Federal tax is the same everywhere in the United States. State income tax is not, and the spread between the heaviest and the lightest states is wide enough to change a relocation decision on its own.
Nine states levy no tax on wage income at all:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Two of them carry footnotes. New Hampshire taxed interest and dividend income for years and has now phased that out, leaving wages untouched throughout. Washington charges no income tax but does levy a capital gains tax on large realised gains, which matters for anyone whose compensation arrives as equity rather than salary.
What the saving actually is
State income tax is deductible against federal tax only within the SALT cap, so for most salaried employees the state bill is a straight reduction in take-home pay. The table shows the approximate annual cost of state income tax at three salary levels, for a single filer taking the standard deduction.
Approximations for a single filer with no itemised deductions. Local income taxes, which several cities including New York City levy separately, are not included.
At $120,000 the difference between California and Texas is roughly $580 a month. That is a meaningful number, and it is the single most cited reason for the technology industry's migration to Austin, Miami and Seattle over the past decade.
Where the money comes from instead
No state runs on nothing. Removing income tax shifts the burden onto property and consumption, and the shift is not subtle.
Property tax
Texas has among the highest effective property tax rates in the country, frequently between 1.6% and 2.2% of assessed value depending on the county and school district. On a $500,000 house that is $8,000 to $11,000 a year, which erases the income tax saving for a homeowner at $120,000 and exceeds it for many. New Hampshire is in a similar position.
Renters escape this directly and pay it indirectly through rent, which is one reason the no-income-tax states look better to people who rent than to people who buy.
Sales tax
Tennessee and Washington both run combined state and local sales taxes near or above 9%. Applied to the consumption of a typical household, that is a few thousand dollars a year, and it falls more heavily on lower incomes than an income tax does.
Severance revenue
Alaska, Wyoming and to some extent Texas and North Dakota fund a share of state government from oil, gas and mineral extraction. Alaska has historically paid residents a dividend out of it. This is genuinely free money for residents and it is also entirely dependent on commodity prices, which is a different kind of risk from a tax rate.
The comparison worth making
The right question is not whether a state charges income tax. It is what the total of income tax, property tax, sales tax and insurance costs comes to for a household of your shape.
- A renter with a high salary and low consumption gains the most from a no-income-tax state. The saving is real and the offsets barely apply.
- A homeowner with a mid salary frequently gains nothing. Property tax in Texas or New Hampshire can exceed what California or New York would have charged on income.
- Anyone in Florida or coastal Texas should price home insurance before deciding. Premiums in exposed areas have risen to a level that dwarfs most state tax differences, and they are not deductible.
- Equity-heavy compensation needs care in Washington, where the capital gains tax applies above a threshold, and in every state that taxes RSU vesting based on where the work was performed rather than where you live when it vests.
The trap in the move itself
States do not simply release you because you changed address. New York and California in particular apply residency audits, and the tests look at where your home, family, licences, bank accounts, doctors and days actually are. Keeping a property, a spouse or a driving licence in the departed state is frequently enough to fail.
Some states also apply a convenience of the employer rule, taxing income earned by someone working remotely from another state if the employer's office is in theirs. New York is the most aggressive here. This is the domestic version of the problem covered in working remotely from another country.
The same logic operates internationally. Switzerland's cantons behave much like American states, with the same salary producing very different bills across a short distance, as the cantonal comparison shows, and Canada's provinces do the same thing at a larger scale in the provincial comparison.
The USA Salary Calculator works out federal income tax, Social Security and Medicare on 2026 rates. State tax is listed separately because it depends where you file.