Feeling Taxed to the Max? Check Out These 9 States Boasting Zero Income Taxes

Yahoo

27-01-2025

It's something most Americans dread: tax day. April 15 is right around the corner, and while most Americans put off the inevitable, a few motivated folks actually start their taxes on launch day—January 27.
But no matter when you start, if you're a homeowner, you're faced with shelling out big bucks for property taxes, federal income taxes, and state income taxes.
That is if you live in the 41 states that levy an income tax, which makes up a significant source of state government revenue.
Then again, maybe you're lucky enough to call one of the nine states in this country that don't levy an income tax home, sweet home. Yep—some states skip taxing your income altogether.
If you're tired of paying Uncle Sam at the federal level and writing a check to your state every year as well, then let's look at where you won't be taxed on your income (but you might have to pay extra bucks in other taxes or home prices).
Known as the 'Last Frontier', Alaska might be the right choice for those looking to escape taxes—and modern life if you head to the remote parts of the state. Indeed, the state of Alaska has the lowest overall tax burden (the average of income tax, property tax, and sales tax), at 4.93%, in the U.S, according to Wallethub.
Tax facts: Those lucky enough to call Alaska home pay zero individual income tax and state sales tax. However, average property tax rates are higher—1.16%—than the national average of 0.90%.
Home prices: The median list price for a home in Fairbanks, Alaska's largest city, is $289,900.The fine print: The 49th state still struggles to attract residents, likely due to its remote location, rugged landscape, and extreme weather conditions (including 24/7 daylight in the summer and 24/7 darkness in the winter).
People might be drawn to the Sunshine State for its average of 237 days of sunshine a year. Or it could be the state's lack of an individual income tax.
'Florida's 'no state income tax' status also includes no pension income tax or IRA, 401(k), or Social Security taxes,' says Baron Christopher Hanson, a real estate agent at Florida's Coldwell Banker Real Estate Investment team. 'Why pay state taxes on retirement or military pension income and shovel snow for the rest of your life?'
However, in recent years, there's been less interest in Florida properties than ever before.
'Warm markets, especially in Florida, saw inventory pile up and market pace slow more than was typical nationally,' explains Realtor.com® senior economic research analyst Hannah Jones.
'More generally, the South has seen inventory climb and market pace slow [in 2024] as buyers stick to the sidelines, thwarted by still-high home prices and mortgage rates.'
Tax facts: While you will pay zip in state income taxes, Florida does have a 6% state sales tax and an average property tax rate of 0.82%.
Home prices: In Sarasota, a popular place for retirees and families, the median list price is $550,000—an almost 3% increase in the last two years.
The fine print: The December 2024 Monthly Housing Report released by Realtor.com found a flood of homes sitting on the market for longer than average, many of which are in Florida. While taxes may be good in the Sunshine State, climate change concerns, higher interest rates, and a fight over new construction may not be to your benefit.
You don't have to take a gamble on how much you'll pay in individual income tax each year in Nevada—the number will always be a goose egg. Instead, most of the state's revenue comes from its special taxes on gambling.
Tax facts: Residents in the Silver State enjoy one of the lowest property tax rates in the country at 0.44%.
Home prices: 'The fact that Nevada has no state income tax attracts many homebuyers,' says Kurt Grosse, a real estate agent with Realty ONE Group in Las Vegas.
Sellers are capitalizing on the demand. Homes in Las Vegas currently average $455,900, a 7% increase in the last two years.
The fine print: The sunny state ranks at No. 13 for the 15 states with the highest state and local sales tax. Still, many celebrities are flocking to the area, so it might be time to consider the 'Silver State.'
There are many reasons people choose to move to New Hampshire. They include stunning mountains, easy access to nature, and easy driving distance to several major metropolitan areas (e.g., Boston, New York City, and even Montreal).
But perhaps one of the biggest draws for many new homebuyers is the overall low tax burden, which includes zero state income taxes.
Tax facts: Wondering how much you'll pay in sales tax in New Hampshire? Try nothing. But that's a different story when it comes to property taxes.
'Property taxes in New Hampshire are among the highest in the U.S., but income tax and sales tax are among the lowest, bringing the total tax burden below nearby Massachusetts, and below all states in the U.S. except Alaska,' adds Jones.
