“Move to Texas and there’s no income tax.” You have heard it. Every relocation listicle repeats it.
Something odd surfaced while writing this. Even the number of no-income-tax states depends on who you ask. South Dakota’s own revenue department says seven. The most-cited private tracker says eight. Search results overwhelmingly say nine.
1. What it's worth. The wage gap dwarfs the tax gap. On BLS figures, an elementary school teacher earns $97,970 in Washington against $52,300 in Mississippi; a registered nurse, $150,280 in California against roughly $77,000 in Alabama and South Dakota — close to double. State income tax differences are a few percentage points.
2. Where the catch is. “No income tax” does not mean “no tax” — the money comes back as property or sales tax. And because the federal return gives part of your state tax back (SALT), the felt difference is smaller than the headline rate.
3. What to do. Look up what your occupation pays in that state before you look at any rate table. Why the count of no-income-tax states comes out as seven, eight or nine is worked out below.
Working out why those three numbers differ explains most of what actually matters here, so that is where this starts.
Seven, eight, or nine?
Start with what the state agencies themselves publish. Nevada is the bluntest:
“Nevada residents do not pay state tax on income earned from salaries, wages, or similar compensation.”
“The State of Nevada does not impose a state income tax on individuals or participate in the administration of Federal Income Tax.”
South Dakota commits to a count: “South Dakota is one of seven states that does not impose a state income tax.” The widely cited private tracker lists eight — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming. The nine you see everywhere adds Washington.
Three states account for the whole disagreement.
| State | What complicates it | Effect on the count |
|---|---|---|
| Tennessee | Taxed interest and dividends from 1929 until repeal in 2021 | Now counted as “none” almost everywhere |
| New Hampshire | Its interest & dividends tax ran through the end of 2024 | Depends on the vintage of the source |
| Washington | Nothing on wages, but it taxes capital gains | This is what splits 7 / 8 / 9 |
New Hampshire’s department documents its own wind-down precisely — “5% for tax periods ending prior to December 31, 2023”, then “4% for taxable periods ending on or after December 31, 2023”, then “3% for taxable periods ending on or after December 31, 2024”, and finally “The I&D Tax is then repealed for taxable periods beginning after December 31, 2024.” The same page adds that “the State of New Hampshire does not have an income tax on an individual’s reported W-2 wages” — which was true the whole time, and is exactly why the counting got muddled.
Tennessee reads the same way. The Hall tax “is imposed only on individuals and other entities receiving interest from bonds and notes and dividends from stock”, was “enacted in 1929”, and “was repealed for tax periods that begin on January 1, 2021, or later.”
※ This article does not pick a number. South Dakota’s official page says seven and the private tracker says eight, and no source was found that explains its own counting rule. State-by-state facts are given instead.
What “no income tax” actually buys you
Nevada answers this on its own page, unprompted:
“While Nevada does not have an individual income tax, it does levy other types of taxes, such as sales tax and property tax.”
“Nevada does have a Commerce Tax for businesses whose gross revenue exceeds $4 million in a fiscal year.”
South Dakota’s page is built the same way: no income tax, then immediately a list of what it does collect — alcohol, cigarette and tobacco excise, motor fuel excise, property, and sales and use tax. Texas substitutes a franchise tax: the comptroller lists a no-tax-due threshold of $2,650,000 in total revenue for 2026–2027, a rate of 0.375% for retail and wholesale, 0.75% for everyone else, and a compensation deduction limit of $480,000.
“No tax state” is a claim about one line item. The money is collected somewhere.
The federal return gives part of your state tax back — SALT
This is the piece most state-versus-state comparisons skip, and it changes the math. State and local taxes are deductible on your federal return, so a raw “13% versus 0%” comparison overstates the real gap.
From the IRS instructions for the 2025 Schedule A:
“The overall limit on the deduction for state and local income, sales, and property taxes has increased to $40,000 ($20,000 if married filing separately). The overall limit is reduced if your modified adjusted gross income is more than $500,000 ($250,000 if married filing separately) but will not be reduced below $10,000 ($5,000 if married filing separately).”
The worksheet spells out the taper: “Multiply line 6 by 30% (0.30)”. Above the threshold the limit falls by 30 cents per dollar of excess — and then stops at $10,000 regardless.
You pick income tax or sales tax, not both
This clause is the one that matters if you live somewhere without an income tax.
“You can elect to deduct state and local general sales taxes instead of income taxes. You can’t deduct both.”
