Nine states have no state individual income tax for tax years 2025 and 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
At a glance
- Retirement income (pensions, Social Security) is tax-free for retirees in these states, since there’s no income tax at all.
- No state income tax does not mean no state taxes. Sales, property, excise, and business taxes may still be significant.
- New Hampshire is included for 2025 because it repealed its tax on interest and dividend income for tax years beginning on or after Jan. 1, 2025.
State-by-state breakdown
Alaska
No individual income, estate, or inheritance tax. No statewide general sales tax (average combined state/local sales tax rate: 1.82%; some localities impose their own). $150,000 property tax exemption for senior citizens and disabled veterans. Corporate income tax rate: 0%–9.4%, with exemptions for small corporations.
Florida
No individual income, estate, or inheritance tax. Statewide sales tax: 6% (up to 2.5% more locally). Property tax collections: $1,686 per capita. Corporate income tax rate: 5.5%.
Nevada
No individual income tax. Statewide sales tax: 6.85% (combined average: 8.24%). Property tax collections: $1,351 per capita. No traditional corporate income tax, but a commerce tax applies to businesses with gross revenue over $4 million/year.
New Hampshire
No tax on wages/salaries; repealed its tax on interest and dividend income for tax years beginning 2025 and later. No estate or inheritance tax. No statewide sales tax. Property tax collections: $3,660 per capita. Corporate income tax rate: 7.5%.
South Dakota
No individual or corporate income tax, estate tax, or inheritance tax. Statewide sales tax: 4.2% (combined average: 6.11%). Property tax collections: $1,695 per capita.
Tennessee
No individual income tax on wages (the state’s former investment income tax was fully phased out). Statewide sales tax: 7% (combined average: 9.61%). Property tax collections: $976 per capita (very low). Corporate income tax rate: 6.5%, plus gross receipts taxes for certain activities.
Texas
No individual income tax. Statewide sales tax: 6.25% (combined average: 8.2%). Property tax collections: $2,248 per capita. No corporate income tax, but a franchise tax applies to many businesses.
Washington
No individual income tax, but a 7% capital gains tax applies to high earners on long-term capital asset sales exceeding $278,000/year (as of 2025). Has an estate tax. Statewide sales tax: 6.5% (combined average: 9.47%). Property tax collections: $1,999 per capita. No traditional corporate income tax, but has a B&O tax.
Wyoming
No individual income tax. Statewide sales tax: 4% (combined average: 5.56%). Property tax collections: $2,152 per capita. No traditional corporate income tax.
How these states fund government
States without an individual income tax rely on sales and use taxes, property taxes, excise taxes, business taxes, and fees. The exact mix varies widely by state.
FAQs
What states have no state income tax? For tax years 2025 and 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Is it cheaper to live in a no-income-tax state? Not necessarily. These states often rely on higher property, sales, or excise taxes, or fees (vehicle registration, business licenses, etc.). Less income tax revenue can also mean lower public service spending, which can raise other costs (e.g., education).
Do no-income-tax states make up the revenue elsewhere? Usually, yes — through sales/excise taxes, property taxes, business taxes, and fees; the exact mix varies by state.
This article is for informational purposes only and not legal or financial advice.