide covers all nine no-income-tax states in detail — what they actually tax, which profile of taxpayer benefits most from each, how to legally establish domicile to stop California or New York from continuing to tax you, and the audit risks you face from your former state after you move.
According to the Tax Foundation, nine US states impose no state income tax as of 2026. Here is what each one taxes instead:
No state income tax. No capital gains tax. Effective property tax rate approximately 0.86% — varies significantly by county (Miami-Dade higher, rural counties lower). Homestead exemption reduces taxable value by up to $50,000 for primary residences. Sales tax 6% state + local (up to 8.5% in some counties). Corporate income tax applies to businesses (5.5%).
No state income tax. No capital gains tax. High property taxes — effective rate approximately 1.60%, one of the highest in the US. Property tax drives most local government and school funding. Homestead exemption available ($100,000 school district exemption from January 2024). Combined sales tax up to 8.25%.
No state income tax. No capital gains tax. Property tax effective rate approximately 0.55% — among the lowest in the US. Revenue primarily from gaming and tourism. Sales tax up to 8.375% in Clark County (Las Vegas). No corporate income tax.
No state income tax. Low property tax (effective rate approximately 0.55%). Low sales tax (4% state; up to 6% with local). Revenue from energy industry (coal, oil). Very low overall tax burden — consistently ranked among the lowest total tax states. Small population, low cost of living.
No state income tax on wages. However: 7% capital gains tax on long-term capital gains above $262,000 (as of 2023, upheld by the Washington Supreme Court in 2023). This materially affects investors, business sellers, and those exercising large stock options. High sales tax (up to 10.4% in Seattle). Business and Occupation tax on gross receipts applies to businesses.
No state income tax. No capital gains tax. Low property tax (effective rate approximately 0.57%). Sales tax 4.2% state + local. Popular with trusts and asset protection planning due to favourable trust laws. Low cost of living.
No state income tax on wages (Hall Income Tax, which taxed interest and dividends, was fully repealed January 1, 2021). No capital gains tax. Highest combined sales tax in the US at 9.55% average — Tennessee funds its budget heavily via sales tax. Grocery tax: 4% state rate on food (low relative to general sales tax). Property tax effective rate approximately 0.71%.
No state income tax. No state sales tax (the only no-income-tax state with no state sales tax). But municipalities charge significant local sales taxes — Juneau charges 5%, Anchorage 0%, smaller towns vary widely. Property tax varies by municipality. Alaska Permanent Fund Dividend (PFD): residents receive an annual dividend from oil revenues (approximately $1,300–$2,000/year in recent years).
The Interest and Dividends Tax (I&D Tax) was fully repealed January 1, 2025 — NH is now a fully no-income-tax state. Previously, NH taxed interest and dividends at 3% (the rate had been declining from 5% in prior years). High property taxes: effective rate approximately 1.93% — one of the highest in the US, driven by lack of state income and sales tax (there is no NH state sales tax). Property tax varies widely by municipality.
The “best” no-income-tax state depends on your income composition. No single state wins for all profiles.
Florida is the top choice for most retirees: no income tax means Social Security, pension income, IRA withdrawals, and investment income are all untaxed at the state level. The homestead exemption reduces property tax on your primary residence. Warm climate and large retiree infrastructure make it the most popular retirement relocation in the US. Wyoming is a strong second for those wanting low property taxes and low cost of living, though the climate is harsher and services thinner.
Florida, Texas, Nevada, Wyoming, and South Dakota are all excellent for capital gains — zero state capital gains tax. Avoid Washington State for large capital gains events (business sales, large stock portfolios above $262K/year). South Dakota is particularly popular for trust and asset protection planning.
Nevada and Wyoming have the lowest effective property tax rates (around 0.55%). Florida is middle-of-the-road with homestead exemptions helping primary residents. Avoid Texas and New Hampshire if you own an expensive home — property tax bills can be significant.
Alaska wins if you are near Anchorage (no sales tax there). Florida is strong for renters — reasonable sales tax and no income tax. Tennessee is poor for heavy consumer spenders — 9.55% combined sales tax is among the highest in the US. Tennessee does, however, charge 0% on groceries at the state level (4% on groceries vs 7% on general goods — lower grocery rate helps lower-income residents).
Florida and Texas are the most popular choices for high-income W-2 earners relocating from CA or NY. Florida has no convenience-of-employer doctrine exposure, strong domicile infrastructure, and a Declaration of Domicile process that creates a paper trail for audit defence. Texas is similar but with higher property taxes.
