Why people actually move for state tax
Take a California software engineer earning $220,000. Combined state + local income tax at roughly 9.3% marginal: about $18,500/year. Same job in Texas: $0. Over ten years, that's $185,000 in after-tax income — enough to cover a down payment, pay off student loans, or fund a decade of 401(k) max contributions.
State tax is the single biggest cost-of-living difference for high earners, because unlike rent or groceries, it scales directly with income. A Florida retiree living on $80K of portfolio income keeps every dollar; a New Jersey neighbor doing the same thing hands over about $4,400/year in state tax.
The nine states with no income tax
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. New Hampshire historically taxed interest and dividends but fully phased that out by 2025. Washington has no wage tax but does tax long-term capital gains above $262K at 7%.
No-income-tax states still collect revenue — usually via higher property tax (Texas, New Hampshire), higher sales tax (Tennessee, Washington), or both. Run the full picture: state income + sales + property + any local rates. A $250K house in Texas at 2.2% effective property tax costs the same each year as a $550K California house at 1.0%.
Progressive states stack a bracket problem on top of federal
California and New York have state brackets steep enough to meaningfully hit high earners. A California single filer at $350K taxable has a federal marginal rate of 32% and a California marginal of 9.3% — combined 41.3%. Add a 1.1% SDI plus the 3.8% federal NIIT on investment income above $200K, and the effective marginal on the last dollar of a big bonus can clear 46%.
That math drives Roth conversion timing, equity-sale timing, and the decision to take deferred comp in a low-state-tax retirement year.
Flat tax states have easier math (and usually lower rates)
Arizona (2.5%), Colorado (4.4%), Illinois (4.95%), Indiana (3.05%), Kentucky (4.0%), Michigan (4.25%), North Carolina (4.5%), Pennsylvania (3.07%), Utah (4.55%), Idaho (5.8%), Iowa (3.8%), Mississippi (4.4%), Massachusetts (5.0%), Louisiana (3.0%), Georgia (5.39%) all operate on a single flat rate for 2025.
Flat states' marginal and effective rates are identical. That removes one layer of planning complexity but also removes the progressive benefit lower earners get in states like California.
What this tool is (and isn't)
This is a directional comparison using average effective rates at $100K of taxable income, adjusted slightly upward for progressive states as income rises. It does not model every state's deduction structure, local piggyback taxes (NYC, Maryland counties, Ohio municipalities, Pennsylvania EIT), credits, exemptions, or pass-through entity taxes.
Use it to see roughly how big the gap is between two states. Use a CPA or your state's tax department to nail the exact number before you move.
The full picture: income + property + sales
Florida looks great on income tax (0%) but has an average effective property tax around 0.80% and sales tax around 7%. New Hampshire has no income tax, no sales tax, and a 1.77% effective property tax — a great deal if you rent, less great if you own. Texas has 0% income but 1.65% effective property tax — punishingly high on a large home.
For a complete move-cost comparison, also look at car registration, gas tax, state estate tax (currently in 12 states + DC), and whether the state has a local option sales tax that pushes the combined rate above 9%.