While every American worker pays federal income tax, state income tax varies significantly. Some states have high progressive rates, others have flat rates, and nine states currently have no income tax at all on earned wages. Finding the states with lowest taxes is often a top priority for those looking to maximize their take-home pay.
The Nine Best Tax Friendly States in 2026
If you use an annual income calculator to project your earnings, you'll find that living in one of these tax friendly states can save you thousands of dollars each year. These regions are often cited as the states with lowest taxes overall for working professionals.
Calculate Your Tax Return Estimate
Before moving, it's wise to run your numbers through a taxes paid calculator. This helps you understand your potential tax return estimate and how much you'll actually save by moving to a state with no income tax. Remember that federal obligations still apply regardless of where you reside.
How Do These States Fund Themselves?
States without income tax typically rely on other revenue sources to fund public services like schools, roads, and emergency services. Even in the states with lowest taxes, you may encounter other costs:
- Sales Tax: Many of these states have higher-than-average sales tax rates (e.g., Tennessee and Washington).
- Property Tax: Higher property taxes are common in states like Texas and New Hampshire.
- Natural Resource Revenue: Alaska funds much of its budget through oil and gas severance taxes.
- Tourism Taxes: Nevada and Florida generate significant revenue from taxes on hotels, gambling, and entertainment.
Looking for more tools? Use our annual income calculator to see how different tax models impact your lifestyle across all 50 states.