Which States Have No Income Tax? Your 2026 Comprehensive Guide

By CalcTax Editorial Team Published May 06, 2026 Last Updated May 06, 2026 12 min read State

In 2025, over 150 million U.S. taxpayers reported income to the IRS, with federal and state income taxes representing a major portion of their tax liabilities. For many, state income tax can significantly impact take-home pay and financial planning. However, a select group of states impose no personal income tax, offering potential savings and unique tax considerations. Navigating the landscape of state income taxes can be complex. Deciding where to live or retire involves more than just federal tax rates; understanding state tax policies, including income tax exemptions, is essential. This article breaks down which states have no income tax in 2026, explains how these states generate revenue without it, and outlines what you need to know about other taxes that may apply. We’ll explore 2025-2026 IRS tax brackets, reference authoritative sources like IRS Publication 17 and the Tax Foundation, and provide actionable insights for taxpayers considering relocation or tax planning. Whether you’re a wage earner, retiree, or business owner, this guide arms you with the knowledge to make informed decisions about state income tax implications.

Overview: Understanding State Income Taxes in the U.S.

State income taxes vary widely across the United States. According to the Tax Foundation's 2025 data, 41 states impose some form of individual income tax, while 9 states do not. Income tax rates in states that do tax income range from flat rates under 5% to progressive brackets exceeding 13% in some cases. For many taxpayers, state income tax liability can add thousands of dollars annually to their federal tax burden.

Per IRS Publication 17 (2025), the federal income tax brackets range from 10% to 37% depending on income level. When combined with state income taxes, the overall tax rate can significantly affect your net income and financial planning strategies.

Understanding which states have no income tax can be a critical factor, especially for high earners, retirees, and those considering relocation. However, absence of income tax does not mean absence of all taxes; many no-income-tax states rely heavily on sales, property, and other taxes to generate revenue.

Which States Have No Personal Income Tax in 2026?

As of 2026, the following nine states impose no state-level personal income tax:

• Alaska
• Florida
• Nevada
• New Hampshire (taxes interest and dividends only)
• South Dakota
• Tennessee (fully phased out tax on interest and dividends by 2021)
• Texas
• Washington
• Wyoming

These states provide a unique tax environment for residents, but it’s important to understand how they compensate for lost income tax revenue. For example, Alaska funds state services primarily through oil and gas revenues, while Florida and Texas rely heavily on sales and property taxes.

New Hampshire and Tennessee: Special Cases

New Hampshire and Tennessee historically taxed interest and dividend income but have both moved to eliminate or phase out these taxes. As of 2021, Tennessee’s Hall Tax was fully repealed, and New Hampshire still taxes some investment income but has proposals to phase it out completely. If you receive significant investment income, this nuance is crucial in your tax planning.

How No-Income-Tax States Fund Their Budgets

States without income tax must generate revenue from alternative sources. The most common revenue streams include:

1. Sales Taxes: These states generally have higher sales tax rates or broader sales tax bases. For example, Washington State’s sales tax averages around 6.5% with local add-ons.
2. Property Taxes: Property tax rates tend to be higher to compensate for missing income tax revenue. Texas is known for high property taxes, which fund schools and local services.
3. Excise and Other Taxes: Taxes on fuel, tobacco, alcohol, and tourism-related fees can be substantial. Alaska leverages oil extraction taxes.

Taxpayers considering relocation should weigh these trade-offs carefully. While no state income tax can save you money annually, higher sales or property taxes may offset many of those gains depending on spending and housing patterns.

Comparing Tax Burdens: Income Tax vs. Other Taxes

According to the Tax Policy Center, state and local tax burdens vary significantly by income level and state. In no-income-tax states, lower-income taxpayers can sometimes face higher regressive taxes through sales tax, which disproportionately affects lower-income households.

For example, a high earner in Texas may save tens of thousands annually in income taxes but pay more in property taxes if they own expensive real estate. Conversely, retirees with fixed incomes in Florida may benefit substantially from no income tax combined with no tax on Social Security benefits.

Taxpayers should analyze their individual circumstances, including income sources and spending habits, to determine whether a no-income-tax state offers a net benefit.

Federal Income Tax Brackets and Interaction with State Taxes (2025-2026)

For context, the 2025 federal income tax brackets for single filers, per IRS Publication 17, are:

• 10%: $0 to $11,000
• 12%: $11,001 to $44,725
• 22%: $44,726 to $95,375
• 24%: $95,376 to $182,100
• 32%: $182,101 to $231,250
• 35%: $231,251 to $578,125
• 37%: Over $578,125

When combined with state income taxes, the effective marginal tax rate can increase significantly. For instance, California’s top marginal income tax rate is 13.3%, which when added to the 37% federal top rate, results in a combined marginal rate exceeding 50%. By contrast, living in a state with no income tax reduces this combined rate dramatically.

High earners, especially in the top brackets, can benefit substantially from residing in no-income-tax states. However, these taxpayers should also consider other tax liabilities, including state sales and property taxes, to evaluate the total tax impact.

Additional Considerations: Taxation of Retirement Income and Investments

Beyond wages, retirement income is a major consideration. Many states tax Social Security benefits, pensions, and IRA or 401(k) withdrawals differently.

Among the nine no-income-tax states, Florida, Texas, and Washington do not tax any retirement income, making them attractive to retirees. New Hampshire and Tennessee, while not taxing wages, historically taxed interest and dividend income, although Tennessee fully phased this out by 2021.

Investors should also be aware of state taxation on capital gains or investment income. No-income-tax states generally do not tax capital gains, offering tax planning advantages.

Actionable Steps for Taxpayers Considering a Move

1. Calculate your current state income tax liability using your 2025 tax return as a baseline.
2. Estimate other tax liabilities (sales, property, excise) in potential no-income-tax states.
3. Consider your income sources – wages, investments, retirement, and how they will be taxed.
4. Use online calculators and consult IRS resources, such as Publication 17, for comprehensive tax information.
5. Consult a CPA or tax advisor with expertise in multistate taxation for personalized advice.

Summary: No Income Tax States in 2026 and What It Means for You

To summarize, the nine states with no personal income tax in 2026 are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. While these states offer potential savings on income tax, they often make up revenue through higher sales or property taxes.

Taxpayers should evaluate their full tax picture, factoring in federal taxes, state sales, property, and other taxes, as well as the tax treatment of retirement and investment income. Resources like the Tax Foundation and IRS publications provide valuable guidance.

Making informed decisions about where to live can lead to meaningful tax savings and improved financial well-being.

Disclaimer

This article provides educational information based on current tax laws and IRS data as of 2026. It is not tax advice. Consult a qualified tax professional for advice tailored to your individual circumstances.