Americans pay vastly different state tax bills depending on where they live. A $100,000 earner in California pays over $9,000 in state income tax alone—in Texas or Florida, that number is zero. If tax savings are a priority, here's where to look and what to consider.
States With No Income Tax
Nine states charge zero state income tax on wages, making them immediately attractive for high earners:
| State | Income Tax | Sales Tax | Property Tax (avg) | Best For |
|---|---|---|---|---|
| Texas | 0% | 6.25% (+local) | ~1.63% | Remote workers, families |
| Florida | 0% | 6% (+local) | ~0.89% | Retirees, warm weather seekers |
| Nevada | 0% | 6.85% (+local) | ~0.60% | Entertainment, no corporate tax |
| Washington | 0% | 6.5% (+local) | ~1.03% | Tech workers (Seattle) |
| Wyoming | 0% | 4% | ~0.57% | Outdoors, low overall taxes |
| South Dakota | 0% | 4.5% | ~1.28% | Retirees, low density |
| Alaska | 0% | None (local varies) | ~1.19% | Adventurous, PFD bonus |
| Tennessee | 0%* | 7% (+local) | ~0.71% | Music scene, growing cities |
| New Hampshire | 0% | None | ~2.18% | No sales tax, Boston access |
What You'll Actually Save
Here's the real-dollar impact of moving from high-tax to no-tax states:
| Salary | CA Tax Paid | NY Tax Paid | Savings (to TX/FL) |
|---|---|---|---|
| $75,000 | $4,800 | $5,100 | $4,800-5,100 |
| $100,000 | $7,200 | $7,500 | $7,200-7,500 |
| $150,000 | $12,500 | $13,200 | $12,500-13,200 |
| $200,000 | $18,800 | $19,500 | $18,800-19,500 |
| $300,000 | $31,500 | $32,000 | $31,500-32,000 |
Beyond Income Tax: Total Tax Burden
Smart tax planning considers all state and local taxes:
- Property tax: Texas's ~1.63% vs California's ~0.76% can erase income tax savings for homeowners with expensive properties. Rates vary significantly by county.
- Sales tax: Washington's 10%+ combined rate (Seattle area) adds up for big spenders.
- Vehicle taxes: Some states charge significant annual registration fees based on vehicle value.
- Estate/inheritance tax: Washington, Oregon, and others tax estates—important for wealth transfer planning.
Best States by Situation
The 'best' tax state depends on your specific circumstances:
- High W-2 earners: Florida or Texas (no income tax, reasonable property taxes)
- Retirees on fixed income: Florida (no income tax, no estate tax, senior exemptions)
- Business owners: Nevada or Wyoming (no corporate tax, strong asset protection)
- High net worth: South Dakota or Nevada (no income tax, favorable trust laws, no estate tax)
- Remote tech workers: Texas (no income tax, growing tech scene, reasonable cost of living)
States to Avoid for Tax Purposes
| State | Top Income Tax | Combined Burden | Why It's Expensive |
|---|---|---|---|
| California | 13.3% | Very High | Highest income tax + high property + high sales |
| New York | 10.9% | Very High | High income + NYC tax + high property |
| New Jersey | 10.75% | Highest | High income + highest property tax in US |
| Oregon | 9.9% | High | High income (no sales tax offset) |
| Minnesota | 9.85% | High | High income + cold weather bonus |
Making the Move: Tax Considerations
- Timing: Move early in the calendar year to minimize taxes owed to your former state.
- Establish domicile: Get a new driver's license, register to vote, and update all records immediately.
- Be thorough: Some states (California, New York) aggressively audit former residents. Document your move extensively.
- Capital gains: Selling investments? Consider timing around your move. California taxes capital gains as ordinary income.
- Remote work: Some states tax income earned 'while working in' the state, even temporarily. Understand your employer's policies.