The Nine States With No Income Tax on Wages
Nine U.S. states currently impose no income tax on wages:
- Alaska
- Florida
- Nevada
- New Hampshire (taxes only investment income, not wages)
- South Dakota
- Tennessee (phased out tax on investment income in 2021)
- Texas
- Washington
- Wyoming
Moving from any of these states to a state with a meaningful income tax rate represents a direct reduction in net income. Conversely, moving from a high-tax state to one of these states is effectively a pay raise — without any change in gross salary.
What the Difference Looks Like in Dollars
To understand the scale of the impact, consider a household earning $100,000 per year in wages moving from Texas (no income tax) to California (up to 9.3% marginal rate at that income level).
At $100,000 of taxable income, California's effective state income tax rate is approximately 5–6%, meaning the household would owe roughly $5,000–$6,000 in state income taxes that they previously did not pay. This is not a cost-of-living number that shows up in any grocery or utility comparison — but it has a bigger effect on monthly take-home pay than the combined difference in food costs between most city pairs.
| State | Approx. Tax Owed | Effective Rate | Notes |
|---|---|---|---|
| Texas | $0 | 0% | No state income tax |
| Florida | $0 | 0% | No state income tax |
| Washington | $0 | 0% | No state income tax |
| Colorado | ~$3,520 | 4.4% | Flat rate |
| Georgia | ~$4,390 | 5.49% | Rate reduced in 2024 |
| North Carolina | ~$3,800 | 4.75% | Flat rate, declining |
| New York | ~$4,900 | 6.13% | Marginal; NYC adds local tax |
| Minnesota | ~$6,000 | 7.5% | Progressive; high at upper brackets |
| Oregon | ~$7,200 | 9% | High marginal rates |
| California | ~$5,200 | 6.5% | Higher rates kick in at higher incomes |
Figures are approximate estimates for illustration purposes. Tax liability depends on filing status, deductions, and credits. Consult your state's revenue department or a tax professional for accurate calculations.
Factors That Offset (or Amplify) the Tax Difference
State income tax is rarely the only tax consideration in a move. Several other factors can significantly affect the total tax picture:
Property Tax
States with no income tax often have higher property taxes to compensate. Texas has no income tax but property tax effective rates averaging 1.6–1.8%, among the highest in the country. New Jersey has both a state income tax and very high property taxes. See our property taxes guide for more.
Sales Tax
State and local sales tax rates vary from 0% (Oregon, Montana, New Hampshire, Delaware) to over 10% in parts of Louisiana and Tennessee. High sales tax states can partially offset the income tax advantage for high-spending households.
Local Income Taxes
Some cities and counties impose their own income taxes on top of state rates. New York City residents pay both state and city income tax. Residents of Philadelphia, Columbus, and certain other cities also pay local income taxes.
Federal Deductibility
Since 2018, the federal SALT (State and Local Tax) deduction has been capped at $10,000 per household. For high earners in high-tax states, this cap means they pay more in federal tax than they would otherwise, further increasing the total tax burden of living in a high-tax state.
How to Estimate the Actual Impact
- Find your current state's income tax on your actual income by looking up your state's tax brackets or using your state revenue department's tax estimator tool.
- Find your destination state's income tax using the same approach.
- Calculate the annual dollar difference. This is a direct addition or subtraction from your net income.
- Add or subtract any property tax difference if you're considering buying.
- Compare this total tax difference to the housing cost difference. Usually one of these two numbers will dominate the other.