The dream of keeping 100% of your state-level earnings is a powerful motivator for many Americans. As inflation and the cost of living continue to rise in 2025, moving to a state with no personal income tax has become a popular strategy for high earners, remote workers, and retirees alike.
But is a 0% income tax rate always a guarantee of massive savings? The answer is: It depends. While you save on your paycheck, states often bridge their budget gaps through higher sales taxes, property taxes, or excise fees.
In this guide, we look at the top 5 most popular tax-free states and analyze how much you can realistically save.
1. Wyoming: The Tax King
Wyoming is consistently ranked as the most tax-friendly state in the U.S. Not only is there no personal or corporate income tax, but the state also boasts some of the lowest property and sales taxes in the country.
- The “Catch”: Wyoming relies heavily on “severance taxes” from oil and coal production. While it’s cheap to live there, job opportunities in certain niche sectors may be limited compared to major tech hubs.
- Savings Potential: A person earning $100,000 in Wyoming could save between $5,000 and $9,000 annually compared to living in a high-tax state like Oregon or California.
2. Florida: The Retiree’s Haven
Florida is a top destination because its constitution prohibits a state income tax. It also has no estate or inheritance tax, making it an ideal choice for wealth preservation.
- The “Catch”: To make up for no income tax, Florida relies on tourism-driven sales taxes. Furthermore, property insurance (especially hurricane coverage) has spiked in 2025, which can eat into your tax savings.
- Savings Potential: High-income earners in Florida see massive benefits, but middle-class families must balance tax savings against rising housing and insurance costs.
3. Texas: High Earnings, High Property Taxes
Texas is famous for its “no income tax” stance, attracting thousands of tech workers and businesses every year.
- The “Catch”: Texas has some of the highest property tax rates in the country (averaging 1.6%–1.8%). If you own an expensive home in Austin or Dallas, your property tax bill might actually be higher than what you would have paid in state income tax elsewhere.
- Savings Potential: Renters and those with modest homes benefit the most in Texas.
4. Tennessee: The Low-Burden State
As of 2025, Tennessee is fully income-tax-free, having successfully phased out the “Hall Tax” on interest and dividends.
- The “Catch”: Tennessee has one of the highest sales tax rates in the nation, often exceeding 9% when combined with local taxes. You don’t pay when you earn, but you pay a lot when you spend.
- Savings Potential: Great for those who are “savers” rather than “spenders.”
5. New Hampshire: No Income, No Sales Tax
New Hampshire is a unique case in 2025. It has no state income tax and no state sales tax. This makes it a “Double-Tax-Free” haven for shoppers and earners.
- The “Catch”: To fund schools and roads, New Hampshire has incredibly high property taxes. If you don’t own real estate (e.g., you are a renter), this state might be your ultimate tax paradise.
- Savings Potential: Extremely high for high-income renters or those with small, efficient properties.
Comparison: $100,000 Salary (No Tax State vs. High Tax State)
| Expense | Wyoming (0% Tax) | California (~9.3% Tax) |
| Gross Salary | $100,000 | $100,000 |
| Federal Tax | ~$14,200 | ~$14,200 |
| State Income Tax | $0 | ~$6,000 |
| FICA (Social Security/Med) | $7,650 | $7,650 |
| Estimated Net Pay | $78,150 | $72,150 |
Note: This is a simplified calculation. Use our U.S. States Salary Calculator for exact numbers, including your specific deductions.
Conclusion: Is it Worth the Move?
Moving to a state with no income tax can save you thousands of dollars, but it’s vital to look at the “Total Tax Burden.” * If you are a high-income earner, you almost always save money.
- If you are a homeowner, check the property tax rates first.
- If you are a big spender, look at the sales tax.
Before you pack your bags, run your current salary through our Salary Comparison Tool to see the real difference in your take-home pay.