No taxpayer wants to see their paycheck shrink due to income taxes, luckily some states don’t tax your income at all.
As of 2025, nine states do not levy a state income tax. That means less money is taken out of your hard-earned paycheck. If you are retired, no income tax also means no tax on your Social Security benefits, withdrawals from your IRA or 401(k) plan, or payouts from your pension.
For some people, these tax breaks can be an attractive incentive to relocate. However, states with no income tax often collect higher taxes elsewhere to make up for revenue shortfall.
For instance, residents of the Sunshine State have been battling climbing property taxes and living costs for years. While Floridians voted to increase their property tax break, it’ll be some time before they get relief.
Here’s where you can expect to see higher taxes in a no-income-tax state.
No income tax doesn’t mean tax-free
Just because a state is income-tax-free, it doesn’t mean you’ll completely evade taxes.
States without an income tax still need money to pay for roads, schools, and other infrastructure, so residents have to pay other taxes (e.g., sales, property, and estate taxes). And sometimes those other state taxes can be on the high end. For example, states with no income tax are often ranked among the places with the highest property tax rates in the country.
So, if you are thinking of moving to a state without an income tax, take note of some of the other taxes you will have to pay there or services that may be limited due to revenue shortfalls. Maybe the grass isn't greener on the other side.
Related: Are No Income Tax States Better to Move To?
That being said, let’s dive into the nine states without an income tax and how you’ll be taxed.
Overall Rating for Taxes: Among the most tax-friendly in the U.S., ranking 3rd overall on the Tax Foundation’s 2025 State Tax Competitive Index.
Alaska ranks as one of the best states to live in if you want a break from high taxes. If you live in the Last Frontier, although chilly, you’ll benefit from no income taxes and you get to live in one of five states with no state sales tax. That being said, localities can levy sales taxes, which can reach 7.85%. Higher rates are found in locations that lack a property tax. But, according to the Tax Foundation, the statewide average is only 1.82%.
Additionally, the state has no inheritance tax or estate tax. If you’re a homeowner, property taxes in Alaska are rather high, the effective property tax rate for an owner-occupied home is 1.07%.
As for gasoline costs, it’s also quite inexpensive compared to the rest of the country. Alaska has an 8.95 cents per gallon gas tax rate and levies a $2.00 excise tax.
For more information, see the Alaska Tax Guide.
Overall Rating for Taxes: Florida’s tax system ranked 4th overall for the Tax Foundation’s 2025 State Tax Competitive Index.
Lots of taxpayers consider relocating to Florida to benefit from the state’s tax breaks. For one, you’ll get to keep more of your hard-earned money as it’s no-income-tax state. That’s not all, your groceries and prescription drugs are also exempt from sales tax. There’s also no inheritance or estate tax.
Generally, when it comes to shopping the Sunshine State imposes a middle-of-the-road sales tax rate compared to other states. As of 2025, you can expect to pay a 6% state sales tax. Localities can add as much as 1%, and the average combined rate is 7.00%, according to the Tax Foundation.
Here’s the catch: property taxes are a sore point for many Floridians. Property taxes sit at an average of 0.71% for an owner-occupied home in the Sunshine State. That alone motivated more than 66% of state voters to pass a ballot measure that aims to increase Florida property tax breaks, as reported by Kiplinger.
Separately, Florida has a 38.6 cents per gallon tax rate and a $1.339 cigarette excise tax rate.
For more information, see the Florida Tax Guide.
Overall Rating for Taxes: Nevada’s tax system does not impose individual or corporate income taxes, but other taxes land its ranking in the 17th place for 2025 compared to all other states vetted by the Tax Foundation.
Nevada, like some of the states mentioned in our list, doesn’t impose an inheritance or estate tax. It’s also a no-income-tax state.
As for shopping, the Silver State does levy a 5.50% sales tax. Localities can add as much as 2%, and the average combined rate is 6.96%, according to the Tax Foundation. That's a pretty high combined rate. One new change: starting January 1, 2025, infant and adult diapers will be exempt from the sales tax.
