The appeal of moving to a state with no income tax is straightforward: keep more of what you earn. But the reality is more nuanced. States must fund government services somehow, and those without income taxes typically offset lost revenue through higher property taxes, higher sales taxes, or both. The actual savings depend heavily on your income level, spending habits, home value, and where you are moving from.
The 9 States With No Individual Income Tax
| State | Notes |
|---|---|
| Alaska | No income tax, no sales tax; funded largely by oil revenues |
| Florida | No income tax; above-average property and sales taxes |
| Nevada | No income tax; funded by gaming/tourism revenues |
| New Hampshire | No income tax on wages; taxes interest and dividends (being phased out) |
| South Dakota | No income tax; relatively low property and sales taxes |
| Tennessee | No income tax on wages; previously taxed dividends (now fully repealed) |
| Texas | No income tax; among the highest property taxes in the country |
| Washington | No income tax on wages; capital gains tax (7%) on gains over $262,000 since 2022 |
| Wyoming | No income tax; low population, resource-funded government |
Note on Washington: The state enacted a 7% capital gains tax on long-term capital gains above a threshold, beginning with gains realized in 2022. This is important for high-net-worth individuals considering Washington as a “no-tax” destination.
What High-Income Earners Actually Save
The income tax savings from moving are proportional to your earnings and the rate differential.
Example: Moving from California (up to 13.3% top rate) to Texas (0%):
| Income | California State Tax (est.) | Texas State Tax | Annual Savings |
|---|---|---|---|
| $100,000 | ~$7,200 | $0 | ~$7,200 |
| $200,000 | ~$17,700 | $0 | ~$17,700 |
| $500,000 | ~$51,000 | $0 | ~$51,000 |
For a $500,000 earner, the income tax savings alone can be substantial. But you need to net out the higher costs.
Example: Moving from New York (up to 10.9%) to Florida (0%):
| Income | New York State + NYC Tax (est.) | Florida Tax | Annual Savings |
|---|---|---|---|
| $100,000 | ~$11,500 (NYC resident) | $0 | ~$11,500 |
| $250,000 | ~$31,000 | $0 | ~$31,000 |
High earners in New York City with combined state + city rates near 14–15% have enormous potential savings by relocating to Florida, which has driven a significant migration pattern.
The Hidden Costs: Property and Sales Taxes
No-income-tax states compensate through other revenue streams.
Property tax rates by state (effective rate on home value, approximate):
| State | Effective Property Tax Rate | Annual Tax on $500K Home |
|---|---|---|
| New Jersey | 2.23% | $11,150 |
| Illinois | 2.05% | $10,250 |
| Texas | 1.75% | $8,750 |
| Nebraska | 1.61% | $8,050 |
| Florida | 0.89% | $4,450 |
| California | 0.76% | $3,800 |
| Wyoming | 0.56% | $2,800 |
| Nevada | 0.55% | $2,750 |
| South Dakota | 0.46% | $2,300 |
Texas has no income tax but property taxes that are nearly double California’s effective rate. A Texas homeowner with a $600,000 home pays roughly $10,500 in property tax — a California homeowner in the same-priced home pays about $4,600. That $5,900 gap partially offsets the income tax savings, especially at moderate income levels.
State sales tax comparison:
| State | State Rate | Average Local Rate | Combined Avg |
|---|---|---|---|
| Tennessee | 7.0% | 2.55% | 9.55% |
| Nevada | 6.85% | 1.38% | 8.23% |
| Washington | 6.5% | 2.70% | 9.20% |
| Texas | 6.25% | 1.95% | 8.20% |
| Florida | 6.0% | 1.08% | 7.08% |
| Alaska | 0% | 1.82% | 1.82% |
| New Hampshire | 0% | 0% | 0% |
Tennessee has one of the highest combined sales tax rates in the country, while Alaska and New Hampshire impose no state-level sales tax. Heavy spenders feel this more acutely.
Who Benefits Most From Moving
High-income earners with earned income benefit most because their income tax savings are large relative to any property or sales tax increases. A $400,000-per-year professional moving from California to Nevada saves roughly $28,000–$35,000 in state income taxes.
Retirees with investment income often benefit substantially, particularly from states like Florida, Nevada, or Wyoming that do not tax Social Security, pension income, or investment returns. Note that New Hampshire’s historical interest and dividend tax (now fully phased out) made it slightly less attractive for retirees.
Moderate earners need to run the numbers carefully. The income tax savings on $80,000 of income moving from a 5% state to a 0% state is $4,000 — but higher property taxes on a $350,000 home in Texas could add $2,000–$3,000 annually, cutting the net savings significantly.
Remote Work and Tax Nexus Complications
If you move to a no-income-tax state but your employer is in New York, California, or another state, you may not escape that state’s taxes as easily as you think.
The New York “Convenience of the Employer” Rule
New York taxes remote workers based on where their employer is located if the remote work is for the employee’s convenience — not a business necessity. A remote employee who moves to Florida but works for a New York company can still owe New York income tax on those wages, even without setting foot in the state.
California’s Reach
California aggressively asserts tax jurisdiction over former residents who move out but maintain significant California connections (business clients, property, board positions). Simply changing your mailing address is insufficient to establish domicile change.
Establishing Domicile
To cleanly change your tax domicile, you typically need to:
- Spend fewer than 183 days in the old state (some states track this aggressively)
- Update your driver’s license, voter registration, and professional licenses
- Move your primary bank accounts and safe deposit box
- Establish local social and civic ties in the new state
- Change your primary health care providers
Cost of Living Offset
No-income-tax states vary widely in cost of living. Florida’s housing market has seen dramatic appreciation since 2020, with Miami and coastal areas rivaling major California cities in home prices. Nevada’s Las Vegas metro has also seen significant price increases.
Alaska has among the highest costs of living for goods due to remote location. Wyoming and South Dakota remain relatively affordable.
When modeling the move’s financial impact, factor in:
- Housing cost differential
- General cost of living (groceries, insurance, healthcare)
- Property insurance — Florida homeowners insurance has risen dramatically due to hurricane risk
Should You Move for Tax Purposes?
Strong case for moving:
- High income ($200,000+) with mobility
- Currently in a high-tax state (California 13.3%, New York 10.9%, New Jersey 10.75%)
- Retirement planning with large investment portfolio
- Business owners with flexibility on business domicile
Weaker case:
- Moderate income where savings are small relative to moving disruption
- Children in school, deep community ties
- Industry concentrated in a specific metro (film, finance, tech) where clients are location-specific
- Remote work situation with nexus risk to your employer’s state
Bottom Line
Moving to a no-income-tax state can produce genuine, significant tax savings — particularly for high earners leaving California or New York. But the savings are rarely as clean as the headline rate suggests. Property taxes (especially in Texas), sales taxes (especially in Tennessee and Washington), cost of living changes, and remote work nexus issues all affect the bottom line. Model the full picture before deciding, and if you do move, establish domicile cleanly and carefully to avoid being taxed by your old state for years afterward.