No taxpayer should see their paycheck shrink attributable to earnings taxes, fortunately some states don’t tax your earnings in the slightest degree.
As of 2025, 9 states don’t levy a state earnings tax. Which implies lots a lot much less cash is taken out of your hard-earned paycheck. In case you is likely to be retired, no earnings tax furthermore means no tax in your Social Safety advantages, withdrawals out of your IRA or 401(okay) plan, or payouts out of your pension.
For a few of us, these tax breaks is also a lovely incentive to relocate. Nonetheless, states with no earnings tax often accumulate larger taxes elsewhere to make up for earnings shortfall.
As an example, residents of the Sunshine State have been battling climbing property taxes and dwelling prices for years. Whereas Floridians voted to extend their property tax break, it’ll be a while earlier than they get low cost.
Correct proper right here’s the place likelihood is you may rely upon to see larger taxes in a no-income-tax state.
No earnings tax doesn’t point out tax-free
Simply because a state is income-tax-free, it doesn’t point out you’ll completely evade taxes.
States with out an earnings tax nonetheless want cash to pay for roads, colleges, and completely totally different infrastructure, so residents must pay completely totally different taxes (e.g., product gross sales, property, and property taxes). And often these completely totally different state taxes is also on the intense finish. As an illustration, states with no earnings tax are sometimes ranked among the many many many areas with the highest property tax bills all through the nation.
So, in case you is likely to be considering of shifting to a state with out an earnings tax, be aware of among the many many completely totally different taxes you’ll ought to pay there or companies which could be restricted attributable to earnings shortfalls. In all probability the grass is simply not greener on the choice aspect.
Associated: Are No Earnings Tax States Larger to Swap To?
That being talked about, let’s dive into the 9 states with out an earnings tax and the way in which during which you’ll be taxed.
Frequent blended state and native product gross sales tax values are applicable as of January 2025 and have been compiled by the Tax Basis. Full tax scores are from the 2025 State Aggressive Index.