States with no income tax: the math nobody does before moving

Nine states levy no broad income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. The marketing writes itself — 'keep 100% of your paycheck!' — and people genuinely relocate over it. But states aren't charities; every one of them funds schools, roads, and police. No-income-tax states simply collect through property taxes, sales taxes, insurance costs, and fees instead. Whether YOU come out ahead depends entirely on your income, your house, and your spending — and the math flips for different households.

Where the money comes from instead

Texas has no income tax and some of the highest property tax rates in the country — commonly 1.6–2.2% of home value per year versus a national average around 0.9%. Tennessee has the highest combined state and local sales tax in the nation, near 9.5%. Washington layers a high sales tax with one of the country's steepest gas taxes, plus a capital gains tax on large gains. Florida runs on sales tax, tourism, and property insurance costs that have become their own tax. The state always gets paid; the only question is through which door.

Notice two things in the numbers. First, the gap between a high-tax and no-income-tax state is real — often 4 to 7 percentage points of income — but it's far smaller than the headline income tax rates suggest. Second, some no-income-tax states (Washington) carry total burdens HIGHER than many income-tax states, because sales and excise taxes fall hard on ordinary spending.

Run your own household through the math

Who actually wins big

• High earners: income tax scales with income, but property and sales taxes don't. A $600k earner leaving California's 9.3–11.3% brackets saves $40,000+ per year; the offsetting costs are pocket change by comparison.
• People with big one-time income events: selling a business, exercising options, or realizing large capital gains while a resident of a no-income-tax state can save six or seven figures (Washington's capital gains tax being the notable exception).
• Retirees with large IRA/401(k) withdrawals — though note that plenty of income-tax states already exempt Social Security and some retirement income, shrinking the gap.
• Renters with high incomes: they capture the income tax savings without directly eating the property tax (though landlords pass some through).
• Remote workers who genuinely relocate — with the residency formalities done properly, since high-tax states audit big earners who claim to have left.

Who barely benefits (or loses)

• Modest-income homeowners: little income tax to save, full exposure to high property taxes and sales taxes. Regressive is the technical term.
• Big-house, average-income households in Texas: the property tax bill can exceed the income tax they left behind.
• Coastal Florida buyers: insurance premiums have doubled in parts of the state; a $6,000–12,000 annual premium is an income tax by another name.
• Anyone moving for a 'savings' that a $30/month cheaper mortgage would match — moving costs, transaction costs, and life disruption need years of tax savings to repay.

Before you call the movers

1. Compute your actual current state income tax from last year's return — the real number, not the top bracket.
2. Price the specific house: look up the actual property tax bill (it's public record) and get a real insurance quote for the address.
3. Add sales tax on your spending: roughly your annual taxable spending times the local combined rate.
4. Check the quirks: Washington's capital gains tax, New Hampshire's high property taxes, Texas school district rates, vehicle taxes and registration fees.
5. Compare TOTALS, then weigh the non-tax reasons — because a move that only makes sense on taxes usually doesn't make sense.

The offsets, quantified

One more line for the spreadsheet: what you give up. High-tax states often couple their rates with services that would otherwise be private expenses — notably public university tuition subsidies, and in some states meaningfully lower childcare or healthcare costs through state programs. A family with three future college students comparing California residency (with in-state UC tuition) against a no-tax alternative should price that difference explicitly; it can run tens of thousands of dollars per child, quietly rivaling a decade of income tax savings. Taxes are a price; the comparison only makes sense when you also compare what the price buys.

The bottom line

'No income tax' is real, but it's a description of one tax, not of the total bill. States collect what they need through property, sales, and insurance-adjacent costs, and the net savings from moving range from life-changing (high earners, big liquidity events) to negative (modest incomes with big houses). Do the four-line math for your actual household before believing the license plate — and if you do move, move all the way.