What state does not pay income tax?

Several States Offer Residents a Break from Income Tax

In the landscape of American taxation, a handful of states stand out for a distinctive feature: they do not levy a state income tax on their residents. This fiscal policy sets them apart and often makes them attractive destinations for individuals and businesses alike.

States Without Income Tax

As of the current date, there are nine states that do not impose a state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, Tennessee, and New Hampshire. Tennessee and New Hampshire, however, do tax dividends and interest income, but they do not tax wages.

Implications for Residents and State Revenue

The absence of a state income tax can have various implications. Residents may enjoy a lower overall tax burden, potentially increasing their disposable income. However, these states must find alternative ways to generate revenue to fund public services. This often results in higher sales taxes, property taxes, or fees, which can disproportionately affect lower-income residents.


Q: What is a state income tax?
A: A state income tax is a tax levied by a state on the income of its residents and businesses within its jurisdiction.

Q: How do states without an income tax fund their services?
A: They typically rely on other forms of taxation, such as sales taxes, property taxes, and various fees.

Q: Are there any states that only tax certain forms of income?
A: Yes, Tennessee and New Hampshire only tax dividends and interest income, not wages.


State Income Tax: A tax imposed by a state on the income earned by individuals and entities within that state.
Disposable Income: The amount of money that households have available for spending and saving after income taxes have been accounted for.
Dividends: A distribution of a portion of a company’s earnings to its shareholders.
Interest Income: Income earned from the lending of money or from the investment in interest-bearing accounts.






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