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9 States With No Income Tax

Paychecks and retirement income escape state taxes if you live here

Cameron Huddleston,

AARP

En español

Published February 06, 2026

There are plenty of strategies to lower your tax bill, including contributing to retirement accounts, leveraging tax credits and maximizing itemized deductions. Or, if you’re really committed to paying less in taxes, you could move.

In nine states, income isn’t taxed — allowing residents to hold on to more of their hard-earned dollars. For retirees, this means that pension payouts, retirement account withdrawals and Social Security benefits aren’t subject to state taxes.

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The ability to avoid income taxes can be compelling. But if you’re thinking about relocating for a lower tax bill, be aware that some states that don’t have income taxes levy hefty taxes in other areas.

Here’s what to know about the total tax burden in the nine states with no income tax.

Alaska

Alaska is one of the most tax-friendly states, especially for older adults. Not only is there no income tax in the Last Frontier, but also state law exempts the first $150,000 of assessed property value from property taxes for adults 65 and older. Its effective property tax rate is 1.07 percent.

There is no state estate tax, inheritance tax, long-term capital gains tax or statewide sales tax — although a majority of Alaska’s municipalities levy a sales tax, with rates of typically 2 percent to 5 percent. Plus, residents receive an annual dividend payment from the Alaska Permanent Fund, which was established in 1976 from the state’s oil and mineral revenues. The 2025 dividend was $1,000.

Florida

Beyond its warm weather, Florida’s low tax burden is a big draw for both retirees and workers. The Sunshine State does not have an individual income tax, estate tax, inheritance tax or long-term capital gains tax. However, it does levy a statewide sales tax of 6 percent, which jumps to an average rate of 7 percent when combined with local sales tax.

The effective property tax rate on owner-occupied housing in Florida is 0.74 percent. Homeowners can apply for the state’s homestead exemption to decrease their property’s taxable value by as much as $50,000.

Nevada

Nevada does not tax capital gains, estates or inheritance. However, purchases are hit with a hefty state and local sales tax rate that averages 8.24 percent.

The effective property tax rate is a low 0.49 percent. Nevada offers property tax exemptions of varying amounts for veterans, disabled veterans, blind people and surviving spouses.

New Hampshire

New Hampshire ranks as one of the most tax-friendly states in the Tax Foundation’s State Tax Competitiveness Index. It has no income tax and is one of five states with no sales tax.

The Granite State doesn’t have an estate or inheritance tax. And it phased out taxes on interest and dividend income in 2025.

Its 1.41 percent effective property tax rate is the highest among states with no income tax, but low-income homeowners may qualify for the state’s property tax relief program.

South Dakota

South Dakota ranks No. 2 in the Tax Foundation’s State Tax Competitiveness Index because it has no individual income tax or corporate income tax. The Mount Rushmore State also doesn’t have an estate or inheritance tax.

The average combined state and local sales tax rate is 6.11 percent. The effective property tax rate is 0.99 percent. Low-income adults who are 65 and older may be eligible for an annual refund of state and property taxes, and there are a few other property tax relief programs for older adults.

Tennessee

Tennessee does not have an income tax, but it has one of the highest sales tax rates in the nation. The average combined state and local sales tax rate is a hefty 9.61 percent.

The Volunteer State does not have an estate or inheritance tax. Its effective property tax rate is a low 0.49 percent. The state has a property tax relief program for low-income adults 65 and older, disabled adults, disabled veterans, and widows or widowers of disabled veterans. Relief comes in the form of reimbursement checks, which can vary in amount.

Texas

Everything is bigger in Texas — except tax bills. The Lone Star State does not have an individual income tax, corporate income tax, inheritance or estate tax.

Texas compensates for its lack of income tax revenue with a higher sales tax. The average combined state and local sales tax rate is 8.2 percent. Texas also has a 1.36 property tax rate, which is higher than most of the other states without an income tax, but it offers a homestead exemption that excludes the first $140,000 in appraised value from taxation and an additional $60,000 exemption for adults who are 65 and older or disabled.

Washington

Aside from its lack of an individual income tax, Washington is not a tax-friendly state. It imposes the nation’s highest-rate estate tax of 35 percent and taxes capital gains income up to 9.9 percent for high earners. Washington also has one of the highest sales tax rates, with an average combined state and local rate of 9.47 percent.

That said, its effective property tax rate is a relatively low 0.75 percent, and homeowners 61 and older may qualify for a reduction in property taxes if they meet certain income requirements.

Wyoming

Wyoming ranks No. 1 in the Tax Foundation’s State Tax Competitiveness Index. It doesn’t have an individual income tax, corporate income tax, inheritance or estate tax. Instead, the state relies heavily on property taxes on minerals production.

Wyoming has a relatively low average combined state and local sales tax rate of 5.56 percent. Its effective property tax rate is 0.55 percent, and, in 2025, the legislature enacted a 25 percent exemption on the first $1 million of value of single-family homes. The state has a property tax relief program for low-income homeowners who are 62 and older or are disabled, veterans and surviving spouses of veterans.

Visit AARP Foundation Tax-Aide to learn more about free tax prep services by 30,000 volunteers nationwide.

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Cameron Huddleston is an award-winning personal finance journalist and author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. Her work has appeared in Kiplinger.com, Kiplinger's Personal Finance, Forbes Advisor, Chicago Tribune, Business Insider and many more online and print publications.

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