Home prices: If you're looking to live in the hottest markets in New Hampshire, your best bets include Nashua, where the median home price is $449,900 and Manchester, which has a $416,500 median.
The fine print: The current property tax rate—1.89%— is the fourth highest in the U.S.
Trying to decide on which Dakota to move to? If you don't want to shell out money for income tax, pick South Dakota. (Though, its sister state does have one of the lowest income tax rates.)
The state also boasts open spaces and a low cost of living.
Tax facts: On average, residents pay a property tax rate of 1.14%. And the average combined state and local sales tax rate is 6.5%.
Home prices: In the small city of Rapid City, the median list price is $399,900—up a whooping 25% in the last two years.
The fine print: With no inheritance tax or capital gains tax, the small, unassuming state has recently become a tax haven for the wealthy — and the house prices are showing the effects.
Texas is now home to more Fortune 500 companies than any other state. Among them are Exxon Mobil, Tesla, and HP Inc. And if you work for these all-star companies, you won't pay any state taxes on your salary.
Tax facts: Homeowners don't have to pay capital gains tax at the state level. Still, it carries an average state tax burden of 7.56%.
Home prices: El Paso was ranked among the top 10 housing markets of 2023 (though it didn't make the cut in 2024) Still, median list price in the border town is $290,00—up 7% from the year before.
The fine print: The Lone Star State has some of America's highest property taxes, clocking in at 1.63%.
The low cost of living, the thriving economy, and the pleasant weather made Tennessee a popular spot for those looking to relocate just after the pandemic, and their tax burden had a lot to do with that.
The Volunteer State doesn't levy taxes on residents' income. That includes earned wages and income from investments, dividends, and interest.
'The fact that we generally have lower housing prices plus no income tax has gained popularity in recent years with the inflationary situation we are in,' says Sheldon Rosengarten, an agent with Marx-Bensdorf Realtors in Memphis, TN.
However, from 2023 to 2024, Southern markets all descended off of the Realtor.com ranking list by the fall, replaced by Northeast and Midwest markets due to recent housing trends.
Tax facts: Residents enjoy a low average property tax rate of 0.48%. However, the state does have a 7% state sales tax and a max local sales tax rate of 9.55%.
Home prices: The Chattanooga housing market was among the top 10 markets positioned for growth in 2023, with a larger share of affordable homes for a median income. While demand may have cooled, the median list price in Chattanooga rose to $370,000 in just one year, a 15.6% increase.
The fine print: Beer lovers should be aware that Tennessee also levies the highest beer tax of any state in the country, at $1.29 per gallon.
The state of Washington doesn't levy an income tax on residents. But its higher cost of living and housing prices tend to make it an overall pricey (albeit popular) state.
Still, according to the Realtor.com December 2024 Monthly Housing Market Trends Report, inventory in Western states rose 23.7%. So, there's a better chance of finding a place here than elsewhere.
Tax facts: Residents pay a hefty property tax rate of 0.88%.
Home prices: Washington's second-largest city, Spokane, has a median list price of $425,000. In Seattle, the median list price is almost double, at $750,000.
The fine print: The state levies a business and occupation (B&O) tax, a hotly debated capital gains tax of 7%, which is applied to profits on the sale of long-term assets, including stocks and bonds.
Not only does Wyoming not have an individual income tax, but the state also doesn't levy a corporate income tax. So if you have a business, Wyoming is a doubly attractive place to call home.
The Equality State also draws in new residents thanks to its low cost of living and the natural beauty of its two national parks: Yellowstone National Park and Grand Teton National Park.
Tax facts: Wyoming boasts one of the lowest property tax rates at 0.56%. The state sales tax is 4%, and the max local sales tax is 2%.
Home prices: Of all the states on this list, Wyoming leads the pack in a boom in house prices. In the three largest cities, the median price of home has risen anywhere for 20% to 40%, from 2023 to 2024. The median list price is $420,000 in Cheyenne, $339,000 in Casper, and $349,500 in Gillette.
The fine print: Because Wyoming is such a tax-friendly state, billionaires are moving in. And the rich are pushing up home prices, which is then driving up property tax rates.
Additional edits and information provided by Dina Sartore-Bodo.
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