Which No-Income-Tax State Actually Saves You Money?

The nine no-income-tax states

Moving to a no-income-tax state can save 3–10% of gross income — on $77,719, that's $2,300–7,800/year. But the savings depend on what other taxes the state charges. Here's the full list with the tradeoffs:

• Alaska — no income tax, no state sales tax (localities may charge). Funds government through oil revenue. Highest savings potential, but remote and expensive to live in.
• Florida — no income tax, 6% state sales tax (plus local surtaxes up to 8.5% total). Popular with retirees. Property insurance is expensive due to hurricane risk.
• Nevada — no income tax, 6.85% state sales tax (up to 8.375% with local). Funds government through gaming and tourism revenue.
• New Hampshire — no tax on earned wages, but taxes interest and dividends (5%). No state sales tax. High property taxes (among the highest in the U.S.).
• South Dakota — no income tax, 4.2% state sales tax (up to 6.4% with local). Low cost of living overall.
• Tennessee — no income tax on wages (dividends/interest tax phased out in 2021). 7% state sales tax (among the highest in the U.S., plus local up to 9.55%).
• Texas — no income tax, 6.25% state sales tax (up to 8.25% with local). Compensates with high property taxes (1.7–1.8% of home value, among the highest nationally).
• Washington — no income tax, 6.5% state sales tax (up to 10.5% with local, among highest). Capital gains tax of 7% on gains over $262,000.
• Wyoming — no income tax, 4% state sales tax (up to 6% with local). Low property taxes (~0.61%). Funds government through mineral and energy revenue.

The real savings on a $85,000 salary

Let's compare what you keep on an $85,000 single-filer salary in three states: Texas (no income tax), Colorado (flat 4.4%), and California (progressive, up to 9.3% at this income).

Federal and FICA are the same everywhere: federal income tax $10,501 (after $14,600 standard deduction, 2024 brackets), FICA $6,503. Total federal burden: $17,004. That leaves $67,996 before state tax.

Texas: no state tax. Take-home: $67,996. You keep 80% of gross.

Colorado: $85,000 × 4.4% = $3,740. Take-home: $64,256. You keep 75.6%.

California: roughly $5,800–6,200 (progressive brackets, deductions vary). Take-home: ~$61,800. You keep 72.7%.

The spread between Texas and California on an $85,000 salary is about $6,200/year. That's $517/month — a car payment or a significant chunk of rent. The take-home calculator shows this for any state.

The property tax offset

No-income-tax states often charge higher property taxes. Texas averages 1.7–1.8% of home value — among the highest in the U.S. On a $340,200 home (the national median), that's $5,783–6,124/year. California averages 0.76% — $2,586 on the same home.

So the Texas homeowner pays about $3,500–3,600 more in property tax than the California homeowner on the same home value. Part of the $6,200 income tax savings gets eaten by property tax. The net savings are still real (~$2,600/year), but smaller than the headline suggests.

Wyoming is the exception: no income tax AND low property taxes (~0.61%). But Wyoming's median home value is lower than the national median, and the state funds itself through energy revenue. This is sustainable while energy prices support it, but it's a unique situation.

If you rent rather than own, the property tax difference is baked into your rent — but it's still there. Landlords pass property taxes through to tenants.

Sales tax: the silent cost

Tennessee has no income tax but the highest combined state + local sales tax in the U.S. — up to 9.55%. On $50,000 of annual spending, that's $4,775 in sales tax. Texas tops out at 8.25%, which is $4,125 on the same spending.

California's base sales tax is 7.25% (up to 10.25% with local), but income tax savings or costs depend on your income bracket. For high earners, California's progressive income tax (up to 13.3%) is far more expensive than any sales tax. For low earners, sales tax is regressive and can be a bigger burden.

The bottom line: you can't look at income tax in isolation. The total tax burden — income + property + sales — is what determines whether a state actually saves you money. The Tax Foundation publishes state and local tax burden rankings annually.

Which state wins for your income level?

For high earners ($150,000+): the no-income-tax states win clearly. At $150,000, California's state tax is roughly $9,000–11,000; Texas is $0. Property tax differences don't fully offset that gap.

For moderate earners ($50,000–80,000): the savings are real but smaller. The $2,000–4,000/year state tax savings may be partially offset by higher property taxes or sales taxes. The state-income-tax calculator shows the exact number for your salary and state.

For low earners ($30,000–50,000): sales tax matters more than income tax. Tennessee's 9.55% sales tax on $30,000 of spending ($2,865) can exceed what you'd pay in a low-sales-tax state with a modest income tax. The progressivity of income tax works in your favor at lower incomes.