Quick Answer
Yes, they absolutely do. Texas has a 1.68% average property tax rate versus 0.75% nationally, while Washington's sales tax averages 9.29% versus 7.12% nationally. No-income-tax states generate 23% more revenue from property taxes and 18% more from sales taxes compared to the national average.
Best Answer
Sarah Chen, Payroll Tax Analyst
Workers considering relocation who want to understand the full tax picture beyond just income taxes
How no-income-tax states fund their governments
Absolutely — states without income taxes make up for lost revenue through significantly higher property taxes, sales taxes, and various fees. According to the Tax Foundation, no-income-tax states collect 23% more revenue from property taxes and 18% more from sales taxes than the national average.
Property tax comparison
Property taxes are the biggest "hidden" cost in no-income-tax states:
Texas homeowners pay roughly $2,600 more annually in property taxes than the national average on a typical home.
Sales tax reality check
Sales taxes in no-income-tax states are notably higher:
On $25,000 in annual taxable purchases, Washington residents pay about $543 more in sales tax than the national average.
Example: Total tax burden for $75,000 earner
Let's break down the real costs for someone earning $75,000 with a $300,000 home:
Texas (no income tax):
Ohio (moderate income tax):
The difference is only $437 — much smaller than most people expect.
Other ways they make up revenue
The income level factor
The "make up" effect hits different income levels differently:
What you should do
Calculate your total tax burden, not just income tax. Factor in:
1. Property taxes on your likely home value
2. Sales tax on your spending patterns
3. Any special local taxes or fees
4. Federal deductibility (SALT cap limits this to $10,000)
Use our paycheck calculator to model different scenarios based on your actual income and housing situation.
Key takeaway: No-income-tax states collect 23% more from property taxes and 18% more from sales taxes than average. High earners still come out ahead, but middle-income workers often pay similar total taxes.
*Sources: [Tax Foundation State-Local Tax Burdens](https://taxfoundation.org/state-local-tax-burdens/), [IRS Publication 17](https://www.irs.gov/pub/irs-pdf/p17.pdf)*
Key Takeaway: No-income-tax states collect 23% more from property taxes and 18% more from sales taxes, making total tax burdens more similar than most people realize.
Property tax rates comparison between no-income-tax and traditional tax states
| State | Property Tax Rate | On $300k Home | Income Tax Rate |
|---|---|---|---|
| Texas | 1.68% | $5,040/year | 0% |
| Florida | 0.89% | $2,670/year | 0% |
| Washington | 0.94% | $2,820/year | 0% |
| Nevada | 0.60% | $1,800/year | 0% |
| National Average | 1.07% | $3,210/year | Varies |
| California | 0.75% | $2,250/year | 1-13.3% |
| New York | 1.30% | $3,900/year | 4-10.9% |
More Perspectives
Sarah Chen, Payroll Tax Analyst
Remote workers who can choose where to live and want to understand all tax implications
Remote workers face unique tax trade-offs
As someone who can live anywhere, you need to look beyond just income taxes. No-income-tax states definitely make up for lost revenue, but the impact on your budget depends on your lifestyle and spending patterns.
Key insight: Remote workers often have different spending patterns than traditional workers — you might buy more online (subject to sales tax), own a larger home (higher property taxes), or travel more frequently (hotel/rental car taxes).
Smart state selection for remote workers
Best overall value (considering all taxes):
1. Wyoming - Low property taxes (0.62%), reasonable sales tax (5.36%), minimal fees
2. South Dakota - Moderate property taxes (1.31%), low sales tax (6.40%)
3. Alaska - No sales tax statewide, moderate property taxes, but high cost of living
Avoid if you're cost-conscious:
Calculate your real savings
Consider a remote worker earning $120,000:
Colorado (4.4% income tax):
Texas (no income tax):
Savings: $572/year — much less dramatic than the $5,280 income tax difference suggests.
Don't forget federal implications
The SALT deduction cap ($10,000 for 2026) means you can't fully deduct high state/local taxes anyway. This reduces the federal tax benefit of living in high-tax states and makes no-income-tax states relatively more attractive.
Bottom line for remote workers: The tax savings are real but modest unless you're earning $150,000+. Factor in cost of living, internet infrastructure, and quality of life — taxes alone shouldn't drive your decision.
Key takeaway: Remote workers save money in no-income-tax states, but higher property and sales taxes reduce savings to $500-2,000 annually for most middle-income earners.
Key Takeaway: Remote workers benefit from no-income-tax states, but higher property and sales taxes reduce actual savings to $500-2,000 annually for most earners.
Sources
- Tax Foundation State-Local Tax Burdens — Annual analysis of state and local tax burden by state
- IRS Publication 17 — Federal tax rules including SALT deduction limitations
Related Questions
Reviewed by Sarah Chen, Payroll Tax Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.