When people plan a move, the phrase “no state income tax” instantly grabs attention. States like Texas, Florida, and Washington are famous for letting you keep more of your paycheck, but the full picture is more complex. Taxes show up in many ways—through sales tax, property tax, fees, and overall cost of living. Before you pack your boxes and change your address for tax reasons, it’s crucial to understand how state income tax vs. no-tax states really affects your wallet and lifestyle.
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This guide breaks down how income-tax and no-tax states work, compares popular states like TX, FL, and WA, and explains what movers should think about—beyond just their tax rate—so you can relocate with confidence.
What Does “No State Income Tax” Actually Mean?
“No state income tax” sounds simple, but there are important details you need to know before moving.
True No-Income-Tax States
As of recent years, these states do not tax earned personal income at the state level:
- Texas (TX)
- Florida (FL)
- Washington (WA)
- Alaska (AK)
- Nevada (NV)
- South Dakota (SD)
- Tennessee (TN) – no tax on wages (previously taxed some investment income)
- Wyoming (WY)
- New Hampshire (NH) – no tax on wages, but historically taxed some interest/dividends
In most of these states, your salary, wages, and self-employment income are not taxed by the state. However, federal income tax still applies, and local taxes and other state taxes may still affect you.
No Income Tax Doesn’t Mean “No Taxes”
States still need money to fund schools, roads, healthcare, and public safety. If a state doesn’t tax income, it usually makes up for it in other areas:
- Higher sales tax (including local add-ons)
- Higher property tax rates or rapidly rising property values
- Fees and specific taxes (vehicle registration, tolls, business licensing)
- Excise taxes on gas, cigarettes, alcohol, etc.
So, while you may pay zero on your paycheck to the state, you could easily pay more when you shop, drive, or own a home.
How State Income Tax Works in Taxed States
States that do have an income tax can vary a lot. Some are relatively low-tax, others are more expensive—but they may offer strong public services in return.
Flat vs. Progressive Income Tax
Income-tax states generally use one of two systems:
- Flat tax: One rate for everyone (for example, 4%), regardless of income.
- Progressive tax: Higher income = higher tax brackets and rates.
Examples:
- California: Highly progressive with multiple brackets and higher top rates.
- New York: Progressive rates, plus some local income taxes (e.g., New York City).
- Colorado: Historically used a flat income tax rate.
What Income Taxes Help Pay For
In many income-tax states, tax dollars heavily contribute to:
- Public schools and universities
- Public transportation
- Healthcare programs
- Social services and infrastructure
This can translate into better-funded services, depending on how efficiently the state manages its budget.
Comparing State Income Tax vs. No-Tax States: It’s About the Whole Picture
When you’re moving, you shouldn’t just ask, “Is there state income tax?” You should ask, “What will my overall cost of living be?” That includes housing, transportation, sales tax, property tax, and even insurance costs.
Key Cost Categories to Compare
- Income taxes: What you pay the state on your wages or self-employment income.
- Sales taxes: Combined state and local rates on most purchases.
- Property taxes: Percentage of your home’s value paid yearly.
- Housing costs: Rent or home prices (often the biggest expense).
- Insurance and utilities: Especially homeowners’ insurance, flood or hurricane risk, and energy costs.
- Transportation: Gas prices, toll roads, car registration, and parking.
When you add these up, some no-tax states may not actually be cheaper overall than certain income-tax states.
Spotlight on Popular No-Income-Tax States: TX, FL, and WA
Texas, Florida, and Washington are among the most popular destinations for people moving to save on state income tax. Each offers unique pros, cons, and lifestyle differences.
Texas: No Income Tax, Big Housing Market
Texas attracts many families and businesses with its no income tax status and historically lower cost of living than coastal states.
- Pros:
- No state income tax on wages.
- Large job markets in cities like Austin, Dallas, Houston, and San Antonio.
- Relatively affordable housing in many areas (though prices have risen).
- Business-friendly climate.
- Cons:
- Higher property tax rates than many states.
- Higher homeowners insurance in some regions (storms, hail, flooding risk).
- Very hot summers, especially in central and southern Texas.
- Traffic and rapid growth in major metros.
Florida: No Income Tax and Warm Weather Retirement Hub
Florida is famous for retirement communities, sun, beaches, and no income tax.
- Pros:
- No state income tax (appealing to retirees and high earners).
- Popular with remote workers and retirees from the Northeast and Midwest.
- No tax on Social Security benefits from the state.
- Warm climate and outdoor lifestyle almost year-round.
- Cons:
- Hurricane and flood exposure can drive up homeowners and flood insurance.
- Some areas have rapidly rising housing and rental prices.
- High humidity and heat for several months.
- Some tourist-heavy regions can be crowded and expensive.
Washington: No Income Tax with High-Tech Economy
Washington State offers no income tax and strong job markets, especially around Seattle and the tech industry.
- Pros:
- No state income tax on wages.