Moving to a no-tax state only works if you actually establish legal domicile there and break ties with your former state. California and New York continue to claim taxing rights over people who “move” but maintain significant ties. Establishing domicile requires concrete, documented actions.
After establishing new domicile, keep a contemporaneous log of days spent in your former state. CA and NY auditors look at both the number of days and the quality of ties. Spending 100 days in California visiting family while “living” in Florida is common — document those trips as visits, not residency.
Florida’s Declaration of Domicile is a formal statutory document recorded with your county circuit court clerk. It costs approximately $10 to file and creates a public record of your domicile claim. For former California and New York residents, it is highly recommended as the first step in establishing Florida domicile — it creates a timestamped record predating any audit.
California and New York have among the most aggressive residency audit programs in the US. When a high-income taxpayer files a change of residence, these states scrutinise the claim carefully — because a $300,000 income earner leaving California costs the state approximately $30,000+ per year in income tax.
The California Franchise Tax Board (FTB) audits former residents for up to 4 years after filing (6 years for substantial understatement of over 25% of income). The FTB looks at:
California also has a “safe harbour”: if you are outside California for more than 546 days in a 24-month period and do not maintain a CA home available for your use, you are presumed to be a non-resident (though this can be rebutted). The safest approach: cut as many California ties as possible on departure day and minimise time in California for at least two full tax years.
New York State and City conduct the most thorough residency audits in the US. NY audits for 4 years (6 for fraud). The standard is the “closer connection” test: where do you have your primary personal contacts, where do you sleep most nights, where is your business, where are your family, social, and community ties? New York looks for the “permanent place of abode”: if you maintain a home in New York that is available to you year-round — even a property owned by family — and you spend 183+ days in New York, you are a statutory resident regardless of claimed domicile.
There is a common misconception that California can audit you for 10 years after departure. The standard audit window is 4 years from the return filing date (not the departure date). The 10-year figure sometimes circulates from the outside limit for criminal tax fraud — not standard civil audits. That said, do not rely on the limitation period as a strategy — clean domicile establishment is the only reliable defence.
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Expert Help With Multi-State and Expat Tax Returns →Nine states: Wyoming (WY), Washington (WA), Texas (TX), Tennessee (TN), South Dakota (SD), Nevada (NV), Florida (FL), Alaska (AK), and New Hampshire (NH). New Hampshire’s Interest and Dividends Tax was fully repealed effective January 1, 2025, making NH a completely no-income-tax state. Note that Washington State levies a 7% capital gains tax on gains above $262,000 — so it is not entirely tax-free for investors.
Washington does not tax wages or ordinary income at the state level. However, it enacted a 7% capital gains tax on long-term capital gains above $262,000 per year (with a $262,000 standard deduction). The Washington Supreme Court upheld this tax in 2023. For W-2 earners, Washington remains effectively no-income-tax. For investors and business owners realising large capital gains, it is not.
Florida is widely considered the best no-income-tax state for retirees. Social Security, pension income, and IRA withdrawals are untaxed. The homestead exemption reduces property tax on primary residences. The warm climate and established retiree infrastructure are additional advantages. Wyoming is a strong alternative for those who prefer a lower cost of living and lower property taxes, but with a harsher climate and fewer services.
California can attempt to — if you fail to properly establish Florida domicile and break California ties. The California FTB audits former residents for up to 4 years and looks for ongoing California connections: days spent in CA, California driving licence, registered vehicles, bank accounts, family remaining in CA, business operations in CA. To be safe: cut California ties on departure day, obtain a Florida driver’s licence immediately, file a Florida Declaration of Domicile, and minimise California days for at least two full tax years.
Yes, as of January 1, 2025. New Hampshire’s Interest and Dividends Tax was fully repealed on that date. Previously it taxed interest and dividend income at rates declining from 5% to 3% in its final years. NH never taxed wages. From 2025, NH taxes no individual income at the state level — it is the ninth full no-income-tax state. NH still has high property taxes (effective rate around 1.93%) and no state sales tax.
The key steps are: (1) Obtain a Florida driver’s licence; (2) Register to vote in Florida; (3) File a Declaration of Domicile with your county circuit court; (4) Register your vehicle in Florida; (5) Update bank, brokerage, and retirement accounts to your Florida address; (6) Update your will and estate documents to reflect Florida domicile; (7) Notify your employer of your new address. The Declaration of Domicile is a formal legal document — unique to Florida — that creates a timestamped public record of your domicile claim, which is invaluable if your former state audits your departure.