States Without Income Tax

State income taxes can be a hurdle on top of federal income taxes but not all state taxes wages and earned income. Some states don’t tax earned income. The states that don’t tax income rely on sales taxes and other kinds of taxes to fund state services. Given the state income taxes can be as high as 13.3 percent, living in a state that doesn’t tax wages can be a great deal. In this article, we will go over the states that don’t tax income and give a detailed explanation of the total tax burden residents face in these states.

Alaska – 5.15 percent tax burden

Alaska’s expensive cost of living makes up for its low taxes. The state doesn’t tax income and has the lowest sales tax at just 1.76 percent. Although the taxes are considerably lower in Alaska than in any other state, it certainly isn’t the cheapest place to live. It ranked 45th place for its affordability. So there are only a handful of states that’s less affordable than Alaska. The high cost of living certainly doesn’t make up for the low taxes though as most goods are shipped to Alaska, increasing the price tag. 

Tennessee – 6.18 percent tax burden

Tennessee has a slightly higher tax burden than Alaska with a much affordable cost of living. It’s ranked 22nd on the affordability scale, added with no state income taxes, it’s a great place to live – keeping your money to yourself wise. The sales tax rate in Tennessee is 7 percent which makes up over half of the state tax collections. 

Wyoming – 6.48 percent tax burden

Wyoming’s affordability and the total tax burden is slightly higher than Tennessee’s. With a total tax burden of 6.48 percent, Wyoming is a great place to live for keeping money to yourself. The state was ranked 28th in affordability, placing it slightly above average. 

Florida – 6.82 percent tax burden

With its sunny beaches and mild climate, the nice weather isn’t just what Floridians enjoy. There is no state income tax in Florida and the total tax burden is just 6.82 percent. On the affordability scale, it’s ranked 35th and it’s the 13th best state to live in.

New Hampshire – 6.85 percent tax burden

Living in New Hampshire doesn’t just bring a good quality of life, but also no state income taxes. It was ranked 5th in the total tax burden and it’s the second-best state to live in, right behind Washington. You won’t get taxed for your wages and the affordability of New Hampshire is right in the middle, ranking 26 out of 50.

South Dakota – 7.86 percent tax burden

South Dakota has a low sales tax and zero income tax. The sales tax applying to all purchases subject to sales tax is just 4.5 percent. Although the property tax is something to not forget as it’s towards to higher-end, the total tax burden of people living in South Dakota is 7.86 percent. The state is considerably affordable though, ranking 14th among others. 

Texas – 8.20 percent tax burden

Texas doesn’t tax earned income but has a considerably higher tax burden. No surprise on that as we’ve made our list going from the lowest to the highest tax burden. Instead of state income taxes, Texas relies on a considerably high sales and use tax

Washington – 8.32 percent tax burden

Washington has the second-highest tax burden in our list of states without income taxes. The sales taxes are quite high but the property taxes fall under the national average. Washington offers an overall balanced tax burden but it’s certainly not the lowest.

Nevada – 8.39 percent tax burden

Nevada has the highest tax burden percentage in our list of states without income taxes at a total of 8.39 percent. The state sales tax is 6.85 percent and has one of the lowest property taxes in the nation. The property tax is just 0.53 percent which is less than the national average.