Why Zero Income Tax States Attract Millions of Workers
In recent years, millions of American workers and remote employees have relocated to states like Florida, Texas, and Washington to shield their earned wages from state income taxes. In states like California, top earners face marginal income tax rates up to 13.3%, while New York City residents pay combined state and city rates exceeding 14.7%.
On a $100,000 annual salary, living in a zero-income-tax state typically saves an employee between $3,500 and $6,000 per year in state withholdings compared to an average-to-high tax state.
List of the 9 No-Income-Tax States & How They Fund Government
States require revenue to operate schools, police forces, highways, and infrastructure. If they don't levy personal income tax, they collect revenue through other statutory mechanisms:
Oil & gas mineral extraction royalties, Permanent Fund Dividend (PFD).
High tourism sales tax, documentary stamp tax, lodging/hotel occupancy taxes.
Gaming / casino taxes, hospitality sales taxes, modified business tax.
High local property taxes (interest & dividend tax phased out in 2027).
Retail sales tax, wholesale taxes, corporate bank franchise tax.
High state sales tax (7.0% state baseline + up to 2.75% local).
High county and school district property taxes (1.6% - 2.2% effective rate).
Business & Occupation (B&O) gross receipts tax, 7% high-earner capital gains tax.
Mineral severance taxes on coal, oil, and natural gas; property taxes.
Direct Comparison: Take-Home Pay on a $100,000 Salary (Single Filer)
Based on 2026 baseline IRS formulas and state statutory rules (Single filer, standard deduction, no pre-tax benefits):
| State | State Tax Rate | State Tax Paid | Annual Take-Home | Bi-Weekly Paycheck |
|---|---|---|---|---|
| Texas (TX) | 0.00% | $0.00 | $78,806.00 | $3,031.00 |
| Florida (FL) | 0.00% | $0.00 | $78,806.00 | $3,031.00 |
| Illinois (IL) | 4.95% Flat | -$4,814.00 | $73,992.00 | $2,845.85 |
| New York (NY) | Progressive (4% - 6.5%) | -$5,122.00 | $73,684.00 | $2,834.00 |
| California (CA) | Progressive + SDI 1.2% | -$6,488.00 | $72,318.00 | $2,781.46 |
*Comparison notes: An employee making $100k keeps nearly $6,488 more per year in Texas or Florida than in California, equating to an additional $249 per bi-weekly paycheck.
The Hidden Trade-Offs: Is Moving Always Cheaper?
Financial advisors caution against evaluating state relocations solely on state income tax withholding. Total tax burden and cost of living include:
Texas and New Hampshire have some of the highest property tax rates in the nation (often 1.6% to 2.2% of assessed value). On a $500,000 home in Texas, property taxes can exceed $10,000 per year, offsetting a substantial portion of income tax savings for homeowners.
Tennessee and Washington rely heavily on sales tax, with combined state and local sales rates reaching 9.5% to 10.3%. In Florida, homeowners insurance rates have escalated dramatically due to hurricane risk.
Compare Any Two States on Your Exact Salary
Use our interactive state calculator to see your net take-home salary across all 50 US states.