States With No Income Tax

States With No Income Tax

states with no income tax

In early 2007 as I was getting everything back from my CPA for my 2006 tax return, I was a little shocked. As it turned out I owed more to the government than I had ever even made in a single year prior. It was crazy to me that I was about to write a check that large to the government. I should point out that it was an amazing year for me, I still had my full time job for half the year and my business had just taken off. All of my years of working on this business for basically free had reached the tipping point and I was really seeing the fruits of my labor. Those fruits where in the form of income that the government wanted their piece of the pie. So between the business and my employment income I was getting nailed with income tax like I had never seen before.

Taxes suck!

It feels like we are getting taxed on everything in life.

states with no income tax



Ever think it would be cool to move to a state that does not have income tax? I sure have, especially as I was looking at check I had written to the government.  My wife and I really started thinking about moving, there was nothing tying me and my family down to any one location, except for one thing, but I will get to that at the end.


There are currently seven states that have no income tax. They are:

  1. Alaska: What makes Alaska even cooler is there is no State Sales Tax either. The state depends primarily on petroleum revenue to pay for everything.

  2. Florida: The costs for the local government are covered by property taxes.  Florida relies on sales tax for most everything else.

  3. Nevada: Gambling! Pretty much everything in Nevada is covered by the tax collected from gaming.

  4. South Dakota: To make up for no Income Tax South Dakota has a variety of other state taxes. Some of the taxes I found are cigarette excise, ban franchise, alcoholic beverages, and coin operated Laundromats.

  5. Texas: The Lone Star State looks to state sales taxes and property taxes to pay the bills. Local jurisdictions can collect additional sales tax as well.

  6. Washington: Sales tax foots the bill for Washington.  They also have some pretty hefty taxes on gasoline and cigarettes.

  7. Wyoming: In addition to no income tax, Wyoming also does not have a corporate income tax. Wyoming gets most of its money from oil and coal mining.



But then there are two more states that you might find on other lists saying there is no income tax. They are New Hampshire and Tennessee. This is only partly true.  While it is true that they do not collect tax on your income from working, they do collect tax on your dividend and interest income. Keep that in mind, especially when it comes time to retire. Most of us, at least people reading from the best blog in the world, will be living off income derived from capital gains, dividends, and other interest income.

What it all boils down to is that the every state needs to make its money in order to function. Taxes in one form or another are a necessary evil in the world.  Since these states are not getting money from you in the form of income tax, they are going to get the money they need in other ways.

Now, onto that one dreaded thing that kept and continues to keep us in New York.


Both my family and my wife’s family are within driving distance of us. Family has always been a very important part of our life and it sucked big time when we had to fly home with kids to see them.  So for now I will stay in New York, but as I am looking at my taxes and what I will be paying as the tax deadline approaches I cannot help but dream of moving.

Author: KC Beavers

KC Beavers is a semi-retired entrepreneur. The subject of personal finance has always fascinated him. In an effort to not bore those around him with all his love of personal finance as much he has come here to bore all of you instead.

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