Should You Move to a State With No Income Tax?

Thinking of moving to a new state? Whether you’re looking for a place to retire or simply hoping to save money, you may want to consider moving to a state that doesn’t impose state income tax.

So which states have no income tax? Currently, only seven U.S. states do not require residents to fork over part of their paychecks come tax season. These states include Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. In addition, New Hampshire and Tennessee do not require residents to pay taxes on earned income, however, they do require that residents pay taxes on dividends and income from investments. Here’s a quick rundown on the pros and cons of moving to a state without state income tax as well as information on the seven states noted above.

So what are the benefits of living in a state with no income tax?

Living in a state that doesn’t tax income can be a major advantage – especially to those in high income households. While many states force high earners to pay high taxes, states without personal income tax do not tax their earnings at all. This allows high earners to save much more of their money. For this reason, many wealthy individuals choose to live the majority of the year in states without a state income tax. Of course, not having to pay state income tax also benefits individuals of all income classes. Come tax season, residents of these states are able to pocket their hard-earned money and save for retirement, vacations, school tuition and more.

Are there any downsides to living in a state with no income tax?

Be aware that if a state doesn’t impose state income tax, it typically makes up for it by raising taxes elsewhere. For instance, while Texas and New Hampshire do not tax earned income, they do have exceptionally high property tax rates, according to Business Insider. In addition, many of these states also impose high sales tax on groceries and goods. Bankrate points out that Tennessee has one of the highest sales tax rates in the country, charging a 7 percent sales tax statewide. The website also notes that “Texas and Nevada have above-average sales taxes, and Texas also has higher-than-average effective property tax rates. Florida relies on sales taxes, and its property taxes are above the national average.”

7 states with no income tax

Alaska

Florida

Nevada

South Dakota

Texas

Washington

Wyoming

Ready to move to a state with no income tax?

For more information about these cities, check Moving.com’s City Profile Report feature. Our reports include city demographics, real estate information, quality of life factors and more. Simply enter the zip code or the state and city of your potential move to get a free report at the click of a button. For help finding and booking the best moving company, check Moving.com’s extensive network of reputable and reliable interstate movers. Best of luck and happy moving!