7 Best States To Live With No Income Tax in 2026
State taxes can vary widely across the United States, covering things like income, sales and property. There are currently nine states that don't tax wages or salaries at all, which might sound like an easy way to keep more of each paycheck. But the real benefit depends on how living costs and other taxes affect everyday finances. Plus, remember -- the federal government still taxes your income regardless of what state you live in.
Out of the states with no income tax, here are the ones where earnings can stretch the furthest without higher costs or taxes eating into people's paychecks.
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Best States With No Income Tax
Wyoming
State Tax Competitiveness Index ranking: 1st
Cost of living: $1,743
Average monthly earnings: $4,979
Wyoming sets the benchmark. Living costs are the lowest on this list, and it ranks top on the Tax Foundation's State Tax Competitiveness Index (2026), which rates the overall tax environment of each state. Earnings comfortably outpace expenses, creating one of the widest monthly cushions among no-income-tax states.
South Dakota
State Tax Competitiveness Index ranking: 2nd
Cost of living: $1,922
Average monthly earnings: $4,487
Living costs are low here, and the state ranks second overall for tax competitiveness. Average earnings comfortably cover averages expenses, making take-home pay stretch further than in many other states.
New Hampshire
State Tax Competitiveness Index ranking: 3rd
Cost of living: $2,535
Average monthly earnings: $5,144
New Hampshire ranks third for overall tax competitiveness and delivers solid average earnings, though monthly costs are slightly higher than the national average of $2,516.
Alaska
State Tax Competitiveness Index ranking: 4th
Cost of living: $2,440
Average monthly earnings: $5,783
Alaska combines high average earnings with living costs just below the national average. The Alaska Permanent Fund adds extra cash, meaning take-home pay can stretch even further, even with higher costs in remote areas.
Florida
State Tax Competitiveness Index ranking: 5th
Cost of living: $2,547
Average monthly earnings: $5,128
Florida offers solid earnings with living costs near the national average, and it comes in the top five in terms of its overall tax environment.
Tennessee
State Tax Competitiveness Index ranking: 8th
Cost of living: $2,198
Average monthly earnings: $4,691
Tennessee combines below-average living costs with strong earnings and is in the top 10 most tax competitive states overall.
Texas
State Tax Competitiveness Index ranking: 7th
Cost of living: $2,132
Average monthly earnings: $5,436
The state's lower-than-average living costs and strong average wages paired with no income tax is positive; however, other taxes are high here. For example, it ranks at No. 38 on the State Tax Competitiveness Index for property taxes.
States With Higher Costs or Tax Challenges
Nevada
State Tax Competitiveness Index ranking: 20th
Cost of living: $2,395
Average monthly earnings: $4,788
Nevada doesn't rank as highly for tax competitiveness, with higher sales taxes plus a payroll tax on wages meaning paychecks don't go as far as in some other no-income-tax states.
Washington
State Tax Competitiveness Index ranking: 45th
Cost of living: $2,644
Average monthly earnings: $6,452
Washington may have the highest average earnings of all the no-income-tax states, but cost of living here is high and it's among the 10 worst states for overall tax friendliness. Combined state and local sales taxes are high at 9.47%, estate taxes can reach up to 35% and the state now charges a capital gains tax on high earners.
Editor's note: The cost of living per person before rent was sourced from from Livingcost.org; average monthly earnings were sourced from the latest U.S. Bureau of Labor Statistics (BLS) data.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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