Living in No Income Tax States

There are a total of seven states in the US that do not levy income taxes and there are the other two states that do not levy taxes on wage income. There are a lot of people who are of the view that living in these states in the US might be quite appealing. This is because they expect their paychecks to be higher if they choose to live in any one of these states. However, there are a number of factors that need to be considered before jumping for a move to these states. The non income tax states in the US include Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Apart from this, Tennessee and New Hampshire are the states that do not levy taxes on wage income.

No Income Tax StatesIs it a Good Thing that these States do not Levy Income Tax?

People who do not have to pay income taxes or the ones living in these states often put forward the claim that there are better job opportunities created in their states. They are also of the view that their states can retain educated professionals and workers more effectively. However, evidence available does not favor these arguments. According to a report presented by the Institute on Taxation and Economic Policy in the year 2013, job growth lagged behind the growth of population in eight out of the nine states in the US that do not tax wages. Another report presented by the center on Budget and Policy Priorities claims that people generally decide the state that they need to live in depending on whether the state has income tax or not. In addition to this, it is important to note that absence of income tax is generally a disadvantage. This is because of the higher rates of property and sales taxes and various other sources of state revenue. For example, Washington State possesses the highest gasoline and sales taxes throughout America; New Hampshire possesses the highest rates on property taxes while Tennessee possesses the highest sales tax rate in the United States.

The Takeaway

Finally, there can be a solid argument made in support of the fact that income tax absence in the states of US is quite unfair for the poor. The taxes levied on the income of an individual tend to be higher for the individuals with high income. On the other hand, property and sales taxes cost low-income individuals more in comparison to their paychecks. This is absolutely unequal for the people who do not have huge earnings.


Just because a state does not have income tax does not mean that an individual in that state will be successful in saving a huge amount of money. It is to be noted that income tax tends to be one of those important financial factors that need to be evaluated prior to deciding the state where an individual wants to live.

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