Why Some States Have No Income Tax
Nine jurisdictions levy no individual income tax on wages. They raise the money elsewhere — most commonly through higher sales taxes, higher property taxes, or taxes on natural resource extraction and tourism.
How each one pays for itself
Alaska funds a large share of state government from oil and gas revenue and a sovereign wealth fund, and levies neither an income tax nor a statewide sales tax.
Florida and Nevada lean heavily on sales tax and tourism, which lets them export part of the burden to visitors. Nevada also taxes gaming.
Texas, Tennessee and South Dakota rely on sales tax combined with property tax; Texas property tax rates are among the highest in the country.
Wyoming taxes mineral extraction. New Hampshire has no sales tax either, and funds itself through unusually high property taxes and business taxes. Washington uses a high sales tax and a business gross receipts tax.
The trade-off is real but not uniform
Whether a no-income-tax state costs you less depends on how you earn and spend. A high earner who rents and consumes modestly usually comes out ahead. A modest earner who owns a house in a high property tax jurisdiction may not.
The comparison also depends on the state you are leaving. Moving between two no-income-tax states is a wash on this axis; moving from a high-rate state is not.
Two states people count differently
New Hampshire has never taxed wages, but it taxed interest and dividends until that tax was repealed effective 2025. Many published lists still describe a tax that no longer exists.
Washington taxes no wages but does levy an excise tax on large long-term capital gains. Whether that counts as an income tax is a definitional argument. We count both as having no individual income tax and say plainly what they do levy.