These 8 States Don't Have an Income Tax. Should You Move to One of Them?

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  • State income taxes can be a huge burden, so avoiding them may seem appealing.
  • While not having to pay state income taxes could be a source of savings, you should consider factors like cost of living, access to jobs, and amenities before relocating.

It's really only one factor of many to consider.

When we think about paying taxes, we often associate it with owing money to the federal government. But the state you live in could have a huge impact on your overall tax burden. 

State tax rates can range from mild to burdensome, and some states don't actually have an income tax at all. You may be inclined to move to a state with no income tax to save yourself some money and keep more of your wages. But before you do, you'll need to look at the big picture.

The eight states with no income tax

There are eight U.S. states that do not impose state taxes on income:

  1. Alaska
  2. Florida
  3. Nevada
  4. South Dakota
  5. Tennessee
  6. Texas
  7. Washington
  8. Wyoming

Additionally, New Hampshire does not tax earnings from a job, but it does impose taxes on interest income in savings accounts and dividend income you might collect in your brokerage account.

Should you move to a state with no income tax?

You might think that moving to a state with no income tax is a good idea. After all, why part with a chunk of your earnings if you don't have to? But before you make the decision to uproot your life and relocate, ask yourself these important questions.

1. What's the cost of living like?

Some of the states on the list above have expensive property values, property taxes, and living costs. So while you might save yourself some money in the form of not having your wages taxed, you might pay up in the form of taking on a costlier mortgage loan and paying more for things like groceries and childcare. 

2. What's the job market like?

It's nice to not have your earnings taxed. But if you move to a state where jobs aren't plentiful in general or within your industry, then you might struggle to earn a decent wage in the first place. 

3. Will I have access to the amenities I want?

Maybe you're someone who really appreciates having access to eateries, museums, and theater. If you move to a state where those amenities aren't so abundant, it might impact your quality of life. 

4. How's the weather?

It's more than fair to say that winters in Alaska and Wyoming can be brutal, and that summers in Texas and Florida can be one drawn-out sweat-fest. It's perfectly okay to factor in climate when deciding where to live. And it's okay to subject yourself to state income taxes if it means getting to settle in an area that's more physically comfortable.

5. What support network will I have?

Relocating to a new state could mean abandoning your social network and having to start anew. That's something you may not be up for, and it could impact your kids if there are children in the picture. Think about what it might mean to move someplace where you don't know a soul before making your choice.

It's easy to see why living in a state with no income tax might tempt you. But make sure to really think things through if you're considering a move to one.

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