In Texas or Florida there is no state income tax to put on that line — so the sales tax election is the one that does any work. And you do not need a shoebox of receipts: the IRS publishes Optional State Sales Tax Tables, and you look up a deduction from your income and family size.
| State | State sales tax rate shown in the IRS table |
|---|---|
| California | 7.25% |
| Illinois | 6.25% |
| Florida | 6.00% |
| New York | 4.00% |
※ Only the four states whose rows returned identical values on two separate readings of the IRS instructions are listed. The Texas and Pennsylvania rows could not be read and are omitted. The full table covers every state — look yours up in the IRS instructions directly. The dollar amounts in the table did not survive the second reading, so none are reproduced here.
Flat or graduated — the structure differs too
Among states that do tax income, some apply one rate to every dollar and others run brackets.
Illinois is the simple case. Its revenue department page says only: “Effective July 1, 2017: 4.95 percent of net income”. Withholding runs at the same 4.95%, and corporations pay 7 percent.
Ohio shows the other shape:
| Ohio taxable income | Tax |
|---|---|
| $0 – $26,050 | 0.000% — nothing |
| $26,050 – $100,000 | $342 + 2.75% of the excess over $26,050 |
| Over $100,000 | $2,394.32 + 3.125% of the excess over $100,000 |
※ Ohio’s 2025 schedule. The page carries the date “May 06, 2020” while showing 2025 brackets. Two readings returned the same date and the same brackets, but the mismatch between the page’s own date and its content is noted rather than smoothed over. No 2026 figures appear on it.
That first bracket is easy to miss: below $26,050 of Ohio taxable income the state rate is zero. A state “having an income tax” does not mean it starts at the first dollar. For how the federal brackets stack on top, see understanding US tax brackets.
Rates move — sometimes a lot
Memorizing “that state is X percent” ages badly. North Carolina publishes eleven years on one page, and the direction is consistent.
The page also warns that “additional rate changes may apply to tax years beginning with 2027 based on certain rate reduction triggers” — so it is not finished moving.
Tennessee deleted a tax outright. New Hampshire’s ended in 2024. State tax law turns over on a scale of a few years, which means a relocation calculation built on a rate you read once is a calculation with an expiry date. Pull the current number from the state agency itself.
The variable that dwarfs the tax rate
Wages differ by state far more than tax rates do. From the Bureau of Labor Statistics release published May 15, 2026 (data for May 2025):
| Occupation | Highest | Lowest |
|---|---|---|
| Elementary school teachers (except special education) | Washington $97,970 California $95,670 | Mississippi $52,300 Oklahoma $52,320 |
| Registered nurses | California $150,280 | Alabama and South Dakota about $77,000 |
Elementary teaching pay is nearly double at the extremes. Nursing is close to that. Set against a state income tax rate difference measured in single percentage points, the pay gap is the larger term by a wide margin. To see what a given salary actually nets, try the US paycheck calculator or the take-home pay table by salary.
Who actually comes out ahead
What follows is reasoning from the figures above, not something quoted from an agency. Read it that way.
- High earners. The rate difference multiplies against a larger number. But past $500,000 of modified AGI the SALT limit tapers at 30 cents on the dollar, so the federal offset shrinks exactly where the state bill is biggest.
- Renters. No property tax bill arrives directly, so more of the “no income tax” benefit stays with you — though some of it is priced into rent.
- Buyers. States without an income tax tend to lean on property tax. Run the property tax number before treating the income tax saving as real. The closing cost and property tax calculator helps.
- Anyone with large realized gains. Washington charges nothing on wages but does tax capital gains — the one place the “no income tax” label misleads most directly. See capital gains tax.
The thing that shifted most while researching this: the state income tax rate is a smaller term than it looks. Pay for the same job varies by up to 2×, property tax fills the gap in no-income-tax states, and SALT claws part of it back at the federal level. No rate table settles the question.
Questions that remain
So how many states have no income tax?
This article does not settle on a number. South Dakota's Department of Revenue calls itself “one of seven states” without a state income tax; the widely cited private source counts eight; and the nine that turns up most in search adds Washington. No source explaining why each side counts as it does could be found, so instead of a number we set out the three states that make the difference: Tennessee repealed its Hall income tax on interest and dividends in 2021, New Hampshire's interest and dividends tax survived until the end of 2024, and Washington does not tax wages but does tax capital gains.
Does “no income tax” mean no taxes?
No — it is a claim about one line item, and the money is collected elsewhere. Nevada's Department of Taxation says on the same page that it “does levy other types of taxes, such as sales tax and property tax,” and adds a Commerce Tax for businesses with gross revenue above $4 million. South Dakota follows the no-income-tax statement with a list of alcohol, tobacco, motor fuel, property, and sales and use taxes. Texas substitutes a franchise tax: for 2026–2027 the no-tax-due threshold is $2,650,000 of total revenue, with 0.375% for retail and wholesale and 0.75% for everyone else.
