9 States With No Income Tax (2026): What They Tax Instead
Nine US states tax no wage income in 2026. Discover what each charges instead, from sales and property taxes to corporate gross receipts, plus Washington's new 9.9% high-income tax.
Florida and Texas generate over 62% of state tax revenue through sales tax; Washington enacted a 9.9% tax on high earners taking effect in 2028.
- 8 states levy zero personal income tax on any income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming.
- Washington taxes no wage earnings, but levies a 7%–9.9% capital gains tax and Governor Ferguson signed SB 6346 enacting a 9.9% tax on high earners starting in 2028.
- No income tax does not equal low tax: Washington ($4,722), Nevada ($4,617), and Wyoming ($4,473) collect more state tax per capita than the national average ($4,363).
- States replace income tax with sales taxes (Tennessee combined avg 9.61%), property taxes (Texas 1.24%, New Hampshire 1.35%), or natural resource severance levies (Alaska 43.9%).
- IRS migration data shows Florida gained +$20.6B and Texas gained +$5.5B in net adjusted gross income from interstate moves in the latest filing year.
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1. The 9 States With No Wage Income Tax
Eight US states levy zero individual income tax on any personal earnings: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.
Washington levies no income tax on salary or wage income, but imposes a 7% to 9.9% tax on high-dollar capital gains, making nine states that exempt earned wages.
Tennessee's Hall Income Tax on interest and dividends was fully phased out in 2021, and New Hampshire's Interest and Dividends tax was repealed effective January 1, 2025.
| State | Combined Sales Tax (2026 Avg) | Effective Property Tax Rate | Tax Competitiveness Rank |
|---|---|---|---|
| Alaska | 1.82% (local only) | 0.90% | #4 in US |
| Florida | 6.98% | 0.76% | #5 in US |
| Nevada | 8.24% | 0.50% | #20 in US |
| New Hampshire | 0.00% (No Sales Tax) | 1.35% | #3 in US |
| South Dakota | 6.11% | 1.00% | #2 in US |
| Tennessee | 9.61% | 0.46% | #8 in US |
| Texas | 8.20% | 1.24% | #7 in US |
| Washington | 9.51% | 0.74% | #45 in US |
| Wyoming | 5.56% | 0.58% | #1 in US |
2. The Washington Asterisk: What's Changing in 2028?
On March 30, 2026, Washington Governor Bob Ferguson signed SB 6346, enacting a 9.9% tax on high personal incomes taking effect January 1, 2028 (with first tax payments due in 2029).
The 9.9% tax applies to Washington taxable income exceeding a $1,000,000 standard deduction (which spouses share). Opponents have filed legal challenges arguing it violates the Washington Constitution's property tax uniformity clauses.
Washington already levies a 7% tax on long-term capital gains between $278,000 and $1,000,000, and 9.9% above $1,000,000. It also enforces an estate tax with a top marginal rate of 35% on taxable estates of $9,000,000+.
3. What These States Tax Instead: Official Census Revenue Breakdown
US Census Bureau state tax collection surveys reveal exactly where no-income-tax states replace their budget shortfalls:
Florida (62.9%), Texas (62.8%), South Dakota (61.6%), Washington (59.4%), and Tennessee (57.5%) derive over half of their state revenue from general sales and gross receipts taxes—nearly double the national average of 30.9%.
Alaska relies on severance taxes on oil, gas, and mineral extraction (43.9% of state collections) plus investment earnings from its $80B+ Permanent Fund.
New Hampshire relies on corporate business profits taxes (32.9% of state collections) and high local real estate property taxes (59.5% of all combined state and local taxes).
4. Business & LLC Taxation: Gross Receipts vs. Profits Taxes
Only two no-income-tax states—Wyoming and South Dakota—tax neither business profits nor corporate gross receipts.
Washington levies a Business & Occupation (B&O) tax ranging from 0.138% to 3.3% on total gross revenue, regardless of profitability.
Nevada imposes a Commerce Tax on gross revenue exceeding $4,000,000.
Tennessee enforces a 6.5% corporate excise tax on net earnings plus a franchise tax on net worth.
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