8 States With No Income Tax: A Retirement Game-Changer You Should Know

pvt_key_collector · 2026-01-12T16:45:40+00:00

Eight U.S. states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Washington. However, these states offset revenue through higher property or sales taxes and still require federal taxes. For retirees, these states can be beneficial as they don't tax retirement income.

pvt_key_collector

2026-01-12 16:45:40

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Which States Offer No Income Tax?

If you’re thinking about relocating or optimizing your tax strategy, here’s what you need to know: eight U.S. states impose zero income tax on their residents. The complete lineup includes Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Before you start packing, there’s a catch worth understanding. Washington technically fits the mold since it doesn’t charge general income tax—except for capital gains exceeding $278,000 on most assets, which face a 7% tax rate. So the pure no-income-tax states are really the other eight.

The Trade-Off: Where These States Get Their Revenue

States can’t run on good intentions alone. Without income tax revenue, they’ve had to get creative. Here’s how they compensate:

Texas and New Hampshire levy significantly higher property taxes than the national average
Tennessee relies on one of the nation’s steepest sales taxes at 7% on most purchases
Nevada depends heavily on tourism and gaming taxes

The reality? Living in a no-income-tax state doesn’t necessarily mean lower overall taxes—just different ones.

The Retirement Income Sweet Spot

Here’s where these states shine for retirees: they don’t tax retirement income either. That means your 401(k) withdrawals, IRA distributions, pension payouts, and Social Security benefits all stay in your pocket. This is genuinely significant for people on fixed incomes trying to stretch their retirement savings.

Federal Taxes Still Apply—No Escaping Uncle Sam

Before you celebrate too early, remember that state tax freedom doesn’t shield you from federal tax obligations. No matter which state you call home, you’ll still owe federal income tax based on IRS brackets.

For 2026, here’s what federal rates look like:

Tax Rate	Single Filers	Married Filing Jointly	Head of Household
10%	$0–$12,400	$0–$24,800	$0–$17,700
12%	$12,401–$50,400	$24,801–$100,800	$17,701–$67,450
22%	$50,401–$105,700	$100,801–$211,400	$67,451–$105,700
24%	$105,701–$201,775	$211,401–$403,550	$105,701–$201,750
32%	$201,776–$256,225	$403,551–$512,450	$201,751–$256,200
35%	$256,226–$640,600	$512,451–$768,700	$256,201–$640,600
37%	Over $640,600	Over $768,700	Over $640,600

Should You Move? Making the Right Call

State tax policy shouldn’t be your only factor when choosing where to live, but it absolutely deserves serious consideration—especially if you’re retired and watching every dollar. Understanding which states have no income tax is one piece of a larger financial puzzle worth exploring.

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