Table of Content

• Affordability Rank, Effective Tax Burden, and Total Tax Burden Rank on Each State
• List of States With No Income Tax
• 1. Alaska
• 2. Florida
• 3. Nevada
• 4. South Dakota
• 5. Texas
• 6. Washington
• 7. Wyoming
• 8. Tennessee
• 9. New Hampshire
• Conclusion 
• States with No Income Tax – FAQs

State	Total Tax Burden Rank	Total Tax Burden Rate	Affordability Rank
Alaska	1	5.06%	40
Florida	5	6.33%	38
Nevada	19	7.69%	34
South Dakota	7	6.69%	8
Texas	22	8.01%	33
Washington	26	8.24%	46
Wyoming	6	6.42%	18
Tennessee	4	6.22%	14
New Hampshire	3	6.14%	36

List of States With No Income Tax

1. Alaska

Tax Burden Rate: 5.06%

There isn’t a sales tax or income tax in Alaska. Alaska has the lowest total state and local tax burden of all 50 states, at 5.06% of personal income, including income, property, sales, and excise taxes. The Alaska Permanent Fund Corp. pays an annual payment to all inhabitants of Alaska, which is composed of revenue and investment earnings from royalties and mineral lease rentals. In 2023, the dividend payment per person was $1,312.

Out of all the states in the union, Alaska has some of the highest and fastest-rising healthcare prices. Nevertheless, it also spent the most on healthcare, excluding the military, at $13,642 per capita in 2020 – the most recent year for which the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary provided information as of September 2023.

2. Florida

Tax Burden Rate: 6.33%

This well-liked state for snowbirds has pleasant weather and a sizable retiree population. Florida has more sales and excise taxes than the rest of the nation, but its overall tax burden is only 6.33%, which is the fifth lowest in the nation.

Due to its higher than average housing expenses, Florida ranks 38th in terms of affordability as of 2023. Its affordability has likewise been declining significantly; in 2020, it was listed as the thirty-first most affordable state. Nevertheless, Florida ranked 10th among the “Best States to Live In” according to U.S. News & World Report.

At $10,401 per person, Florida was among the states with the lowest per capita education spending in 2021. Florida’s infrastructure received a C grade from the ASCE in 2021.

3. Nevada

Tax Burden Rate: 7.69%

High sales taxes on everything from clothing to groceries, sin taxes on gambling and alcohol, and taxes on hotels and casinos are Nevada’s main sources of income. Nevadans thus have the second-highest state-imposed overall tax burden on this ranking, at 7.69% of personal income. When compared to all states, it still comes in at a fairly respectable 19 out of 50.

Nevertheless, Nevada’s high housing and living expenses push it closer to the bottom (34) of the list in terms of affordability. The state is ranked 38th out of the “Best States to Live In” list by U.S. News & World Report. With $10,450 spent on education in 2021, Nevada ranked fourth in the western region of the United States and in the lowest quartile nationally. Nevada’s infrastructure received a C in the most recent ASCE infrastructure report card (as of 2023).

4. South Dakota

Tax Burden Rate: 6.69%

WalletHub ranks South Dakota seventh in terms of total tax burden, with residents paying just 6.69% of their personal income in taxes. The state is ranked 12th on the U.S. News & World Report “Best States” lists and 8th in terms of affordability.

South Dakota ranked 14th in the country in 2014 with a per capita healthcare spending of $8,933. Since then, things have gotten better: according to the most recent report from 2020, South Dakota spent $12,495 per person, ranking it eighth in the US. Despite spending more on education, it spent less per student in 2019 than any other bordering Midwestern state ($10,952 per kid).

5. Texas

Tax Burden Rate: 8.01%

Some states have sales taxes as high as 8.25%. Additionally, property taxes are greater than in the majority of states, resulting in an overall tax burden of 8.19% of personal income. Even still, Texas ranks 22nd in the nation for overall tax burden, making Texans among those with the lowest overall burdens. Texas is 33rd in the US for affordability, although it is ranked 35th on U.S. News & World Report’s list of the “Best States to Live In.”

