Hate Paying Taxes? These 9 States Have No Income Tax

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You’ll still pay taxes in other ways. 

It’s getting close to that time of year again — the dreaded tax season! No one enjoys paying taxes, so why not move to one of the nine states in the U.S. without an income tax? That’s right, you read correctly — there are nine states that don’t have a state income tax. They just might be perfect for those looking to escape the burden of income taxes to keep more money in your bank account.

Which states don’t have income tax?

There are currently nine states with no income tax:

AlaskaFloridaNevadaNew HampshireSouth DakotaTennesseeTexasWashingtonWyoming

Each of these nine states have their own unique benefits that make them attractive for residents looking to get away from filing state taxes every year.

RELATED: Best Tax Software

Take Alaska, for example. This beautiful state has some of the most breathtaking landscapes in the country and is home to some incredible wildlife, like whales and bald eagles. For those who love nature but still want access to city life, Washington State is another great option without any form of personal income tax.

Tennessee offers access to the booming country music scene and has a low cost of living — the average cost of living in Tennessee is more than 10% lower than the national average. Want more entertainment? Florida has no state personal income tax and is home to world-famous attractions like Disneyworld and Universal Studios Orlando. Moving to a state with no income taxes may sound great, especially if you’re moving from a high-tax state like California, where the top marginal rate is 13.3%, the highest in the country.

How these states generate revenue

It’s important to note that states still need to generate revenue, and states without income taxes find other ways to pay for roads, schools, and other infrastructure. New Hampshire currently only taxes interest and dividend income, and Washington levies an income tax on capital gains only for certain high earners.Washington also has the highest estate tax in the country, at 20%. The bulk of Florida’s general revenue (75% to 80%), comes from the state’s 6% sales tax, and Tennessee has the highest sales tax in the nation at 9.55%.

Gas tax is another revenue stream. For example, Washington imposes a $0.494 per gallon tax on gasoline, one of the highest in the nation. Other states generate their income from property taxes. The property tax rate in New Hampshire is 1.89%, the third highest in the country. All of these different types of taxes levied by state and local governments may mean that your projected tax savings may not be as much as you hoped for. So you will need to do your own research before taking the leap to moving to one of these states.

Overall, if you’re tired of paying too much in taxes each year, then moving to a new state may be a good bet. Each state offers something unique that can appeal to different people looking for a change in scenery or a more affordable cost of living. However, since states still need to generate revenue, learn more to see how your tax costs will be impacted in other ways. Be sure to consider all factors when taking a look at what these nine states have to offer.

Our picks for best tax software

Our independent analysts pored over the perks and user reviews for the most popular tax provider services to land on the best-in-class picks to file your taxes. Get started by reviewing our list of the best tax software.

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