15 States With No Income Tax (Or Very Low)

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Saving money on taxes is fun. It’s exciting, and quite honestly, a bit of a relief. For many Americans, the search for financial relief consists of finding states that won’t take a bite out of their paycheck with income tax. If you want to stretch your dollars or just fed up of giving Uncle Sam more than you want, some states are especially known for their tax friendly policies.

States without an income tax aren’t giving away free lunches, but they do present the opportunity to hang on to a larger portion of your hard earned money. But these tax havens have different ways of making up for the lack of income tax: sales tax, property tax or creative revenue streams. The trade off, however, is one many residents are willing to make. Here’s a friendly guide to states where your paycheck gets a breath of fresh air.

Alaska

Tax-Free Havens: States Where Your Social Security, 401(k), and Pension Stay Untouched! — Image Credit: Frank K./Wikimedia Commons

The land of glaciers and no income tax, and apparently grizzlies. But this state not only skips taxing your paycheck, it also offers the sweetener: an annual check from the Permanent Fund Dividend, funded from oil revenues. The cost of living can be high (remember that gallon of milk for $6?), but without income tax and those yearly payouts, you make up for it.

Tennessee

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If you’re a fan of country music and hot chicken, you’ll no doubt be partial to the sweet tune Tennessee sings regarding its tax policies. Though it taxed dividends and interest income through 2021, the state has fully embraced its no income tax status. Finally, you can safely enjoy Nashville’s nightlife without the taxman waiting at the bar.

Texas

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If anything’s bigger in Texas, it should be your paycheck. Residents pay no income tax, leaving more of their earnings for barbecue, cowboy boots, or to fill up the tank for those long highway drives. Taxes on property here can be a bit high, but that’s a price most are willing to pay.

Nevada

People aren’t only heading to Nevada because of Las vegas. The state has no income tax, and makes its money off tourists visiting casinos, shows or desert adventures. If you’re a resident, you’d be living in a thriving economy, and you won’t see your paycheck shrink.

Washington

Another income tax free haven is Washington State, which also has a small tax on capital gains. If shopping is your hobby, the evergreen state will more than make up for it with sales tax, so budget accordingly. But lack of income tax is a big draw for tech workers and coffee lovers alike.

Wyoming

7 States Drowning in Debt Brace for Major Tax Hikes, While 8 States Enjoy Unstoppable Fiscal Freedom — Image Credit: Myotus/Wikimedia Commons

Wide open plains mean wide open paychecks in Wyoming. In this cowboy state, there’s no state income tax, but it attracts retirees and entrepreneurs alike. Quiet, picturesque place. Your earnings can be used for ranch living… or just help with a few extra steaks on the grill.

New Hampshire

Your wages don’t get taxed in New Hampshire, though interest and dividend income does. For most people, it means that most of their earnings remain in their pockets. If you love skiing or hiking, this scenic state has a great blend of outdoor fun and financial perks.

Florida

Southern Cities on the Verge of Becoming Unaffordable by 2025 — Image Credit: Alvesgaspar/Wikimedia Commons

Florida is not just sunshine and beaches: it’s got a zero income tax policy, too. That’s why it is a number one pick for retirees, snowbirds, and anyone wanting to live their best tropical life on a budget. The state’s cost of living can also vary by area, so you’ll find those savings come in handy. According to the CNBC, Florida ranks high for business friendly metrics, another plus!

South Dakota

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If Mount Rushmore doesn’t convince you to visit South Dakota, its no income tax policy might. This is a great state for residents looking to save more and make less of sense out of their financial goals, due to their straightforward tax system.

Mississippi

For its part, Mississippi is lowering its income tax rates steadily. They want to completely eliminate the state income tax by 2026. Although its rates are among the lowest in the country, it’s also affordable to live there now.

North Dakota

"America’s 20 Gloomiest Places You’d Never Want to Call Home" — Image Credit: Tim Kiser /Wikimedia Commons

Most residents of North Dakota have been enjoying income tax cuts with a flat rate of just 1.5%. It’s one of the lowest you’ll see in the nation. This state has a tight knit community feel, and booming energy and agriculture sectors that provide it with financial breathing room.

Indiana

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Worthy of note, Indiana charges just 3.15% income tax, one of the lowest in the country. And when you add to that its affordable living costs and Midwestern charm, you’ve got an easy mix. Yes, Hoosier hospitality is very real too.

Pennsylvania

Pennsylvania’s flat income tax rate is 3.07 percent, the lowest of all states that do levy income tax. With low tax rates, the state’s history and multiple cities is appealing to many.

Hawaii

U.S States That Are Most Hit Hard By Inflation — Image Credit: Sharon Hahn Darlin/Wikimedia Commons

You might be surprised to see Hawaii on this list. Well, the state does tax income, but it has plenty of generous deductions and credits for lower income residents in most cases, effectively reducing the tax load for many. This is a small price to pay for living in paradise.

Colorado

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With natural beauty and an active lifestyle, Colorado’s flat income tax rate of 4.4% is low enough to turn heads. If you like skiing, hiking, or just soaking up mountain views, you even have more reasons to call Colorado your home.

Disclaimer: This list is solely the author’s opinion based on research and publicly available information.