Which U.S. States Have No Income Tax?


Quick Answer

The seven U.S. states that have no personal income tax of any kind, as of 2014, are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two other states that only tax interest and dividend income are Tennessee and New Hampshire.

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Full Answer

Although these states do not impose tax on individual income, most of them make up for it with other forms of taxation. Alaska, however, remains one of the most tax-friendly states in the country. Because the state earns royalties through the production of gas and oil, there is not only no income tax, but also no sales tax and low property taxes. Additionally, the state pays every eligible permanent resident royalties on natural resource production through its Alaska Permanent Fund. Due to revenue from gambling and tourism, Nevada has no individual or corporate income taxes. However, it earns a majority of state revenue through sales and use taxes. Other states with modest sales taxes whose residents have overall low tax burdens include South Dakota and Texas.

On the other hand, with sales taxes of 6.5 to 9.5 percent depending on the area, and extremely high property taxes, the residents of Washington have some of the highest tax burdens in the country despite not having a state personal income tax.

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