- Home to major companies and startups (tech, aerospace, logistics).
- Stunning natural scenery: mountains, forests, coastline.
- Outdoor lifestyle and temperate summers in many areas.
- Cons:
- Higher statewide sales tax, plus local add-ons.
- Significant housing costs in the Seattle metro area.
- Cloudy, rainy weather much of the year in western Washington.
- Costs for parking, commuting, and daily living can add up in major cities.
Sample Comparison: Income-Tax State vs. No-Tax State
To illustrate how this plays out, consider a simplified comparison for a household earning $100,000 per year. These numbers are for demonstration only and don’t reflect exact current tax tables, but they show how trade-offs can look.
| Category | No-Tax State (Example: Texas) | Income-Tax State (Example: State with 5% Rate) |
|---|---|---|
| State Income Tax | $0 | ≈ $5,000 |
| Property Tax (on $400,000 home) | ≈ $8,000/year (2.0%) | ≈ $4,000/year (1.0%) |
| Sales Tax (assuming $30,000 taxable spending) | ≈ $2,400 (8%) | ≈ $1,800 (6%) |
| Total (state/local taxes shown) | ≈ $10,400 | ≈ $10,800 |
Even with no income tax, higher property and sales taxes might narrow or erase the advantage. In some households and locations, the no-tax state wins; in others, the income-tax state could cost about the same—or even less—overall, especially if housing is more affordable.
Who Benefits Most from Moving to a No-Income-Tax State?
Not everyone benefits equally from a no-income-tax state. Your job, income type, and lifestyle make a big difference.
High Earners and Remote Workers
For high-income professionals, skipping a 5–10% state income tax can save tens of thousands of dollars per year.
- Example: A professional earning $200,000 leaving a 9% state might save roughly $18,000 per year in state income tax by moving to Texas, Florida, or Washington—before factoring in higher property or sales taxes.
- Remote workers can relocate while keeping their higher-paying job (subject to employer and tax rules).
Retirees and Those with Investment Income
Retirees often consider states with no income tax and favorable treatment of retirement income.
- Some no-tax states don’t tax pensions or withdrawals at the state level.
- Florida, for example, is especially popular with retirees due to no state income tax and no tax on Social Security benefits from the state.
However, insurance costs, HOA fees, and healthcare access must also be weighed carefully.
Small Business Owners and Self-Employed
Entrepreneurs and freelancers can benefit, but should be aware of local business taxes and fees.
- Some no-tax states may have higher business license fees, franchise taxes, or gross receipts taxes.
- Washington, for example, uses a business and occupation (B&O) tax on gross receipts rather than traditional corporate income tax.
Hidden Trade-Offs When Choosing a No-Income-Tax State
Focusing only on your paycheck can cause you to overlook other important issues that affect your life and long-term finances.
Public Services and Infrastructure
Some income-tax states use revenue to support:
- Well-funded public education systems
- Robust public transportation networks
- Extensive social services and community programs
No-income-tax states often rely more heavily on sales and property taxes, and depending on the state, certain services may be more limited or unevenly funded. This isn’t always negative, but it deserves careful comparison if you have children or rely on public transit.
Cost of Housing and Growth Pressure
Many people moving into popular no-tax states has driven up housing prices in certain metro areas.
- Texas cities like Austin and Dallas have seen significant price growth.
- Seattle and surrounding areas in Washington have experienced tight housing markets and rising rents.
- Florida coastal cities and desirable suburbs have become much more expensive over the past decade.
Even without an income tax, high rent or mortgage payments can quickly offset your tax savings.
Tax Residency and “Moving for Taxes”: Important Rules
Relocating for tax reasons is more than just changing your mailing address. States care about where you actually live and work.
Establishing Residency in a New State
To be treated as a resident of a new state, you typically need to:
- Spend more than half the year there (varies by state).
- Change your driver’s license and vehicle registration.
- Register to vote in the new state.
- Update your address for banks, employers, and tax filings.
- Actually live there—own or rent a home, move your family, etc.
Beware of “Sticky” Former States
Some high-tax states are aggressive about claiming you as a resident if they believe you haven’t truly left or still have strong ties.
- Owning property in your old state and spending significant time there can raise questions.
- Continuing to work physically in your former state may mean you still owe income tax there.
It’s wise to consult a qualified tax professional when planning a move mainly for tax benefits.
How to Compare States Before You Move
Choosing between a state with income tax and a no-tax state requires a structured comparison. Think beyond just the rate and build a realistic budget.
Step-by-Step Comparison Checklist
- 1. Calculate your state income tax in your current state.
- Use last year’s return as a guide.
- Estimate this year’s income and apply the tax brackets.
- 2. Estimate your tax situation in the new state.
- If it’s a no-income-tax state, income tax is $0—but factor in other state-specific taxes.
- 3. Compare housing costs.
- Look at rents or home prices in specific neighborhoods.
- Consider HOA fees, condo dues, or special assessments.