As Kiplinger reported, the sales tax relief adds to a national trend of lowering the share of states that still tax diapers. What else is exempt from the sales tax?
- Groceries: Exempt
- Prescription Drugs: Exempt
As for homeowners, the Silver State levies a 0.44% effective property tax, which ranks it as one of the ten states with the lowest property taxes. If you’re commuting, Nevada levies a 23.81 cents per gallon gas tax rate and a $1.80 cigarette excise tax, that’s not too bad.
Another positive change for Nevada residents this year will impact your unemployment insurance (UI). The Silver State increased the UI taxable wage base on January 1, from $40,600 in 2024 to $41,800 in 2025. Critics have formerly mentioned that the state’s unemployment insurance tax is uncompetitive.
For more information, see the Nevada Tax Guide.
Overall Rating for Taxes: Among the top ten tax-friendliest states in 2025, per Tax Foundation estimates.
New Hampshire is one of the best states in the nation when it comes to tax breaks. You won’t have to worry about income taxes, state or local sales taxes, or an inheritance and estate tax. At first glance, that sounds like a pretty solid deal. However, you’ll end up paying higher taxes elsewhere.
Where will you feel the pinch? Property taxes in New Hampshire are among the highest in the country at a 1.61% rate on owner-occupied homes. In 2025, owners of mobile homes have reportedly been complaining that their property taxes are much higher compared to people in regular homes.
Another tax to watch out for is gas. If you’re commuting in The Granite State, you can expect to pay a 23.83 cents per gallon tax rate.
Major changes coming your way: As mentioned, New Hampshire doesn't tax earned income, and as of January 1, 2025, the state has repealed the tax on interest and dividends income. The tax on interest and dividends income was originally meant to be phased out by 2027, however, HB 2, enacted in June 2023 sped up the phaseout by two years. As a result, starting this year, New Hampshire doesn’t levy an individual income tax.
For more information, see the New Hampshire Tax Guide.
Overall Rating for Taxes: South Dakota ranks as the second tax-friendliest state in the country in 2025 according to the Tax Foundation.
You won’t have to pay state income taxes, inheritance, or estate taxes in South Dakota. Another positive for folks in the Mount Rushmore State is that the sales tax is below average compared to the rest of the country.
You can expect to pay a 4.2% state sales tax, while localities can add as much as 4.5%, and the average combined rate is 6.11%, according to the Tax Foundation.
While groceries and clothing are taxable, there are some exemptions to the sales tax:
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under a special 4% excise tax
- Prescription Drugs: Exempt
As for property taxes, South Dakota imposes a 1.01% effective rate. That's slightly below the national average.
Catching a ride? Drivers in the Mount Rushmore State can expect a 30 cents per gallon gas tax rate.
For more information, see the South Dakota Tax Guide.
Overall Rating for Taxes: Tennesse ranks among the top 10 states that are the most tax-friendly in 2025.
Tennessee does not levy income tax, estate, or inheritance taxes. However, what makes it one of the most tax-friendly states is its below-average property tax rate. At just 0.48%, property taxes are nearly 50% lower compared to other states featured on this list.
Where does Tennessee recoup some state and local revenue? It’s higher than average sales tax. The Volunteer State has a 7% state levy. There's also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.55%, with an average combined state and local rate of 9.55%, according to the Tax Foundation.
That's the second-highest combined rate in the nation. Local taxes are limited, though: Only the first $1,600 of any single item is taxable.
- Groceries: Taxable (4% state rate; additional local taxes may apply)
- Clothing: Taxable
- Motor Vehicles: Taxable (7% basic rate, plus 2.75% state tax on sales price between $1,600 and $3,200; additional local taxes may also apply)
- Prescription Drugs: Exempt
As Kiplinger reported, the Tennessee Works Act will give residents a break from certain taxes. That includes a sales tax holiday from August to October and other tax relief for small businesses through 2025.
As for gas tax, in Tennesee, you’ll pay an average of 24.4 cents per gallon of gas, not exactly the lowest tax rate but not the highest either.