In 2021, Texas spent $11,005 on education per student. Its infrastructure received a C grade from the ASCE in 2021 as well. Texas has the seventh-lowest healthcare spending per capita in the US (2014), at $6,998. Since then, this has grown to $8,406 per capita.

6. Washington

Tax Burden Rate: 8.24%

Washington has higher sales and excise taxes than most other states, and the cost of gas is higher for residents. With a total tax burden of 8.24%, the state ranks 26 out of 50. That might not matter, though, for some citizens, as U.S. News & World Report named their state the second best place to live overall.

In 2014, Washington paid $132 less per person for healthcare than the national average ($7,913 per capita). Washington was spending $9,265 per capital by 2020, ranking forty-first. On the other hand, despite receiving a C grade for school funding allocation six years earlier, it spent more on education than most in 2021, spending $15,570 per student. In 2019, Washington received the same rating for its infrastructure from ASCE.

7. Wyoming

Tax Burden Rate: 6.42%

With a total tax burden of 6.42% of personal income (property, income, sales, and excise taxes combined), the state is ranked sixth lowest in the nation. According to reports in the Cowboy State Daily, Wyoming levies taxes on natural resources, mostly oil, to make up for not having a personal income tax, just like Alaska does. On average, the state is ranked 26th on the list of “Best States to Live In” by U.S. News & World Report and 18th in terms of affordability.

Wyoming spent $18,144 per student in 2021 – more than twice as much as its neighbor, Idaho, and in the top percentile of US states. In 2015, it received the highest score of A for school funding allocation on this list.

8. Tennessee

Tax Burden Rate: 6.22%

After the new law is fully put into effect, Tennessee hopes to draw in retirees who rely largely on income from investments. The state has the fourth-lowest total tax burden in the country, at 6.22%. Tennessee is ranked 14th overall in the affordability category and 24th in the “Best States to Live In” list by U.S. News & World Report. Tennessee was near the bottom of the US in terms of education spending in 2021, with $10,507 per student. Tennessee also has one of the lowest per capita healthcare spending rates in 2020, at $9,336.

Although the ASCE noted that 276 of the state’s dams have a high hazard rating and 4.4% of its bridges are structurally poor, the state has not yet gotten an official letter grade for its infrastructure.

9. New Hampshire

Tax Burden Rate: 6.14%

New Hampshire ranks third in the US with a total tax burden of just 6.14%, according to WalletHub. The state is ranked 36th in the US for affordability and sixth among “Best States to Live In” by U.S. News & World Report.

New Hampshire, however it is outspent by some of its northeast neighbors, nearly spent more per student on education than any other state on this list in 2021 ($19,443 per kid). A slightly higher C- was awarded to New Hampshire’s infrastructure in 2017. Its 2020 healthcare spending per capita is the twelfth highest in the country at $11,793.

Conclusion 

Here is a list of states with no income tax, while residing in a state without an income tax would possibly seem enticing, it’s important to remember a large number of things that have an impact on general economic condition and way of life.

By examining factors like tax burden, affordability, and investment in social services, people can make knowledgeable decisions about their choice of state and know the wider financial and social implications of tax policies throughout states.

States with No Income Tax – FAQs

How do these states make up for the lack of income tax revenue?

They mostly depend on other forms of taxation, such as sales tax, property tax, or excise taxes, to generate revenue for state operations.

Do states without income tax offer other tax advantages?

Yes, some of these states may have lower overall tax burdens compared to states with income tax. However, it’s essential to consider the overall tax structure and cost of living.

How do these states compare in terms of affordability?

Affordability can vary among states without an income tax, depending on factors such as housing costs, healthcare expenses, and overall living expenses.

Do states without income tax provide good public services?

The quality of public services, such as education, healthcare, and infrastructure, can vary among states. Some states may prioritize investment in these areas, while others may face challenges.

Are there any tax benefits for retired people in states without income tax?

Retired people may find states without income tax appealing due to potential tax savings. However, it’s essential to consider other factors such as healthcare services, cost of living, and quality of life amenities.