The question what states have no income tax has become a central focus for millions of Americans making financial and lifestyle decisions. As of September 2025, nine states do not levy a state personal income tax. This development continues to shape migration trends, retirement choices, and even business investment across the nation.
In 2025, New Hampshire officially eliminated its last remaining tax on interest and dividends, joining the group of states with no income tax. This update marks a significant milestone, making the current list a full nine states.
Key Points Summary (for fast readers)
What’s New in 2025:
- New Hampshire completed its full elimination of income-based taxes.
- Mississippi and Kentucky are in the process of phasing out wage taxes.
States With No Income Tax:
Alaska · Florida · Nevada · New Hampshire · South Dakota · Tennessee · Texas · Washington · Wyoming
Why It Matters:
- Lower overall tax burden for many middle-income households.
- Population growth continues to favor states with no income tax.
- Retirees save thousands each year by avoiding state income tax.
The Nine States With No Income Tax in 2025
In 2025, nine U.S. states continue to stand out for not imposing a state income tax on wages. While that may sound like a universal tax break, each state has its own way of making up for the lost revenue. From high sales taxes to reliance on natural resources, these states balance their budgets in very different ways. Here’s an updated breakdown of how each one works.
Alaska
Alaska is one of the most unique states when it comes to taxes. It levies no personal income tax and has no statewide sales tax. However, local governments may impose their own sales taxes, which vary by municipality. Much of Alaska’s revenue comes from oil, gas, and other natural resource royalties. Residents also receive an annual distribution from the Permanent Fund Dividend, which channels part of the state’s oil revenues directly into household pockets.
Florida
Florida is one of the most popular no-income-tax states, especially for retirees and remote workers. Instead of taxing income, Florida leans on sales taxes, tourism revenue, and various fees. Property taxes are moderate compared to many other states, and the absence of estate and inheritance taxes makes it even more attractive for individuals looking to preserve wealth across generations. Tourism plays a huge role in Florida’s finances, as millions of visitors contribute to the state’s budget each year.
Nevada
Nevada collects no state income tax, which makes it appealing to both individuals and businesses. The state’s economy is powered largely by the tourism, gaming, and hospitality industries, which generate significant tax revenue through sales taxes, hotel levies, and entertainment fees. Nevada’s sales taxes are relatively high, especially in tourist-heavy areas like Las Vegas, helping to balance the books in the absence of an income tax.
New Hampshire
As of January 1, 2025, New Hampshire no longer taxes interest and dividends, officially joining the ranks of states with no income tax at all. The state’s revenue comes primarily from property taxes, which are among the highest in the nation. New Hampshire does not levy a statewide sales tax either, making its tax structure unusual. While residents benefit from no income or sales taxes, the high property tax burden is the trade-off.
South Dakota
South Dakota is often considered one of the most business-friendly states in the country. It imposes no personal or corporate income taxes, relying instead on sales taxes, excise taxes, and fees to fund state operations. Agriculture and financial services play a major role in the state’s economy. The relatively simple tax system has helped South Dakota attract both businesses and individuals seeking a low-tax environment.
Tennessee
Tennessee fully eliminated its tax on investment income in 2021, cementing its place on the no-income-tax list. Today, the state relies heavily on sales taxes, which rank among the highest combined rates in the nation. However, Tennessee offsets this with relatively low property taxes, which makes it an attractive option for both families and retirees. The overall balance gives residents relief on earned income while shifting more of the burden to spending.
Texas
Texas does not levy an income tax, but it does depend on high property taxes and sales taxes to generate revenue. Local governments collect much of the property tax, and rates can be steep depending on where you live. Still, many people are drawn to Texas because of its growing economy, business opportunities, and favorable tax structure. The state’s rapid population growth in recent years is partly fueled by its reputation as a tax-friendly destination.
Washington
Washington is a no-income-tax state for wages, but it has taken steps to raise revenue in other ways. It imposes a tax on long-term capital gains above certain thresholds and collects revenue through its business and occupation (B&O) tax, which is based on gross receipts rather than profits. Sales taxes are also high, particularly in urban areas like Seattle. While Washington doesn’t tax ordinary wages, the newer capital gains tax and estate tax adjustments mean higher-income households may still face significant obligations.
Wyoming
Wyoming rounds out the list with one of the lightest overall tax burdens in the nation. The state has no income tax for individuals or businesses, and it funds public services largely through mineral extraction industries like coal, oil, and natural gas. Sales taxes are relatively low, and property taxes are among the lowest in the country. As a result, Wyoming is often considered one of the most affordable states for both residents and businesses.
Trade-Offs Behind No Income Tax
While living in a no-income-tax state sounds like a straightforward win, the reality is more nuanced. These states often rely on higher sales or property taxes to fund government services. For example:
- High Sales Taxes: Tennessee and Washington impose some of the highest sales taxes in the country.
- High Property Taxes: Texas and New Hampshire offset no income tax with above-average property tax rates.
- Industry-Specific Taxes: Nevada and Wyoming depend heavily on tourism and natural resources, meaning their budgets can fluctuate with economic cycles.
Residents should weigh these trade-offs carefully before assuming they’ll save overall.
Migration Trends Toward No-Income-Tax States
Population data in 2025 shows that states without income taxes continue to attract new residents at higher rates. Florida and Texas lead the country in population gains, with hundreds of thousands moving in each year. These states appeal not only to retirees but also to younger workers seeking financial flexibility.
Nevada, Tennessee, and South Dakota are also experiencing steady growth as remote work makes relocating easier. Meanwhile, some high-tax states have seen consistent outmigration, suggesting that tax policy is a factor in household relocation decisions.
Impact on Retirees
Retirees are among the biggest beneficiaries of no-income-tax states. Without a state tax on pensions, 401(k) withdrawals, or Social Security, annual savings can amount to thousands of dollars. States like Florida, Texas, and Nevada consistently rank as top retirement destinations, not only for climate but also for financial reasons.
Future Outlook: Which States May Join Next?
Two states to watch are Mississippi and Kentucky. Both have passed legislation aimed at phasing out income taxes over time. If successful, they could become the next additions to the no-income-tax group. However, such transitions depend on budget stability and political will, meaning the timeline remains uncertain.
Why Businesses Care About No Income Tax
It’s not just individuals who benefit. Businesses see advantages in no-income-tax states as well. Lower personal tax burdens can help attract talent, while corporate-friendly environments in places like South Dakota and Wyoming reduce overhead. Tech hubs have begun expanding in Texas and Florida, reflecting the dual pull of workforce migration and tax incentives.
Final Thoughts
The landscape of what states have no income tax in 2025 reflects larger shifts in how Americans think about work, retirement, and quality of life. With nine states now offering complete relief from income tax, and others exploring phase-outs, the trend shows no sign of slowing.
For individuals considering relocation, weighing the balance of sales, property, and lifestyle costs remains key. Still, the savings are undeniable for many families and retirees.
If you’re thinking of moving, or simply curious about where financial advantages are greatest, the nine states on today’s list are worth a closer look. Share your thoughts—would you move for tax savings?
Frequently Asked Questions
Q: How many states have no income tax in 2025?
There are nine states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Q: Is Washington completely income-tax free?
Yes, Washington has no personal income tax on wages. However, it does impose certain other taxes, including a capital gains tax and a business tax.
Q: Which states may join the no-income-tax list in the future?
Mississippi and Kentucky are gradually phasing out their income taxes, and both could eventually join the no-income-tax list if their plans succeed.
Disclaimer: This article is for informational purposes only. Tax laws can change, and while every effort has been made to provide accurate information, we take no accountability for financial decisions made based on this content.