Quick Answer
Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For someone earning $75,000, moving from California (13.3% top rate) to Texas could save over $3,000 annually in state taxes.
Best Answer
Sarah Chen, Payroll Tax Analyst
W-2 workers considering state tax implications for their paychecks
Which states have zero income tax?
Nine states impose no state income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. This means your entire state tax withholding goes to zero, directly increasing your take-home pay.
Example: $75,000 salary comparison
Let's compare identical $75,000 salaries in different tax environments:
Texas (no state income tax):
California (high state tax):
The difference: $135 per paycheck or $3,510 annually in additional take-home pay.
State-by-state comparison of lowest rates
Important considerations beyond the rate
Special situations to consider
New Hampshire caveat: While NH has no tax on wages, it does tax dividends and interest income at 5%. If you have significant investment income, this matters.
Alaska bonus: Alaska actually pays residents an annual dividend from oil revenues (around $1,000-$2,000 per person in recent years).
What you should do
Before relocating for tax purposes:
1. Calculate your total tax burden (state + local + property)
2. Factor in cost-of-living differences
3. Consider your employer's location policies
4. Use our paycheck calculator to model different scenarios
[Calculate your take-home pay in different states →](paycheck-calculator)
Key takeaway: The nine no-tax states can save you $2,000-$5,000+ annually on a $75,000 salary, but consider the full picture including property taxes and cost of living.
Key Takeaway: Nine states have no income tax, potentially saving $2,000-$5,000+ annually, but total cost of living matters more than tax rates alone.
Comparison of lowest state income tax rates and potential savings
| State | Income Tax Rate | Annual Savings on $75,000 | Notes |
|---|---|---|---|
| Texas, Florida, Nevada | 0% | $3,500+ | No state income tax |
| Wyoming, Alaska | 0% | $3,500+ | Alaska pays dividends |
| North Dakota | 1.1% - 2.9% | $2,600+ | Low graduated rates |
| Pennsylvania | 3.07% flat | $2,270 | Flat rate, no local variation |
| Indiana | 3.23% flat | $2,100 | Flat rate system |
| Utah | 4.85% flat | $1,860 | Moderate flat rate |
More Perspectives
Sarah Chen, Payroll Tax Analyst
Remote employees who can choose their tax state
Remote work tax planning opportunities
As a remote worker, your state of residence determines your income tax obligation, not where your employer is located. This creates significant tax planning opportunities.
Establishing residency in no-tax states
To claim residency in a no-tax state, you typically need:
Common remote worker scenarios
Scenario 1: You work for a California company but live in Texas
Scenario 2: You live in New York but work remotely
States to avoid as remote workers
Some states have "convenience of employer" rules that tax remote workers even if they're not residents:
If your employer is in these states, consult a tax professional about your obligations.
Key takeaway: Remote workers have unique opportunities to minimize state taxes by choosing their residence strategically, potentially saving thousands annually.
Key Takeaway: Remote workers can choose low-tax states for residence, but must meet residency requirements and beware of 'convenience of employer' rules.
Sources
- IRS Publication 17 — Your Federal Income Tax - includes state tax considerations
- Tax Foundation State Tax Data — Comprehensive state tax rate comparisons
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.