Which states charge neither sales tax nor income tax

Five states have no sales tax and no income tax: Alaska, Florida, Nevada, South Dakota, and Wyoming. These are the only U.S. states with both taxes absent. No other state combination removes both entirely.

Most states that skip income tax still collect sales tax. Most states that skip sales tax still collect income tax. The five listed above are the rare exception — they fund government operations through other means: business taxes, property taxes, excise taxes on fuel and alcohol, and in Alaska's case, oil revenue.

If you are considering a move or planning where to make a large purchase, understanding which taxes apply where matters. The absence of one tax does not mean the cost of living is lower overall — property taxes, utility taxes, and other fees vary widely.

Key Takeaways

  • Alaska, Florida, Nevada, South Dakota, and Wyoming are the only five states with neither sales tax nor income tax.
  • States without income tax often rely on sales tax, business taxes, and excise taxes instead — so the total tax burden depends on what you buy and own, not just your paycheck.
  • Moving to a no-tax state does not automatically lower your overall costs, because property taxes and utility taxes can be higher.
  • If you work remotely for a company in another state, you may still owe income tax to your home state even if you live in a no-tax state.

Alaska: Oil revenue and no income or sales tax

Alaska has no state income tax and no sales tax. The state funds itself largely through oil and gas revenue, which means residents do not pay either tax. However, Alaska does charge a 12% excise tax on alcohol and collects property taxes, which vary by municipality.

Some Alaska cities and boroughs add their own local sales taxes on top of the state's zero rate. Anchorage, for example, has a 12% local sales tax. Juneau has 5%. So while the state itself collects no sales tax, you may pay one depending on where in Alaska you live or shop.

Alaska also has no state income tax on wages, retirement income, or investment gains. This applies to residents and nonresidents who work in the state.

Florida: No income tax, but sales tax applies

Florida has no state income tax but does charge a 6% state sales tax. Counties can add their own local sales tax, bringing the total to between 6% and 7.5% depending on location. Miami-Dade County, for example, charges 7%, while some rural counties stay at 6%.

The lack of income tax means no tax on wages, pensions, Social Security, or investment income. This is a major draw for retirees. However, Florida makes up the revenue through sales tax and property taxes, which are moderate but not negligible.

If you move to Florida and claim residency there, you will not owe Florida income tax even if you work remotely for a company based elsewhere. You may still owe income tax to your previous state if you do not formally establish residency in Florida.

Nevada: No income tax, 6.85% sales tax

Nevada has no state income tax and charges a 6.85% state sales tax. Counties add local sales taxes ranging from 0.75% to 1.5%, bringing the total to between 7.375% and 8.375% depending on where you shop. Clark County (Las Vegas) and Washoe County (Reno) are the largest population centers.

Nevada funds itself through sales tax, gaming taxes, and property taxes. The lack of income tax applies to all income types: wages, self-employment income, retirement distributions, and capital gains.

Nevada has no residency requirement to claim the tax benefit — you do not have to live there full-time to avoid income tax. However, if you are a U.S. citizen or resident alien, your home state may still claim you as a resident for tax purposes if you maintain ties there.

South Dakota: No income tax, 4.5% sales tax

South Dakota has no state income tax and charges a 4.5% state sales tax — one of the lowest in the nation. Counties and municipalities can add local sales taxes of up to 2%, bringing totals to between 4.5% and 6.5% depending on location.

South Dakota funds operations through sales tax, property taxes, and excise taxes. The state has no tax on wages, retirement income, or investment gains. This combination of low sales tax and no income tax makes South Dakota attractive to retirees and business owners.

South Dakota also has no inheritance tax and no estate tax, which affects what heirs receive from a deceased person's estate. Combined with the income tax absence, this draws people planning for wealth transfer.

Wyoming: No income tax, 4% sales tax

Wyoming has no state income tax and charges a 4% state sales tax — the lowest base rate among the five no-tax states. Counties and cities add local sales taxes of up to 2%, bringing totals to between 4% and 6% depending on location. Teton County (Jackson Hole) has some of the highest combined rates in the state.

Wyoming funds itself through sales tax, property taxes, and mineral extraction taxes. The state has no tax on wages, self-employment income, retirement distributions, or capital gains.

Like South Dakota, Wyoming has no inheritance tax and no estate tax. The combination appeals to business owners and retirees managing significant assets.

How remote work and residency affect your tax obligation

Moving to a no-tax state does not automatically free you from income tax if you work remotely. Your tax obligation depends on where your employer is located and where you claim residency.

If you work for a company in a state with income tax and you move to a no-tax state, you may still owe income tax to your previous state unless you formally establish residency in the new state. Establishing residency typically requires getting a driver's license, registering to vote, and maintaining a permanent address — not just living there part-time.

Some states tax residents on worldwide income even after they move. Others tax based on where the work is performed. A few tax based on where the employer is located. The rules vary, and the IRS does not automatically update your status when you move. You may need to file tax returns in both states and claim a credit for taxes paid to one state against taxes owed to the other.

Frequently Asked Questions

Do I have to live in a no-tax state to avoid income tax?

No. You must establish legal residency there. This means getting a state driver's license, registering to vote, and maintaining a permanent address. Living there part-time or working remotely from there without changing your residency does not protect you from your home state's income tax.

If I move to one of these states, will I pay less in taxes overall?

Not necessarily. These states fund operations through other taxes: sales tax, property tax, excise tax, and business taxes. Your total tax burden depends on what you earn, what you buy, and what property you own. A state with no income tax but high property tax may cost you more than your current state.

Do these states have local sales taxes too?

Yes. All five allow cities and counties to add local sales taxes on top of the state rate (or in Alaska's case, on top of zero). Your actual sales tax rate depends on your specific city or county, not just the state.

Can I claim residency in a no-tax state if I only visit there occasionally?

No. States require evidence of permanent residency: a driver's license, voter registration, a lease or deed, and typically a year of residence before you can claim the tax benefit. Visiting or owning property does not establish residency for tax purposes.

What about Social Security and retirement income in these states?

All five states exempt Social Security and retirement income from state income tax. However, you still pay federal income tax on these sources. Property tax and sales tax still apply to purchases and real estate.