There is one big change this year, effective January 1, hydrogen gas will be exempt from the sales and use tax. However, it will still be subject to the alternative fuels tax of 21 cents per gallon, according to the Tax Foundation. Hydrogen gas was added to the state’s alternative fuels law as part of SB 2307.
For more information, see the Tennessee Tax Guide.
Overall Rating for Taxes: Among the 10 best states to live in regarding taxes in 2025.
Like other states featured on this list, Texas doesn’t impose an income tax, inheritance, or estate tax. Starting with the good: one tax change will impact schools this year. As of January 1, school districts are allowed to request more state funding if their budgets are short. The Texas Education Agency is also required to publicize the maximum compression levy rate for each school district.
For commuters, Texas only levies a tax rate of 20 cents per gallon of gasoline, that’s among the lowest state gas taxes in the U.S.
Now, the not-so-good. Texas levies a 6.25% state sales tax. Localities can add up to 2%, with an average combined rate of 8.2%, according to the Tax Foundation. Texas' combined rate is well above the U.S. average.
While groceries and prescription drugs are exempt from sales tax, motor vehicles and clothing are not.
You won’t catch a break with property taxes, either. The median property tax rate on an owner-occupied home is 1.47%, which is much higher compared to the rest of the country.
For more information, see the Texas Tax Guide.
Overall Rating for Taxes: Ranks among the least tax-friendly states in 2025.
While Washington doesn’t levy income tax, the state recently imposed a 7% capital gains tax on the sale or exchange of certain long-term capital assets if the annual profits exceed $250,000.
Other taxes may complicate the cost of living for residents of the Evergreen State. Washington imposes a 6.5% state sales tax. Municipalities can add up to 4.1%, with the average combined rate at 9.38%, according to the Tax Foundation. Washington's combined rate is the fourth-highest in the nation.
While groceries and prescription drugs are exempt from sales tax, clothing and motor vehicles are not.
Property Taxes: Do you have a property that generates or stores renewable energy? If you do, starting January 1, 2025, qualifying renewable energy facilities may apply and be considered eligible for a new exemption on the state portion of personal property tax. Overall, the average Washington resident can expect to pay 0.76% in property taxes.
Inheritance and Estate Taxes: Washington does not have an inheritance tax, but it does levy an estate tax. For 2025, estates valued over $2.193 million (the exemption threshold is subject to adjustment each year for inflation), must pay estate taxes. Tax rates range from 10% to 20%. The state offers an additional $2.5 million deduction for family-owned businesses valued at $6 million or less.
As for gas taxes, Washington drivers pay a tax rate of 52.8 cents per gallon of gas, within the top five highest in the U.S.
For more information, see the Washington State Tax Guide.
Overall Rating for Taxes: Wyoming ranks as the 1st overall most tax-friendly state in the United States in 2025.
Wyoming is the best state in the country when it comes to tax-friendliness. With no income tax, estate, or inheritance taxes, its residents also benefit from low taxes across the board.
The Cowboy State imposes a 4% state sales tax. Municipalities can add up to 2% to that, with a combined rate of 5.44%, according to the Tax Foundation. The combined rate is one of the lowest in the nation.
Groceries and prescription drugs are exempt from the sales tax, but motor vehicles and clothes are not.
If you’re commuting, gas taxes are quite low as well. Wyoming has a 24 cents per gallon gas tax rate.
One major tax change for property taxes will benefit homeowners this year: If you’ve paid Wyoming property taxes for at least 25 years, you may be in luck this year. As of January 1, 2025, homeowners or spouses who are 65 years old or older are eligible for a 50% property tax exemption. Military members who are residents of Wyoming may also qualify.
- The exemption is temporary and set to sunset on July 1, 2027, however, a separate bill doubles the exemption for certain veterans (from $3,000 to $6,000 of the assessed value of a home).
- Overall, homeowners pay an average 0.55% effective property tax rate in the state.
For more information, see the Wyoming Tax Guide.
