Research Report
States With Lowest Income Tax 2026
Last updated: June 2026 — 3 data sources
Key Takeaways
- Nine states have no income tax, saving residents significant annual tax costs.
- Flat tax states like Pennsylvania (3.07%) and Michigan (4.25%) offer low, predictable rates.
- No-income-tax states often offset with higher property or sales taxes.
- Use our salary calculator to compare take-home pay across states with different tax structures.
Key Findings
- Nine US states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
- States with no income tax generally rely on higher sales taxes or property taxes to generate revenue.
- Flat tax states like Illinois (4.95%) and Pennsylvania (3.07%) offer simple, predictable tax systems.
- For high earners, the difference between living in a no-income-tax state vs. a high-tax state can be $10,000-$50,000+ per year.
States With No Income Tax (2026)
Nine US states impose no state income tax on earned wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. These states fund government operations through alternative revenue sources including sales taxes, property taxes, and tourism-related revenues.
Residents of these states save significantly on taxes. For example, a worker earning $100,000 in Texas pays no state income tax, while a worker earning the same amount in California could pay over $7,000 in state income tax. However, no-income-tax states often have higher property taxes or sales taxes that partially offset the savings.
Flat Income Tax States
Several states use a flat income tax system where all taxable income is taxed at the same rate. Pennsylvania has one of the lowest flat rates at 3.07%, followed by Illinois at 4.95%, and Michigan at 4.25%. Flat tax systems offer simplicity and predictability but may be less progressive than graduated rate systems.
Flat tax states generally have moderate overall tax burdens compared to progressive tax states. Our salary calculator can estimate take-home pay in any state, accounting for both federal and state income taxes.
Progressive Tax State Comparison
Progressive tax states like California (1.0-13.3%), New York (4.0-10.9%), and Georgia (1.0-5.75%) tax higher incomes at higher rates. While top marginal rates in these states can exceed 10%, the effective tax rate for most taxpayers is significantly lower because only the portion of income in each bracket is taxed at that rate.
When considering relocation, it is important to evaluate the total tax burden across all tax types (income, property, sales) rather than focusing on income tax alone.
Methodology
This report categorizes states by their income tax structure: no income tax, flat tax, or progressive tax. Data is sourced from state revenue departments and tax foundation publications. The analysis considers effective tax rates for different income levels and includes property tax rates as a counterbalance.
Sources
- State Revenue Departments
- Tax Foundation - State Tax Collections
- Federation of Tax Administrators
Frequently Asked Questions
Which states have no income tax?
Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. These states rely on other revenue sources like sales tax and property tax.
Do no-income-tax states have higher other taxes?
Yes, most no-income-tax states have higher-than-average property taxes or sales taxes. Texas has an effective property tax rate of 1.60% (above the national average), while Washington has a high sales tax rate. Always consider the total tax burden, not just income tax.
Related Pages
Official Sources
Canada calculators use data from the following official government agencies:
- Canada Revenue Agency (CRA) — Federal and provincial income tax rates, CPP contributions, and RRSP limits.
- Statistics Canada — Employment data, income statistics, and housing market data.
- Bank of Canada — Interest rates, inflation data, and mortgage rate benchmarks.
Methodology
Our Canadian calculators use federal and provincial tax brackets, CPP/QPP contribution rates, and EI premiums published by the Canada Revenue Agency (CRA). Economic data is sourced from Statistics Canada. Mortgage calculations use Bank of Canada rates and market averages. All figures are for educational purposes.
Data Sources
All tax brackets, contribution rates, and economic data used in our calculators are sourced from the official government publications listed above. Rates are updated at least annually to reflect the latest tax year and regulatory changes. Users should verify critical figures with official sources or qualified professionals.
Last updated: June 2026. Information may change; always verify with official sources.
Last Updated: June 2026 — Reviewed Against Official Sources