No Income Tax States: What They Charge Instead
Washington has no income tax and two payroll premiums. Texas has neither and higher property taxes. The comparison is never just the income tax.
Nine states do not tax wage income. What they charge instead varies enormously, and in one case the employee payroll deductions are larger than several states' income tax.
What actually comes out
| State | Income tax | Employee premiums | Total state-level deductions |
|---|---|---|---|
| Alaska | $0 | $271 | $271 |
| Florida | $0 | $0 | $0 |
| Nevada | $0 | $0 | $0 |
| New Hampshire | $0 | $0 | $0 |
| South Dakota | $0 | $0 | $0 |
| Tennessee | $0 | $0 | $0 |
| Texas | $0 | $0 | $0 |
| Washington | $0 | $1,665 | $1,665 |
| Wyoming | $0 | $0 | $0 |
What is not in that table
Property tax, which in Texas is among the highest in the country and does a great deal of the work an income tax would otherwise do. Sales tax, which Washington and Tennessee both lean on heavily. And in Alaska, an employee unemployment insurance contribution, which almost no other state charges the worker for.
The honest version of the comparison is that a state has to raise money somehow, and the absence of an income tax tells you where it does not come from rather than that it costs less overall.
The Washington change
Washington has enacted a 9.9 per cent income tax on individuals with income over $1,000,000 from 1 January 2028, with first returns due in 2029. It does not affect 2026 and it will not affect most people at all, but it does mean any hard-coded 'Washington has no income tax' rule has a shelf life.
The numbers this sits on
| State | Federal | FICA | State | Premiums | Take-home | Effective rate |
|---|---|---|---|---|---|---|
| Texas | $17,570 | $9,180 | $0 | $0 | $93,250 | 22.3% |
| Florida | $17,570 | $9,180 | $0 | $0 | $93,250 | 22.3% |
| Washington | $17,570 | $9,180 | $0 | $1,665 | $91,585 | 23.7% |
| North Carolina | $17,570 | $9,180 | $4,387 | $0 | $88,863 | 25.9% |
| Colorado | $17,570 | $9,180 | $5,038 | $528 | $87,684 | 26.9% |
| New York | $17,570 | $9,180 | $6,203 | $443 | $86,604 | 27.8% |
| California | $17,570 | $9,180 | $7,606 | $1,560 | $84,084 | 29.9% |
| Oregon | $17,570 | $9,180 | $8,920 | $840 | $83,490 | 30.4% |
Federal withholding is identical in every row, because it is federal. Everything else moves, and the spread between the best and worst row on $120,000 is $9,760 a year. That is real money and it is still usually smaller than the rent difference between the same two places.
Two rules worth carrying away
Your bracket is not your tax rate. The bracket tells you what the next dollar costs; your average across the year is usually about ten points lower. Use the marginal rate for decisions and the effective rate for understanding what you paid.
A Section 125 benefit beats an equal 401(k) contribution on take-home. Section 125 escapes Social Security and Medicare as well as income tax; a traditional 401(k) escapes income tax only. That is 7.65 cents in the dollar, every dollar, and it is the reason to fill a health or dependent care election before adding to the 401(k) beyond the employer match.
Three states break from the federal rules on top of that: Pennsylvania taxes 401(k) deferrals going in, and California and New Jersey do not recognise HSA contributions. If you are in one of those, the arithmetic above shifts and the relevant state page says how.
Work it out
Figures on this page are for the 2026/27 tax year (6 April 2026 to 5 April 2027) and were last checked on 29 August 2026. Every rate we use is listed on the sources page.