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States With No Income Tax in 2026

By The Ledgerism Editorial Team · The Ledgerism Brief Editorial Team produces original, methodology-disclosed accounting and tax research—data trackers, databases, and reference guides built to be the most-cited source in the field. Every figure is verified against primary sources including FASB, the IRS, the PCAOB, NASBA, the AICPA, and state boards of accountancy.

Nine states levy no broad-based personal income tax in 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. None taxes wages or salary. Two carry asterisks: New Hampshire finished phasing out its tax on interest and dividends on January 1, 2025, and Washington taxes certain long-term capital gains at 7% to 9.9%.

Living in one of these states can lower your total tax bill, but it does not eliminate taxes. Each state replaces income tax revenue with some mix of sales tax, property tax, and severance taxes on oil, gas, and minerals. In several of them, sales or property taxes rank among the highest in the country.

The 9 states with no income tax in 2026

The table below lists all nine states, how each treats personal income, and the main levers each uses to raise revenue instead. State-level general sales tax rates are shown; most states also permit local add-ons, so combined rates run higher.

The nine break into two groups by revenue model. Alaska, Texas, and Wyoming lean on severance taxes tied to oil, gas, and minerals, which shifts much of the burden to extraction industries. Florida, Nevada, South Dakota, and Tennessee depend heavily on sales tax and, in Florida and Nevada, on tourism and gaming. New Hampshire is the outlier: no sales tax and no income tax, funded largely by property tax.

New Hampshire finished phasing out its interest and dividends tax

New Hampshire became the ninth true no-income-tax state on January 1, 2025, when its Interest and Dividends (I&D) Tax was repealed. The tax never touched wages. It applied only to investment income above $2,400 for individual filers or $4,800 for joint filers, and the state phased the rate down before ending it entirely.

The repeal came from House Bill 2, enacted in the 2023 legislative session, which accelerated an earlier timeline. The I&D rate stepped down each year until it reached zero.

With the I&D tax gone, New Hampshire residents owe no state tax on wages, interest, or dividends. The state still relies on high property taxes and business taxes, including the Business Profits Tax and Business Enterprise Tax, to fund government. Tennessee ran a similar path earlier: its Hall income tax on interest and dividends was fully repealed on January 1, 2021.

Washington taxes capital gains at 7% to 9.9%

Washington has no tax on wages, but since 2022 it has taxed certain long-term capital gains. The base rate is 7% on annual gains above a standard deduction, which was $270,000 in 2024 and $278,000 in 2025 (indexed annually). A second tier adds 2.9% on gains above $1 million, for a top rate of 9.9%.

The Washington Department of Revenue treats this as an excise tax on the sale or exchange of capital assets, not an income tax, a characterization the state Supreme Court upheld in 2023. That legal framing is why Washington still counts as a no-income-tax state.

The tiered structure comes from ESSB 5813, enacted in 2025 and effective for tax year 2025, with returns due April 15, 2026. The tax reaches a narrow group: a filer needs more than $1 million in taxable gains in a single year, on top of the standard deduction, to hit the 9.9% tier.

Several asset types are exempt from Washington’s capital gains tax, which sharply limits who pays it:

• Real estate (residential and commercial)
• Retirement account assets, including 401(k) and IRA holdings
• Assets used in a trade or business that qualify for depreciation or expensing
• Timber, timberland, and commercial fishing privileges
• Livestock related to farming and ranching

How no-income-tax states raise revenue instead

A state that forgoes income tax still has to fund schools, roads, and services. The three main substitutes are sales tax, property tax, and severance taxes, and the mix shapes who actually bears the burden.

Sales tax. Tennessee and Washington sit near the top of combined state-and-local sales tax rankings, averaging roughly 9.55% and 9.38% respectively. Sales tax is regressive, meaning it takes a larger share of income from lower earners who spend most of what they make.

Property tax. Texas and New Hampshire carry some of the highest effective property tax rates in the country, near 1.68% and 1.93% of home value. For a homeowner, a high property tax can offset much of the income tax savings, which is why total burden depends heavily on whether you own real estate.

Severance and industry taxes. Alaska, Wyoming, and Texas tax oil, gas, and mineral extraction. Alaska has no state sales tax and no income tax, funding much of its budget from petroleum revenue and Permanent Fund earnings. Nevada and Florida add gaming and tourism taxes that export part of the burden to visitors.

The headline “no income tax” says nothing about total burden. A high earner who rents may come out well ahead in Washington or Texas, while a middle-income homeowner in Texas can pay more in combined state and local taxes than a comparable resident of a state that does levy income tax. To compare states properly, weigh property, sales, and other taxes together, not the income line alone.

Frequently asked questions

How many states have no income tax in 2026?

Nine states have no broad-based personal income tax in 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire joined the group on January 1, 2025, after repealing its tax on interest and dividends. Washington is included despite taxing some long-term capital gains, because that levy is legally an excise tax.

Does Washington really have no income tax?

Washington has no tax on wages or salary. It does tax certain long-term capital gains at 7%, plus an additional 2.9% (a 9.9% top rate) on gains above $1 million, effective for tax year 2025. The state and its Supreme Court classify this as an excise tax, not an income tax. Real estate and retirement account gains are exempt, so the tax reaches relatively few filers.

Did New Hampshire eliminate its income tax?

New Hampshire never taxed wages. It taxed interest and dividend income above $2,400 (individual) or $4,800 (joint), and that Interest and Dividends Tax was fully repealed effective January 1, 2025, under House Bill 2 from the 2023 session. The rate phased down from 5% to 4% to 3% before reaching zero. New Hampshire now has no tax on wages, interest, or dividends.

Do no-income-tax states have higher other taxes?

Often, yes. States without income tax replace that revenue through sales tax, property tax, or severance taxes. Tennessee and Washington have some of the highest combined sales tax rates, near 9.55% and 9.38%. Texas and New Hampshire carry high effective property tax rates, near 1.68% and 1.93%. Whether you save overall depends on your spending, homeownership, and income level.

Which no-income-tax state has the lowest overall tax burden?

It varies by household, so no single answer fits everyone. States funded partly by oil, gas, or gaming revenue, such as Alaska, Wyoming, and Nevada, tend to post lower total burdens for many residents because part of the cost falls on industry and visitors. High-property-tax states like Texas and New Hampshire can produce higher combined burdens for homeowners despite zero income tax.

Is moving to a no-income-tax state worth it?

It can be, especially for high earners who rent or who have most of their income from wages rather than investment gains. The savings shrink if you buy a home in a high-property-tax state or spend heavily where sales tax is steep. Compare the full picture, income, property, and sales taxes together, before relocating for tax reasons.

Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.

Related reading: The State and Local Tax Burden Report 2026, The Property Tax Report 2026, The Sales and Use Tax Report 2026, the Capital Gains Tax Report 2026, and, for contrast, New York State Income Tax 2026.

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