Texas collects zero dollars in state income tax — yet a retiree in San Antonio owning a $280,000 home pays roughly $4,800 a year in property taxes, nearly double what the same retiree owes in Henderson, Nevada. Nine states enter with no broad-based income tax. But “no income tax” is not the same as “low tax.” The hidden costs buried in sales levies, fuel surcharges, and property assessments tell a radically different story — especially for retirees on fixed incomes.
The nine no-income-tax states for are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Each offsets lost revenue differently. New Hampshire leans on property taxes averaging 1.93% effective rate. Texas pairs its zero income tax with sales taxes reaching 8.25%. Washington imposes a 7% capital gains tax on gains above $262,000. For retirees, the smartest move is calculating total tax burden — not just the income tax line.
income tax in 2026
a $60K Wyoming salary
in Tennessee (no income tax)
in New Hampshire
Why Retirees Are Moving to These Nine States Right Now
Read more: Cheapest States to Live in America
The math is simple on its surface. A retiree drawing $60,000 annually from a 401(k) in Cheyenne, Wyoming keeps every dollar of that at the state level. The same distribution in Iowa triggers a 3.8% state rate, costing roughly $2,280 per year. Over a 20-year retirement, that gap compounds past $45,600 — before investment growth.
Florida remains the dominant retirement magnet. The Villages, the massive retirement community straddling Sumter and Marion counties, added thousands of new residents between and . Florida exempts all Social Security income and charges no state income tax. A retired couple living on $55,000 combined — Social Security plus modest IRA draws — can rent a two-bedroom villa in The Villages for roughly $1,800/month, about what a one-bedroom rents for in Phoenix.
But Florida’s appeal is shifting. Henderson, Nevada (population 330,000+, founded ) is drawing retirees from California at record pace. Nevada’s effective property tax rate sits near 0.44% — one of the lowest in the country. A $350,000 home there generates roughly $1,540/year in property taxes. Comparable California homes in Sacramento County generate over $3,500.
The Full Cost Breakdown: What Retirees Actually Pay in Each State
| State | Income Tax | Effective Property Tax | State Sales Tax | SS Benefits Taxed? |
|---|---|---|---|---|
| Alaska | None | ~1.04% | None (locals vary) | No |
| Florida | None | ~0.83% | 6% | No |
| Nevada | None | ~0.44% | 6.85% | No |
| New Hampshire | None (as of 2025) | ~1.93% | None | No |
| South Dakota | None | ~1.01% | 4.5% | No |
| Tennessee | None | ~0.45% | 7% (up to 9.75%) | No |
| Texas | None | ~1.60% | 6.25% (up to 8.25%) | No |
| Washington | None (wages) | ~0. 84% |
6.5% (up to 10.4%) | 7% capital gains tax |
| Wyoming | None | ~0.55% | 4% (up to 6%) | No |
Sources: Tax Foundation, IRS.gov, individual state revenue department websites. Property tax rates reflect effective statewide averages; local rates vary significantly by county.
Washington State’s Fine Print: The Capital Gains Tax
Washington is not a clean “no income tax” state for high earners. Since , Washington levies a 7% capital gains excise tax on long-term gains above ~$270,000 per year (threshold adjusts annually for inflation). The state Supreme Court upheld it in .
If you sell a business, a stock portfolio, or investment property in King County and clear $1 million in gains, you owe Washington $51,100 — calculated as 7% of the $730,000 above the threshold. That’s real money. Retirees with large brokerage accounts or small-business owners planning an exit should price this in carefully before relocating to Seattle or Bellevue.
Wages, salaries, Social Security, and retirement account distributions remain untaxed. The hit is targeted but steep for investment-heavy households.
New Hampshire: Finally a True Zero in 2026
Read more: 9 States With No Income Tax in 2026 — and the Hidden Costs
For decades, New Hampshire taxed interest and dividend income at 5% — the so-called “I&D tax.” The legislature phased it out gradually, and as of , it is fully gone. In , New Hampshire is a genuine zero-income-tax state for the first time in modern history.
The trade-off is property taxes. Hillsborough County — home to Manchester and Nashua — carries effective property tax rates near 1.93%. On a $450,000 home (roughly the 2026 median in southern New Hampshire), that’s $8,685 per year in property taxes alone. There is no statewide sales tax, which partially softens the blow.
What You’ll Actually Pay: Real Numbers, Real Places
Abstract percentages mislead. Here’s what the annual tax picture looks like for a household earning $85,000/year, owning a median-priced home, in six specific no-income-tax cities — compared against a comparable household in Portland, Oregon (9.9% top marginal rate).
Austin, TX (Travis County)
Median home: ~$495,000 ·
- 🏠 Property tax: ~$8,415/yr (1.7% eff.)
- 🛒 Sales tax (city): 8.25%
- 💼 State income tax: $0
- 📊 Est. total state/local burden: ~$11,200/yr
⚠ High property taxes offset the income tax savings substantially.
Nashville, TN (Davidson County)
Median home: ~$415,000 ·
- 🏠 Property tax: ~$1,865/yr (0.45% eff.)
- 🛒 Sales tax (city): 9.25%
- 💼 State income tax: $0
- 📊 Est. total state/local burden: ~$7,100/yr
✅ Low property taxes make Tennessee genuinely lean for homeowners.
Las Vegas, NV (Clark County)
Median home: ~$425,000 ·
- 🏠 Property tax: ~$2,338/yr (0.55% eff.)
- 🛒 Sales tax (city): 8.375%
- 💼 State income tax: $0
- 📊 Est. total state/local burden: ~$7,400/yr
✅ Among the lowest property tax burdens in the no-income-tax group.
Frequently Asked Questions
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