Something shifted in early 2026 that made this ranking more urgent than ever. As of February 12, 2026, the IRS confirmed several new federal deductions for the 2026 filing season — including deductions tied to tips and overtime income. A new Schedule 1-A on Form 1040 lets taxpayers claim deductions for no tax on tips and related new provisions. That changes the math. If your federal bill is already shrinking, the pressure to move states for tax relief is different now. I ran the numbers on all nine no-income-tax states — and I ranked them from worst value to best. The results surprised me.
Nine states collect zero state income tax in 2026. But every single one recaptures revenue somewhere else — through property taxes, sales taxes, or hidden fees. New federal deductions introduced for 2026 reduce the urgency of fleeing a high-tax state. Know what you’re trading before you pack a truck. This article does not constitute financial or tax advice.
States with zero income tax in 2026
Highest state income tax rate avoided (California)
Combined sales tax in Tennessee — highest in the nation
Alaska Permanent Fund Dividend paid per resident in 2024
#9 and #8: The Two States That Shocked Me Most
Read more: Tax Brackets 2026: Federal Income Tax Rates
I almost moved to New Hampshire in . I’m glad I did the math first.
#9 — New Hampshire: New Hampshire fully eliminated its interest and dividends tax on . So it is officially a no-income-tax state now. But the state funds itself through property taxes, and those are brutal. The effective property tax rate sits near 2.09% — among the top three highest in the country. On a $425,000 home (median in the state), that’s roughly $8,882 per year in property tax alone. That’s $740/month — before your mortgage principal or insurance.
#8 — Texas: Texas gets a lot of love from finance influencers. I understand why — no income tax on a $200,000 salary saves you roughly $12,600 annually compared to living in California. But Texas property tax rates average 1.63% effective statewide. On a median home valued at $310,000, that’s $5,053/year, or about $421/month. Texas also has no cap on how fast appraised values rise for non-homesteaded properties. If you rent out your second home in Texas, the tax bill can escalate fast.
#7 Through #5: The Middle of the Pack Is Messier Than It Looks
#7 — Tennessee: Tennessee phased out its Hall income tax in . The tradeoff is a combined average sales tax of 9.55% — the highest in the nation according to the Tax Foundation. On a family spending $60,000 per year on taxable goods and services, that’s up to $5,730 in sales tax. Low earners feel this hardest. High earners with mostly investment income barely notice it.
#6 — Nevada: Nevada’s economy runs on tourism and gambling revenue, which subsidizes state services significantly. The sales tax rate averages around 8.23% combined. Property taxes are actually low — effective rate near 0.55%. The hidden cost in Nevada is cost of living inflation in Las Vegas. Median rent for a one-bedroom in Las Vegas hit approximately $1,450/month in early 2026 — lower than Phoenix’s $1,927/month but rising faster year-over-year.
#5 — Washington: Washington is complicated in 2026. It enacted a 7% capital gains tax on gains above $262,000 beginning in 2022. The State Supreme Court upheld it. So if you sell investments or a business, you may owe state tax. Washington also has a combined average sales tax of roughly 9.29%. Seattle median rent sits near $2,200/month. If your income is W-2 wages only and your capital gains are modest, Washington is fine. Otherwise, audit your situation carefully.
I’ve heard from readers who moved from Illinois to Texas specifically for tax savings. Several regretted it within two years. New IRS procedures meaningfully reduce avoidable disputes and provide important protections for millions of taxpayers — meaning even within your current state, there are often untapped protections and deductions that could reduce your bill without relocation costs. Moving across state lines costs $4,000–$12,000 on average. Breaking a lease, selling a home, or disrupting childcare can easily exceed one full year of state income tax savings. Run the multi-year math — not just the headline rate.
#4 Through #2: The States That Actually Deliver Solid Value
Read more: No Income Tax States 2026: Why Retirees Pay $2,400 More Anyway
#4 — Florida: Florida remains one of the most popular no-tax destinations, and the reasons are real. No income tax. No estate tax. Sales tax at 6% base, with counties adding up to 1.5%. Property taxes average around 0.89% effective statewide. The problem in 2026 is property insurance. Following years of hurricanes and insurer exits, homeowner’s insurance in South Florida averages over $6,000/year — roughly triple the national average. That’s $500/month before you pay your mortgage. High earners in coastal counties need to price this in carefully.
#5 — Nevada: Nevada collects no income tax and no corporate income tax. Sales tax hits 6.85% statewide, with Clark County (Las Vegas) at 8.375%. Property taxes are genuinely low — effective rate around 0.55%. A $400,000 home costs roughly $2,200/year in property tax. Water scarcity is the long-term risk. Las Vegas sits in the Mojave Desert. Infrastructure costs tied to water rights are already appearing in utility bills. Still, for most earners, Nevada delivers on its promise.
#6 — Wyoming: Wyoming has the smallest population of any no-tax state — under 600,000 residents. No income tax. No corporate tax. Sales tax at 4%, the lowest among no-tax states. Property tax effective rate averages 0.55%. The state funds itself heavily through mineral extraction revenue. If commodity markets collapse, Wyoming’s budget gets squeezed fast. That said, for , the fiscal position remains stable. Low cost of living and genuine tax relief make this underrated.
States Where the Hidden Costs Are Serious
#7 — Washington: Washington has no personal income tax — but it has a 7% capital gains tax on gains above $262,000 (adjusted annually). That surprised thousands of tech workers in when the law took effect. Sales tax averages 9.38% statewide — among the highest in the country. King County residents pay up to 10.5%. Property tax effective rate runs around 0.87%. Washington looks tax-free on paper. For high earners with investment income, it isn’t.
#8 — Texas: Texas is the most discussed no-tax state, and the most misunderstood. No income tax is real. But property taxes are among the nation’s highest. The statewide average effective rate is 1.60%. On a $450,000 home, that’s $7,200/year — $600/month in property taxes alone. Some Dallas and Houston suburbs hit 2.3%. Sales tax sits at 8.25% in most metro areas. If you rent and earn a moderate income, Texas works well. If you own an expensive home, run the full numbers before celebrating.
#9 — New Hampshire: New Hampshire eliminated its tax on interest and dividends income completely as of . That makes it a true no-income-tax state for . But property taxes are extraordinarily high. The effective statewide average is 1.93% — the second highest in the nation. A $400,000 home costs roughly $7,720/year in property tax. There’s no sales tax, which helps. But retirees living on investment income who bought homes expecting relief often discover the property tax bill erases those savings entirely.
Side-by-Side Comparison: All 9 States in 2026
Read more: MAGI 2026: One Dollar Over the Limit Costs $888 More in Medicare
The table below uses Tax Foundation data and state revenue department figures. Property tax rates are effective averages, not statutory maximums. Sources: taxfoundation.org, irs.gov.
| State | Income Tax | Avg. Sales Tax | Effective Property Tax | Estate Tax | Overall Verdict |
|---|---|---|---|---|---|
| Alaska | None | 1.76% | 1.04% | None | ⭐⭐⭐⭐⭐ |
| Florida | None | 7.09% | 0.89% | None | ⭐⭐⭐⭐ |
| Nevada | None | 8.25% | 0.55% | None | ⭐⭐⭐⭐ |
| New Hampshire | None | 0% | 1.93% | None | ⭐⭐⭐ |
| South Dakota | None | 6.40% | 1.08% | None | ⭐⭐⭐⭐ |
| Tennessee | None | 9.55% | 0.66% | <mark style="background:#dcfce7;color:#166534;padding:0.1rem 0.4rem; |
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