- 4. Check property tax rates.
- Find average effective rates and apply them to a realistic home value for you.
- 5. Review sales tax and your spending.
- Estimate your annual spending on taxable goods and apply the combined tax rate.
- 6. Add transportation and insurance costs.
- Car insurance, homeowners insurance, flood or hurricane coverage if needed.
- Commuting costs, tolls, and parking.
- 7. Factor in quality of life and career opportunities.
- Job market strength, networking, industry clusters.
- Family support, schools, climate, outdoor activities.
Using a Simple Comparison Table
Create a basic table comparing your current state with your target no-tax state:
| Category | Current State | New State (No Income Tax) |
|---|---|---|
| Estimated State Income Tax | $ | $0 |
| Property Tax (Annual) | $ | $ |
| Sales Tax (Annual) | $ | $ |
| Housing (Annual Rent/Mortgage) | $ | $ |
| Insurance (Home/Auto) | $ | $ |
| Transportation (Gas/Tolls/Parking) | $ | $ |
| Total Estimated Annual Cost | $ | $ |
This exercise helps you see whether the “no tax” label truly saves you money after all the trade-offs.
Practical Moving Tips When Choosing Between Taxed and No-Tax States
Once you’ve decided where you want to go, organizing a smooth move is the next step. The right planning can save you time, money, and stress.
Time Your Move Thoughtfully
Because tax residency often depends on where you live for most of the year, moving earlier in the calendar year may be more advantageous than moving in December. Confirm rules for both your old and new states and coordinate with a tax professional if needed.
Update Your Records Quickly
- Driver’s license and state ID
- Vehicle registration
- Voter registration
- Employer HR and payroll systems
- Banking, investment accounts, and insurance policies
These updates help clearly establish your new residency and ensure payroll taxes are handled correctly.
Work With a Reliable Moving Company
Whether you’re heading to a no-tax state like Texas, Florida, or Washington, or weighing options across the country, having trusted movers on your side makes the transition smoother. A professional moving company can handle packing, loading, transportation, and timing, so you can focus on paperwork, housing, and your financial plan.
If you’re planning a relocation and want a dependable partner for your move, visit United Local Movers to explore services, get a quote, and schedule your moving date with experienced professionals.
Quality of Life: The Non-Financial Side of the Decision
Taxes matter, but they’re not everything. A financially “perfect” state on paper may not fit your family’s lifestyle or values.
Climate and Environment
- Texas: Hot summers, mild winters, risk of severe storms and hurricanes in some regions.
- Florida: Tropical/subtropical, humid, hurricane risk, beautiful beaches.
- Washington: Milder temperatures in many areas, rainy winters in the west, snowy winters in the mountains and eastern side.
Think about how climate affects your daily life, hobbies, and health.
Community and Culture
Each state has distinct culture, politics, and lifestyle:
- Major cities vs. small towns
- Local food, arts, and entertainment scenes
- Outdoor recreation options (hiking, skiing, beaches, lakes)
- Community values and pace of life
Spend some time visiting the area, if you can, to test how it feels before committing to a permanent move.
Education and Family Considerations
If you have children or plan to, research:
- Public and private school quality
- Access to childcare and after-school programs
- Nearby colleges and universities
- Safety, parks, and family-friendly amenities
Sometimes families find that slightly higher taxes are worth it for top-tier schools and services.
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When a No-Income-Tax State Might Not Be Best for You
Despite the appeal, moving to a no-income-tax state isn’t always the right financial or personal choice.
Situations Where You Might Stay Put
- Your current state offers strong job security and growth in your field.
- You rely heavily on public services (transit, specialized schools, healthcare networks) that are excellent where you live.
- Housing in your current area is significantly cheaper than in your target no-tax state.
- You have a strong support network of family and friends you’re not willing to leave.
In these cases, modestly higher taxes could still be worth paying, especially if overall cost of living is similar or even lower than in a no-tax state.
Key Takeaways: Balancing Taxes, Costs, and Lifestyle
Choosing between a state with income tax and a no-income-tax state like Texas, Florida, or Washington should be a careful, numbers-driven decision balanced with your lifestyle preferences.
- No-income-tax states can offer meaningful savings, especially for high earners, retirees with substantial income, and remote workers.
- Higher property and sales taxes—and sometimes higher housing and insurance costs—can eat into or offset those savings.
- The “best” state for you depends on your salary, assets, family situation, and what you value in daily life.
- Always look at the total cost of living, not just the income tax rate.
- Professional advice from a tax expert and an experienced moving company can help your transition be both financially smart and logistically smooth.
When you’re ready to turn your decision into action, teaming up with a reliable mover will make the process easier from start to finish. With careful planning, you can enjoy the financial and lifestyle benefits of your new state—whether it has an income tax or not.
United Local Movers is here to help you make your move as efficient and stress-free as possible, so you can focus on settling into your new home, understanding your new tax landscape, and enjoying this next chapter in your life.
