States with no income tax in 2026
Updated on January 26, 2026
Published by
Table of Contents
There are nine US states that do not tax wages or salaries at the state level for income earned in 2025 (reported on tax returns filed in 2026). If you’re an American living abroad, that can make state tax compliance simpler.
What “no income tax” really means (especially if you live overseas)
When people talk about states with no income tax, they usually mean one specific thing:
The state does not tax wages or salaries earned by individuals.
That definition is narrow, and it’s easy to misread it. “No income tax” does not mean any of the following:
- You owe no US taxes
- You’re exempt from federal filing
- The state has no other taxes
- Residency rules disappear
This distinction matters even more if you live abroad. Many expats assume that once they leave the US, state taxes become irrelevant. Sometimes they do. Sometimes they don’t.
States focus heavily on residency and domicile, not just physical location. Depending on your ties, a state may still consider you a resident for tax purposes even if you’ve lived abroad for years.
Important: In this blog, “no income tax” means no state-level tax on wages or salary for individuals. Federal income tax rules still apply worldwide to US citizens.
States with no income tax for the 2025 tax year
Here is the complete and current list for income earned in 2025 and filed in 2026.
States with no state income tax on wages (2025 tax year)
|
State |
state income tax on wages |
notes for americans abroad |
|
Alaska |
none |
Local income taxes may apply in some municipalities |
|
Florida |
none |
Common expat domicile |
|
Nevada |
none |
No wage-based state return |
|
South Dakota |
none |
Simple residency structure |
|
Tennessee |
none |
Income tax fully repealed |
|
Texas |
none |
Residency exits can be scrutinized |
|
Washington |
none (wages only) |
State capital gains tax applies |
|
Wyoming |
none |
Low administrative burden |
|
New Hampshire |
none (2025 onward) |
Interest & dividend tax repealed |
Nine states don’t tax wages at the state level. Washington is included because it doesn’t tax wages, although it does have a capital gains tax on certain long-term gains above thresholds.
Have self-employment income? Contact us today to manage your tax obligations.
2025 update: New Hampshire fully repealed its tax on interest and dividends starting in 2025. That’s why it now appears on updated “no income tax” lists.
Why Americans abroad still care about no-income-tax states
If you live overseas, choosing or maintaining ties to a no-income-tax state usually isn’t about paying less tax. It’s about reducing friction.
Here’s where these states help in real life.
- Fewer state filing questions
- Lower risk of late notices or surprise letters
- Cleaner breaks from prior high-tax states
- Easier long-term compliance while abroad
For digital nomads, retirees, and contractors, state tax issues often show up years later. Usually when something in your finances changes, like a property sale, a retirement withdrawal, or a move back to the US.
No-income-tax states don’t eliminate every risk. However, they remove one of the most common triggers, which is wage taxation.
Note: Living abroad doesn’t automatically end state residency. States look at intent, ties, and history. No-income-tax states simply reduce what’s at stake if residency is questioned.
Common traps to watch for (even in no-income-tax states)
Even if a state doesn’t tax wages, that doesn’t mean it ignores you entirely.
Here are the issues we see most often with Americans abroad:
- Moving overseas does not automatically end state residency
- Old addresses, voter registration, or driver’s licenses still matter
- Capital gains may be taxed even when wages aren’t
- Local or municipal taxes can still exist
- States often review intent, not just location
Washington is the most common example of this distinction in practice. While wages aren’t taxed, certain capital gains can still trigger state tax.
State tax problems often appear after a major financial event, not during quiet years abroad. By then, penalties and interest may already apply.
No income tax vs low-income tax states
You’ll often see no-income-tax states grouped together with low-income tax states. For Americans abroad, that shortcut can be misleading. A lower rate doesn’t always mean fewer forms, fewer questions, or less hassle.
Here’s a simple comparison that shows why the distinction matters for Americans abroad:
| Factor | No income tax states | Low-income tax states |
| wage tax | 0% | reduced but present |
| filing risk | lower | moderate |
| residency scrutiny | medium | often higher |
| expat suitability | often strong | situation-dependent |
Low-tax states still require filings. They still send notices. They still argue residency. The rate may be small, but the compliance burden isn’t.
For Americans abroad, clarity usually beats marginal savings.
How no-income-tax states fit into US expat taxes overall
State taxes are only one layer of the system. Even if your state doesn’t tax wages, US citizens abroad still have federal obligations, including:
- federal income tax
- worldwide income reporting
- foreign income exclusions or credits
- information returns
No-income-tax states don’t change federal law. They simply remove one moving part.
That matters because expat tax compliance already has enough complexity. Fewer authorities mean fewer deadlines, fewer forms, and fewer surprises.
FAQs
-
Do states with no income tax ever require a state tax return?
Sometimes, yes. Even without a wage tax, a state may require a filing if you have other connections, such as business income, capital gains, or unresolved residency issues from prior years.
-
If I move abroad, do I automatically lose my state residency?
-
Can a state with no income tax still tax investment income?
-
Can I rely on a no-income-tax state to avoid state tax issues entirely?
Prefer to talk it through? Schedule your free callback today.
Spread the word. Please share… 👉
