Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — do not levy a state income tax.
Tax Revenue Sources for No-Income-Tax States
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Alaska has no state income or sales tax and relies on revenue from mineral lease rentals and royalties.
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Florida relies on tourism revenue.
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Nevada‘s economy is fueled by entertainment and hospitality.
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New Hampshire taxes some dividends and interest.
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Tennessee recently eliminated tax on investment income.
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Texas and New Hampshire have high property taxes.
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Wyoming relies on property, oil, sales and excise taxes for revenue.
By eliminating income tax, these states offer residents the advantage of retaining a larger portion of their earnings. Alaska stands out due to its unique revenue generation approach through natural resources.
Despite eliminating state income tax, these states may have trade-offs such as high property taxes, sales taxes, and higher costs of living.
Considerations Before Moving
Before making a move to one of these states, it is important to consider the full tax picture, including other forms of taxation and cost of living.
State Tax Burden Comparison
| State Tax Burden (% of Personal Income) | Rank (Best to Worst) | Affordability Ranking | "Best States to Live In" Rank |
|---|---|---|---|
| (Values to be inserted by user) | (Values to be inserted by user) | (Values to be inserted by user) | (Values to be inserted by user) |
Alaska ranks low for tax burden and high for affordability. Wyoming scores above average for cost of living and housing affordability.
High-Income Family Consideration
For high-income families, living in a state without personal income tax could result in significant savings.
Alaska, top-ranked for tax burden, capitalizes on its natural resources to avoid imposing income or sales taxes on residents. This lack of taxes translates to considerable savings for both individuals and businesses.