Could moving to a no-income-tax state actually cost you more money in retirement? Nine states collect zero state income tax heading into the 2026 tax year. But each one quietly recovers that revenue somewhere else — property levies, sales taxes, or fees that hit retirees on fixed incomes especially hard. This guide shows you exactly which states make the list, what hidden costs lurk inside each one, and how to calculate whether relocating actually saves you money.
What You’ll Learn in This Guide
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By the end of this page you will know: the complete 2026 list of no-income-tax states, the hidden costs inside each one, how to calculate your personal savings or loss, and which states offer the best overall deal for Social Security recipients over age 62.
The 9 No-Income-Tax States for 2026: Full List and Key Facts
Read more: States With No Income Tax 2026: 9 States Listed — Plus the Hidden Costs Retirees Miss
The states without income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire taxes only interest and dividend income at a rate that phases to zero by . Every other state on the list already charges zero.
Income Tax in 2026
Sales Tax in Texas
Sales Tax Rate
Tax in New Hampshire
| State | State Sales Tax | Avg. Effective Property Tax | Taxes Social Security? |
|---|---|---|---|
| Alaska | 0% | 1.04% | No |
| Florida | 6.00% | 0.83% | No |
| Nevada | 6.85% | 0.55% | No |
| New Hampshire | 0% | 1.93% | No |
| South Dakota | 4.50% | 1.14% | No |
| Tennessee | 7.00% | 0.66% | No |
| Texas | 6.25% | 1.60% | No |
| Washington | 6.50% | 0.93% | No |
| Wyoming | 4.00% | 0.61% | No |
Sources: Tax Foundation 2026 data; Lincoln Institute of Land Policy. State sales tax rates are base rates; local additions vary.
Hidden Costs That Can Erase Your Income-Tax Savings
Read more: 5 Cheapest States to Retire in 2026: Save $279/Month
Saving on income tax sounds simple. Reality is messier. Here are the four cost categories that most retirees underestimate when relocating to these nine states.
1. Property Taxes
New Hampshire’s effective property tax rate of 1.93% is the highest among the nine. On a $350,000 home, that equals $6,755 per year — about $563 per month, roughly what a used car payment costs. Texas sits at 1.60%, meaning the same home costs you $5,600 annually in property tax alone. Compare that to Nevada at 0.55%, or $1,925 on that same $350,000 home — a difference of $4,830 per year.
2. Sales Taxes
Tennessee’s combined state and average local sales tax rate reaches 9.55%, the highest in the country. A retiree spending $40,000 per year on taxable goods and services pays roughly $3,820 in Tennessee sales tax — that’s about equal to three months of a Medicare Advantage premium budget. Alaska and New Hampshire charge zero state sales tax, though Alaska allows local jurisdictions to levy up to 7.5%.
3. Gas Taxes
Fuel costs are climbing nationwide, and gas tax rates vary sharply by state. Washington charges 49.4 cents per gallon in state gas tax — one of the highest rates in the U.S. A driver logging 12,000 miles annually at 25 mpg burns 480 gallons, paying roughly $237 in Washington gas tax per year. Wyoming charges just 24 cents per gallon, cutting that annual fuel tax to $115.
4. Cost of Living and Housing
Florida’s median home value reached approximately $410,000 in early , according to Zillow Research. That same dollar buys a comparable home in South Dakota for around $265,000. (I calculated this comparison when a reader asked me whether Tampa or Sioux Falls made more financial sense — the answer shocked both of us.) Wyoming’s median home sits near $310,000, making it mid-range among the nine states.
Some states with income taxes are actually better retirement deals. Colorado taxes Social Security but only above a threshold and offers a flat 4.4% income tax rate. Pennsylvania exempts all retirement income — including pensions and 401(k) distributions — from state income tax entirely, despite technically having a 3.07% income tax. For a retiree whose income is mostly Social Security and a pension, Pennsylvania’s effective rate can be zero while its property taxes and sales taxes run lower than Texas or Tennessee.
Which No-Tax State Fits Your Retirement Profile?
If you receive mostly Social Security ($1,800–$3,000/month): Nevada and Wyoming carry the lowest combined tax burden. Low property taxes and moderate sales taxes leave more of your fixed income intact.
If you own a home worth $400,000+: Avoid Texas and New Hampshire. Their property tax rates will cost you $6,400–$7,700 annually regardless of your income level.
If you spend heavily on goods and services ($50,000+/year): Skip Tennessee. Its 9.55% combined sales tax rate hits big spenders harder than income taxes would in many other states.
If you want cold weather and outdoor access: Alaska and Wyoming offer geographic advantages, and both carry modest property tax burdens.
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