States With No Income Tax | What States Do Not Have Income Tax?

One way to ensure you're maximizing your retirement budget is to live in a state with no income tax.

When it comes time for retirement, understanding how your finances will be impacted is critical. For many, retirement means a fixed income that will likely remain constant the duration of your life.

Knowing how to stretch your dollar to the max is important because the more you can save, the more you can enjoy the finer things in life and live in one of the best places to retire.

By living in a state with no income taxes, you’ll save a substantial amount of money that can be reinvested or spent on other things.

What States Do Not Have Income Tax?

  • Nevada
  • Texas
  • Alaska
  • Florida
  • South Dakota
  • Washington
  • New Hampshire
  • Tennessee
  • Wyoming

The 9 States With No State Income Tax

Nevada

A question we’re often asked is “does Nevada have state income tax?”

Home to the cities of Las Vegas and Reno, Nevada is one of the best states to retire tax wise because it doesn’t tax your wages, retirement accounts, Social Security or pension, because there is no state income tax!

No State Income Tax. Social Security, 401(k), IRAs, employer retirement plans, public and private pensions not taxed by the state.

Property Tax: Average effective property tax is 0.77%.

Sales Tax: 5.5%. Locally, up to 1.3% is added.

Inheritance and Estate Taxes: No estate or inheritance tax.

Source: State of Nevada Department of Taxation

Texas

The Lonestar State has attracted people for years because of its job growth, standard of living and the fact that it’s one of the states with no income tax.

Check out cities such as Austin, Dallas/Fort Worth, Houston, or San Antonio, all which offer comfortable big city living without the high taxes found in states such as New York, New Jersey, Illinois or California.

No State Income Tax. No wage tax or retirement income tax.

Property Tax: Average effective property tax is 1.86%.

Sales Tax: 7%. Locally, up to 2% is added.

Inheritance and Estate Taxes: No inheritance or estate tax.

Source: Texas Comptroller’s Office

Alaska

Looking to get away? If you enjoy the outdoors and being far away from the lower 48 then Alaska might be the place for you.

The obvious benefit is this state doesn’t have any income tax, which includes your retirement plans, pensions and IRA’s. While there is no income tax, another added benefit is there is no sales tax throughout much of the state.

No State Income Tax. No tax on retirement plans or private and public pensions.

Property Tax: Average effective property tax is 1.19%. Some areas have no property tax.

Sales Tax: No state sales tax. Locally, up to 7.5% sales tax. Statewide average is 1.76%.

Inheritance and Estate Taxes: No estate or inheritance tax.

Source: Alaska Department of Revenue Tax Division

Florida

Next on our list is the sunshine state, Florida, long known as a great place to retire in part, because it has no state income tax.

Another added benefit is the climate, where in many parts of the state it’s warm and sunny year-round and offers easy access to golf courses, pools and the beach.

No State Income Tax. Social Security, IRAs, 401(k), retirement plans or pensions are not taxed by the state.

Property Tax: Average effective property tax is 1.02%.

Sales Tax: 6% state sales tax. Locally, up to 2% is added.

Inheritance and Estate Taxes: No tax on inheritance or estate.

Source: Florida Department of Revenue

South Dakota

While South Dakota may seem boring and in the middle of nowhere, its lack of income tax makes it an attractive place to live.

Plus, there’s real beauty tucked back in the Black Hills and on the plains of the Badlands. If you don’t want to live there, at least visit on vacation!

No State Income Tax. No tax on retirement plans, pensions, Social Security, 401(k), IRAs.

Property Tax: Average effective property tax is 1.32%.

Sales Tax: 4.5% state sales tax. Locally, up to 4.5% is added.

Inheritance and Estate Taxes: No tax on inheritance or estate.

Source: South Dakota Department of Revenue

Washington

Washington in the Pacific Northwest is another state without state income tax. Known for its beauty and the Seattle metro area (coffee, too!), people looking to save big on taxes find a friend in Washington.

No State Income Tax. No tax on Social Security, retirement plans, 401(k), IRAs or pensions.

Property Tax: Average effective property tax is 1.06%.

Sales Tax: 6% state sales tax. Up to 3.4% added locally.

Inheritance and Estate Taxes: No inheritance tax. There is an estate tax on estates greater than $2.129 million. Tax rates range from 10% to 20%. There is a $2.5 million deduction available for family-owner businesses valued at less than $6 million.

Source: Washington Department of Revenue

New Hampshire

If you are looking to reside in the Northeast, then New Hampshire may be the state for you.

Even though there is a 5% tax on dividends, there is no sales tax, which can be looked at as an offset. Depending on your retirement portfolio, this state could be the perfect place for you.

No State Income Tax. No tax on Social Security, IRAs, 401(k), pensions or retirement accounts. There is a 5% tax on interest and dividends that exceed $2,400 for individuals ($4,800 joint filers).

Property Tax: Third highest property tax in the U.S. at an average effective rate of 2.19%.

Sales Tax: No state sales tax.

Inheritance and Estate Taxes: No inheritance or estate tax.

Source: New Hampshire Department of Revenue Administration

Tennessee

A state with a few up and coming cities and the beautiful Appalachian and Smokey Mountains to explore, it might be time to give Tennessee a closer look.

While these are favorable tax treatments there is a state sales tax of 7%, which is among the high end of our mentioned states. Groceries are also taxed at a 4% rate.

No State Income Tax. The Hall Tax taxes dividends and select interest but will be eliminated by 2021.

Property Tax: 0.748% of assessed home value.

Sales Tax: 7% sales tax. Locally up to 2.75% is added.

Inheritance and Estate Taxes:No inheritance or estate tax.

Source: Tennessee Department of Revenue

Wyoming

Another one of the best states to retire tax wise for Baby Boomers is Wyoming.

A beautiful rugged and conservative state with no income tax for retirees, Wyoming is the least populous state in the country and includes two amazing national parks – Grand Teton and Yellowstone.

No State Income Tax. No tax on retirement plans, Social Security, 401(k), IRAs or pensions.

Property Tax: Average effective property tax is 0.61%.

Sales Tax: 4%. Locally up to 2% is added.

Inheritance and Estate Taxes: No inheritance or estate tax.

Source: Wyoming Department of Revenue

Moving to a State With No Income Tax

It’s important to evaluate each state individually and compare it against your living requirements. These states are a great place to start and retiring with no state income tax will certainly bring you peace of mind when tax season rolls around!

The information provided is for informational purposes only. It should not be considered legal or financial advice. Matiah Fischer and RetireBetterNow.com does not make any guarantee or other promise as to any results that may be obtained from using this information or our services. To the maximum extent permitted by law, Matiah Fischer and RetireBetterNow.com disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable. Content contained on this website is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Use this information at your own risk.

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