Nine states have no income tax at all
Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming collect no state income tax on wages, salaries, or investment income. New Hampshire taxes only interest and dividend income, not wages. That is the complete list. Every other state taxes at least some form of income.
The absence of income tax does not mean these states have no taxes. Most make up the revenue through sales tax, property tax, or both — sometimes at rates higher than states with income tax. A state with no income tax can still be expensive to live in overall, depending on what you earn and what you own.
For renters and people receiving housing assistance, the practical difference is narrow: your gross income (before taxes) is what most housing programs count, so state income tax does not change your income on a housing application. What matters more is whether the state's overall tax burden leaves you with more or less money after you pay everything.
Key Takeaways
- Nine states have no income tax on wages: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming; New Hampshire taxes only investment income.
- States without income tax usually charge higher sales tax or property tax to fund services, so your total tax burden may not be lower.
- Housing assistance programs count your gross income before taxes, so living in a no-income-tax state does not change how much assistance you may receive.
- Property tax rates vary widely even among no-income-tax states, which affects both renters (through higher rent) and homeowners directly.
How no-income-tax states fund services
States without income tax still need money to run schools, roads, courts, and housing programs. They shift the burden to sales tax, property tax, or both. Texas and Washington, for example, have no income tax but charge 8.25% and 10.25% sales tax respectively — higher than many income-tax states. Alaska has no sales tax but charges property tax.
The result is that your actual cost of living may not be lower. A person earning $40,000 in Texas pays no income tax but pays sales tax on nearly everything they buy. A person earning $40,000 in a state with 5% income tax but 6% sales tax might pay less overall, depending on spending patterns. Renters do not pay property tax directly, but landlords do — and they pass that cost to tenants through higher rent.
When comparing states for affordability, look at the combined effect: income tax plus sales tax plus property tax, weighted by how much you spend in each category. A no-income-tax state is not automatically cheaper.
What no-income-tax status means for housing assistance
Most housing assistance programs — including public housing, Section 8 vouchers, and emergency rental funds — calculate your income as your gross income, before any taxes are taken out. This means living in Alaska or Texas does not change the income threshold you must meet or the amount of assistance you receive. The program counts what you earn, not what you keep after taxes.
However, the state's tax structure can affect how much money you have left after rent and taxes, which influences whether you can afford to live there at all. If you receive a housing voucher that covers part of your rent, the voucher amount is usually fixed regardless of state taxes. Your responsibility for the remaining rent depends on your take-home pay — which is affected by state and federal taxes combined.
State-by-state breakdown of no-income-tax states
The nine no-income-tax states and New Hampshire each fund government services differently. Some rely heavily on sales tax, others on property tax, and a few on a combination. The table below shows the primary tax each state uses to replace income tax revenue.
| State | Income Tax Status | Primary Alternative Tax |
|---|---|---|
| Alaska | No income tax | No state sales tax; property tax varies by municipality |
| Florida | No income tax | 6% state sales tax; property tax around 0.83% of home value |
| Nevada | No income tax | 8.23% state sales tax; property tax around 0.6% of home value |
| New Hampshire | No wage tax; 5% tax on interest and dividends | No state sales tax; property tax around 2.18% of home value |
| South Dakota | No income tax | 4.5% state sales tax; property tax around 0.31% of home value |
| Tennessee | No income tax | 9.55% state sales tax; property tax around 0.71% of home value |
| Texas | No income tax | 8.25% state sales tax; property tax around 1.8% of home value |
| Washington | No income tax | 10.25% state sales tax; property tax around 0.84% of home value |
| Wyoming | No income tax | 4% state sales tax; property tax around 0.61% of home value |
Property tax rates shown are state averages and vary by county and municipality. Sales tax rates include state tax only and do not include local additions, which can push the total higher. Alaska stands out as having neither income tax nor state sales tax, but local governments there charge property tax at rates that vary significantly by location.
How property tax affects renters
Renters do not pay property tax directly, but it shapes the rent they pay. In states with high property tax, landlords charge higher rent to cover their tax bills. In states with low property tax but high sales tax, the effect on rent is less direct — it depends on the landlord's other costs and the local rental market.
New Hampshire has the highest property tax rate among no-income-tax states (around 2.18% of home value), which means renters there often pay higher rent than renters in Wyoming or South Dakota, where property tax is much lower. However, New Hampshire has no sales tax, so residents who buy goods pay less in that category. The trade-off varies by individual spending and income.
If you are considering moving to a no-income-tax state for housing affordability, research the property tax rate in the specific county or city where you plan to live. A state with no income tax can still have expensive rent if property tax is high.
Moving to a no-income-tax state with housing assistance
If you receive a housing voucher or other portable assistance, you can usually move it to a no-income-tax state, but the process requires advance notice to your housing authority. Most vouchers are portable within the United States, meaning you can use them in any state. However, you must contact your current housing authority before you move and request a portability transfer. The receiving state's housing authority must then accept your voucher.
The voucher amount itself does not change when you move states. If your voucher covers $800 of your rent in your current state, it will still cover $800 in the new state (or the local payment standard, whichever is lower). Your share of the rent — the amount you pay out of pocket — depends on your income and the new state's rent levels. If rent is higher in the new state, you may pay more even though the voucher amount is the same.
Before moving, contact your housing authority's portability coordinator to confirm the timeline and what documents the receiving state will need. Moving without notifying your authority can result in loss of the voucher.
Frequently Asked Questions
If I move to a no-income-tax state, will I pay less in taxes overall?
Not necessarily. States without income tax make up the revenue through sales tax, property tax, or both. Your total tax burden depends on your income, what you spend, and whether you own property. Compare the combined rates in your current state and the state you are considering before deciding.
Does living in a no-income-tax state change how much housing assistance I receive?
No. Housing assistance programs count your gross income before taxes. The state's tax structure does not change the income threshold or the assistance amount. However, it affects how much money you have left after taxes, which influences your ability to afford the rent you are responsible for.
Can I move my Section 8 voucher to a no-income-tax state?
Yes, most vouchers are portable. You must notify your current housing authority and request a portability transfer before you move. The receiving state's housing authority must accept the transfer. The voucher amount stays the same, but your out-of-pocket rent share depends on the new state's rent levels and your income.
Which no-income-tax state has the lowest overall taxes?
That depends on your income and spending. Wyoming and South Dakota have low sales tax and low property tax, making them competitive for many people. Alaska has no sales tax but variable property tax. New Hampshire has no sales tax but high property tax. Calculate your expected total tax burden based on your specific situation before moving.
Do no-income-tax states have fewer housing programs?
No. Housing assistance programs are funded by federal money and state money. A state's income tax status does not determine the size or availability of its housing programs. Texas and Florida, both no-income-tax states, have large public housing and voucher programs. Program availability depends on funding and demand, not tax structure.