What does it mean that the federal return gives state tax back?
State and local taxes are deductible on your federal return — the SALT deduction. Per the IRS's 2025 Schedule A instructions, income, sales and property taxes share a combined cap of $40,000 ($20,000 filing separately). That it is combined rather than per-item is the part people miss. Above $500,000 of modified AGI ($250,000 filing separately) the cap is reduced by 30% of the excess, but it never falls below $10,000 ($5,000 separately). Which is why comparing “13% against 0%” overstates the real gap.
If my state has no income tax, is there nothing to put on the SALT line?
You can put sales tax there instead. The IRS instructions say you may “elect to deduct state and local general sales taxes instead of income taxes” and that you cannot deduct both. In Texas or Florida, where there is no state income tax to enter, the sales tax election is the one that actually does any work. You do not need to keep receipts either: the IRS publishes Optional State Sales Tax Tables, so a deduction can be looked up from income and family size.
Is moving to a no-income-tax state worth it, then?
Look up what your occupation pays in that state before you look at any rate table. In the Bureau of Labor Statistics data, elementary school teachers earn $97,970 in Washington against $52,300 in Mississippi, and registered nurses $150,280 in California against about $77,000 in Alabama and South Dakota — close to double. Measured the same way, as a difference between two states, the pay gap is roughly ten times the tax gap. Rates are not fixed either: North Carolina came down from 5.75% in 2015 to 3.99% in 2026, and its page notes that further reductions may apply from 2027.
Sources
- IRS — 2025 Instructions for Schedule A. Source of the $40,000 / $20,000 SALT limit, the $500,000 / $250,000 threshold, the 30% taper, the $10,000 / $5,000 floor, and the income-versus-sales-tax election. The PDF carries the state sales tax tables.
- Nevada Department of Taxation — Income Tax in Nevada. Source of the no-individual-income-tax statements, the note about other taxes, and the $4 million Commerce Tax threshold.
- South Dakota Department of Revenue — Taxes for Individuals. Source of “one of seven states” and the list of taxes actually levied.
- Tennessee Department of Revenue — Hall Income Tax (last modified 11 April 2023). Source of the 1929 enactment and the 2021 repeal.
- New Hampshire Department of Revenue — Interest & Dividends Tax. Source of the 5% → 4% → 3% → repeal sequence and the W-2 statement.
- Illinois Department of Revenue — Income Tax Rates. Source of 4.95% effective 1 July 2017.
- North Carolina Department of Revenue — Tax Rate Schedules. Source of the 2015–2026 series and the 2027 trigger language.
- Ohio Department of Taxation — Annual Tax Rates. Source of the 2025 brackets. Page date reads May 06, 2020.
- Texas Comptroller — Franchise Tax (updated 20 May 2026). Source of the $2,650,000 threshold and the 0.375% / 0.75% rates.
- Bureau of Labor Statistics — Occupational Employment and Wages Summary (May 2025 data, released 15 May 2026). Source of the state wage comparisons.
- Tax Foundation — 2025 State Individual Income Tax Rates & Brackets (published 18 February 2025, last modified 2 April 2026). A private research organization with stated policy positions on tax, not a government agency. Source of the eight-state count and of the note that Washington taxes only capital gains.
Where to check further
Every figure above came from opening the agency page directly and reading it twice to confirm the values matched. Several things did not survive that, so here is where to fill them in.
- Exact top marginal rates by state. California’s 13.3%, Hawaii’s 11% and Pennsylvania’s 3.07% are quoted everywhere but could not be confirmed on the states’ own web pages (California publishes schedules only inside form PDFs; Pennsylvania’s was not found at all). Open the state agency’s tax rate schedule for the year to be certain.
- The count of no-income-tax states, and where Washington and Alaska stand now. South Dakota’s official page says seven, the private tracker eight, and Washington’s revenue page returned contradictory text on repeated readings (Alaska’s domain was unreachable). If you are actually moving, check that state’s revenue page on the day — this changes on a few-year cycle.
- The real burden once property and sales tax are counted. Rankings like “Texas has among the highest property taxes” could not be matched to a government source, so all of them were dropped. Income tax alone is half the picture — look up county and city property rates and the combined sales tax rate on the local government’s own page.
State tax law changes on a few-year cycle and local taxes stack on top in many places. Confirm against the relevant state agency and a tax professional before acting. This is not tax advice. For housing market context, see the 2026 US housing market.
