States With No Income Tax 2026: All 9 States Compared — Total Tax Burden, Not Just the Headline

The phrase "no income tax state" has become shorthand for "low tax state," but the reality is considerably more nuanced. Nine US states impose no broad-based personal income tax on wages and salaries. For high-income earners and retirees, this can represent a significant saving — California's top rate is 14.4%, New York's is 10.9%, and moving to Texas or Florida can save tens of thousands per year.

But the nine states compensate for missing income tax revenue in different ways. Texas and New Hampshire have among the highest property tax rates in the nation. Nevada and Washington have above-average sales taxes. Alaska and Wyoming have unique revenue structures (oil revenue and mineral royalties, respectively) that allow genuinely low total tax burdens.

This guide compares all nine states on total tax burden — not just the headline income tax rate — and explains the exceptions: New Hampshire's dividend/interest tax, Washington's capital gains tax, and the local income taxes that apply in some states regardless of state-level rules.

The 9 No-Income-Tax States: Side-by-Side Comparison

All nine states are listed below with key tax metrics. "Total state/local burden" is the Tax Foundation's estimate for a middle-income household:

Source: Tax Foundation State and Local Tax Burden Rankings; state revenue department publications 2026.

The Exceptions: New Hampshire, Washington, and the Fine Print

Two of the nine states have important exceptions that catch recent movers off guard:

New Hampshire — Interest and Dividend Tax (Phasing Out)

New Hampshire has never taxed wages, salaries, or self-employment income. However, it historically levied the Interest and Dividends Tax (I&D Tax) on investment income. This was 5% until 2023, then reduced to 3% for 2026 as part of a phased elimination. The tax is fully eliminated effective January 1, 2027.

The I&D Tax applies to: interest from bank accounts, interest from bonds, dividends from stocks and mutual funds. It does NOT apply to wages, Social Security, pensions, IRA/401(k) distributions, or capital gains. For retirement-age residents with large investment portfolios, this tax can still be meaningful in 2026 — a portfolio generating $100,000 in dividends and interest would owe $3,000 in NH I&D Tax. After 2026, this disappears entirely.

Washington — Capital Gains Tax (Enacted 2021)

Washington enacted a 7% capital gains tax on long-term capital gains exceeding $262,000 (2026, inflation-adjusted from $250,000) for both single and married filers. This applies to gains from stocks, bonds, and certain business assets. Notable exemptions: gains from selling a primary residence (subject to the federal exclusion), retirement accounts (IRAs, 401(k)s), real estate, livestock, and timber.

The Washington capital gains tax was upheld by the state Supreme Court in March 2023. For typical W-2 workers, it has no impact. For investors and business owners selling assets, gains over $262,000 trigger 7% Washington tax on the excess — in addition to federal capital gains tax (0%, 15%, or 20%).

States That Had Income Tax and Eliminated It

Tennessee eliminated its Hall Tax on dividends and interest effective January 1, 2021. Before that date, Tennessee residents paid 3% on investment income. Since 2021, Tennessee is fully income-tax-free. Note: some older guides still incorrectly list the Hall Tax as active.

The Texas Property Tax Trap: Total Burden Comparison

Texas is often cited as the gold standard no-income-tax state, and its economic growth and population inflows reflect genuine tax appeal. But a comparison of a Texas homeowner to a comparable resident of Oregon or California reveals a more nuanced picture.

Worked example — $150,000 income, $400,000 home:

At $150,000 income, a Texas homeowner saves approximately $9,000 vs. an Oregon resident — but only $3,300 vs. a Florida resident. Wyoming offers the lowest total burden of any no-income-tax state in this scenario.

The income scaling effect: No-income-tax savings scale with income — the $9,000 Texas vs. Oregon savings at $150k becomes $22,000+ at $500,000 income. But property tax savings don't scale with income, so the advantage grows significantly for high earners.

Where No-Income-Tax States Win Outright: Retirees and Investors

The no-income-tax states offer their clearest advantage for two specific groups:

Retirees with Pension and Investment Income

High-income-tax states typically tax pension income, IRA distributions, and investment income at ordinary income rates. California taxes pension income at up to 14.4%. New York taxes it at up to 10.9%. A retiree receiving $200,000/year in pension and IRA distributions saves:

• vs. California: up to $28,800/year in state income tax by living in Texas or Florida
• vs. New York City: up to $30,000+/year (state + NYC city tax) by moving to Florida or Texas
• Property tax offset: if the retiree owns a $500,000 home, Texas property tax would cost ~$8,000/year — still net positive vs. NY or CA

Florida wins outright for most retirees: lower property tax than Texas, Homestead Exemption reduces assessed value by up to $50,000, and the Save Our Homes cap limits annual assessment increases to 3% for full-time residents.

High-Income Tech Workers and Founders

California's 13.3% (for income over $1M, rising to 14.4% from 2024) vs. Texas's 0% creates an annual saving of over $130,000 on $1M of income. Tech workers who relocate from San Francisco to Austin or Seattle to Austin commonly cite this differential. Washington's capital gains tax partially offset this advantage for founders with large equity stakes — but it only applies to gains over $262,000 and only to realized gains, not unvested equity.

Local Income Taxes in No-Income-Tax States

An important caveat: in most of the nine no-income-tax states, municipalities cannot levy their own income taxes. However, there are exceptions worth noting:

• Washington — Metro SHS and Multnomah County (Oregon border): Workers who commute across the Oregon border face Oregon state income tax (plus Portland metro local taxes) on Oregon-source wages even if they live in Washington.
• Tennessee: No local income taxes exist in Tennessee.
• Texas: No local income taxes. Texas municipalities can levy property taxes (contributing to the high average) but not local income taxes.
• Nevada: No local income taxes.
• Florida: No local income taxes.
• Alaska: A handful of Alaska municipalities (Juneau, Sitka) levy a local sales tax, but no Alaska locality levies an income tax.

The relevant exception for this guide is Washington state residents who commute to Oregon (common in the Portland/Vancouver, WA corridor) — they face Oregon income tax on Oregon-source wages plus potentially Portland metro local taxes, even though Washington itself has no income tax. This is among the most complex cross-state tax situations in the US and is covered separately in the Oregon/Portland local tax guide.