In the US, there are several states that have no income tax. It is important to bear in mind, however, that income tax is only one way a state gathers money to pay for its expenses. The following states are income tax free states: Wyoming, Washington, Texas, South Dakota, Nevada, Florida and Alaska. New Hampshire and Tennessee only charge income tax on income that is derived from interest or stock dividends.
This doesn't mean that people should immediately move to one of these states to pay no income tax. Usually state income tax is fairly low, and states use other means to fill their coffers. These can include sales tax, taxes on property, luxury taxes, taxes on corporate profits, and taxes on state activities. For instance, Nevada gets much of its revenue from taxes assessed on gambling activity. Only one state, Alaska, charges no income tax and no sales tax either.
How much a person will pay in taxes depends on their assets, and in most states there are some breaks in property tax charges for people of low income or for people over a certain age. When this is compared with cost of living in certain states, whether a state charges no income tax, a "no tax" state may not be the most affordable state, especially for certain age groups or income ranges.
Some states with no income tax may be particularly challenging ones to live in. Alaska, though it has the double benefit of no income tax and no sales tax, has many rural areas and harsh winters that can make it unattractive as a state of choice to live in. Of course, there are many people who adore their state of Alaska and wouldn't live elsewhere. The cost of living may be high, however, and certain necessities can be far out of reach in remote areas, making it not an ideal state, especially for people of little means or with limited mobility.
Florida, on the other hand, with its dual benefit of no income tax and no tax on property, often makes an ideal retirement spot for some people, and explains the higher number of retirees that choose to make their homes there. Though Florida can boast beautiful weather much of the year, there are occasional hurricanes and storms that can be severe, and anyone living there, especially with reduced mobility or straightened means, should have a good support system in place to help them during emergencies.
Before anyone makes a move, they should also consider the effects of local taxes. Some counties, cities, and municipalities are able to charge higher sales taxes or add on to property taxes. These can make a difference in overall cost of living and might determine which states and areas in states are least expensive. Price of relocation could also nullify effects of paying no income taxes for years to come.
