Keyword Analysis & Research: states with no income tax

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Frequently Asked Questions

What are the advantages and disadvantages of living in a state with no income tax?

Living in a state without income tax might allow you to hold on to more of your hard-earned money, but it won’t necessarily shield you from other taxes or a higher cost of living. Many or all of the products featured here are from our partners who compensate us.

What are the nine states that do not have an income tax?

Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — have no income taxes. New Hampshire, however, taxes interest and dividends, according to the Tax Foundation.

Why do some states choose not to have an income tax?

Why Do Some States Charge No Income Tax? State income tax is set at the state level, not the federal level, so it's entirely up to state lawmakers. Their reasons for not having income taxes could be driven by their ideals for tax policy, as an incentive to attract new residents, or because they derive revenue from another source.

How do states without an income tax make up for the lost revenue?

States with no income tax often make up for the loss of revenue to the state by charging residents a higher sales, property or excise tax (taxes on goods like fuel, tobacco and alcohol). For instance, Tennessee has the highest combined sales tax rate in the nation at 9.53%, according to the Tax Foundation, a D.C.-based think tank.

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