States With No Income Tax: 2026 Guide for Freelancers

Nine states have no tax on wages or ordinary personal income in 2026: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. For a freelancer, living in one of them means your business profit escapes state income tax, though you still owe federal income tax, self-employment tax and any state business, sales or property taxes. Moving there only helps if you genuinely change residency.

This guide lists the states with no income tax, what each taxes instead, how residency and income sourcing work for freelancers who serve clients nationwide, a worked example, and the steps to move without a residency audit going wrong. It is general information, not tax advice; state rules change, so confirm the details with the state and a tax professional.

The nine states with no income tax in 2026

State	Personal income tax	Main business taxes to know	State sales tax
Alaska	None	Corporate income tax on C corporations	None statewide; many localities levy one
Florida	None	Corporate income tax on C corporations; annual report fees	Yes
Nevada	None	Commerce tax on businesses with Nevada gross revenue above $4 million; business license fee	Yes
New Hampshire	None (interest and dividends tax repealed from 2025)	Business profits tax and business enterprise tax	None
South Dakota	None	No general corporate income tax	Yes
Tennessee	None	Franchise and excise taxes on many entities, including LLCs	Yes
Texas	None	Franchise (margin) tax on many entities; sole proprietors are generally not subject	Yes
Washington	No tax on wages; capital gains tax; new high-income tax from 2028 under challenge	Business and occupation (B&O) tax on gross receipts	Yes
Wyoming	None	No corporate income tax; annual report license tax	Yes

Sources such as Kiplinger's 2026 list agree on these nine. For Texas specifics, see our guide to the Texas franchise tax; Wyoming's appeal for company formation is covered in Wyoming vs Delaware LLC.

Washington: the state to watch

Washington has never taxed wages, but it has added taxes on investment and very high incomes. Its capital gains tax applies 7% to long-term gains above an inflation-adjusted standard deduction, plus a 2.9% surtax on taxable gains above $1 million starting with 2025. In March 2026, Governor Bob Ferguson signed a 9.9% tax on income above $1 million, effective for income from January 1, 2028, and opponents filed lawsuits soon after, as reported by the Washington State Standard. For a typical freelancer earning well under $1 million, Washington still means no state income tax on business profit, but the B&O tax applies to gross receipts above the state's filing thresholds, so check your obligations with the Department of Revenue.

What freelancers still pay in a no-income-tax state

• Federal income tax at the normal rates; see 2026 federal tax brackets.
• Self-employment tax of 15.3% on net earnings up to the Social Security wage base, $184,500 for 2026, and 2.9% Medicare above that.
• State business taxes depending on entity type and revenue, as in the table above.
• Sales tax on taxable goods or services you sell; our sales tax by state guide shows rates.
• Property tax, which tends to be higher in some of these states.
• Taxes in other states if you physically work there.

Quarterly federal estimates still apply; see quarterly estimated taxes for freelancers.

Where is freelance income taxed? Residency and sourcing

Two rules decide which state can tax you:

1. Residency. Your state of domicile can tax all your income from everywhere. If that state has no income tax, there is nothing to pay there.
2. Source. A state where you are not resident can tax income sourced there. For self-employed services, income is generally sourced to where you physically perform the work, not where the client is located.

So a Florida resident designing websites from home for clients in New York generally owes no New York income tax. If the same designer spends three weeks on site at a client's office in New York, the income earned for that work may be New York-source and taxable there. Employees face different rules, including New York's convenience-of-the-employer rule. If you travel a lot, read our guide to digital nomad taxes.

Worked example: a freelancer moves from Illinois to Texas

The figures are illustrative and simplified. A freelance developer has $150,000 of net Schedule C profit. Illinois applies a flat 4.95% personal income tax rate to the state's base income after small exemptions.

Item	Living in Illinois	Living in Texas
Net business profit	$150,000	$150,000
State income tax (about 4.95% of roughly $140,000 state taxable income after adjustments)	about $6,800	$0
Texas franchise tax (sole proprietor)	Not applicable	Generally not subject
Federal income and self-employment tax	Same	Same

The developer saves about $6,800 a year in state income tax, but should compare Texas property taxes and insurance before deciding. If they had operated through an LLC, the Texas franchise tax would apply but owes nothing below the state's no-tax-due revenue threshold. Moving mid-year means filing a part-year Illinois return for income earned before the move.

Gross receipts taxes: a cost even without profit

Washington's business and occupation tax, Nevada's commerce tax and the Texas franchise tax (in its revenue-based forms) are calculated from revenue rather than net profit. That matters for freelancers with thin margins or a loss year: a gross receipts tax can still be due when an income tax would not be. Washington's B&O rates vary by classification, with service businesses generally taxed at a higher rate than retailers, and a small business credit reduces or removes the tax for low revenue. Check each state's thresholds before you assume a no-income-tax state is tax-free for your business, and price your services with any gross receipts tax in mind.

Snowbirds and part-year living

Many people split the year between a high-tax state and Florida, Texas or Nevada. High-tax states often have a statutory residency rule: if you keep a home there and spend more than a set number of days there (commonly 183), you can be taxed as a resident even if your domicile is elsewhere. Keep the days in the old state well below that line, keep travel records, and avoid working from the old state's home for long stretches. Your client invoices and calendar showing where you worked help support the position if questioned.

Invoicing when you move

A move touches every invoice you send. Update your business address, any state tax registration numbers and, if you sell taxable items, which state's sales tax you charge. Tell clients in writing and send a new W-9 so their 1099s show your new address. If you collect sales tax, read sales tax nexus to see whether you still have obligations in your old state.

Step by step: changing your tax residency properly

1. Establish a real home in the new state and move your belongings.
2. Spend the majority of your time there, and track days with a calendar or app.
3. Update official records: driver's license, voter registration, vehicle registration, will and estate documents.
4. Move the business: update your registered address, reregister or qualify your LLC, update your W-9 and the address on your invoices.
5. Shift banking, doctors and memberships to the new state.
6. Sell or rent out the old home, or be ready to explain why you keep it.
7. File a final part-year return in the old state.

States such as California and New York are known for auditing high earners who claim to have left. Your client invoices, showing your business address and where services were performed, are part of the evidence.

Common mistakes

• Keeping the old home and social life while claiming to live elsewhere.
• Forming an LLC in a no-tax state while living in a high-tax state. Your home state still taxes you as a resident, and may require the LLC to register there.
• Forgetting business taxes such as Tennessee franchise and excise tax or Washington B&O.
• Working in other states without tracking days.
• Assuming the SALT deduction still matters. With no state income tax, your SALT deduction is mainly property and sales tax; see SALT cap 2026.

Retirement and investment income

For freelancers planning ahead, the states without an income tax also do not tax pension, IRA and 401(k) withdrawals or Social Security benefits at the state level. Investment income is generally untaxed too, with the exception of Washington's capital gains tax on large long-term gains. If you plan to retire or sell a business in the next few years, the timing of a move and the sourcing of that income are worth discussing with an adviser, because some states tax gains on business interests or installment sales tied to your former residency.

Business entities and no-income-tax states

Pass-through entities owned by residents of these states usually owe no state income tax at the owner level, so pass-through entity tax elections, which help owners in high-tax states, are generally irrelevant; see pass-through entity tax for where they matter. C corporations, however, may owe corporate income tax in Florida, Alaska, New Hampshire and Tennessee. Choose your entity based on your total picture, not just the state.

Wherever you live, your invoices should show your current business address and clear service details. Update your billing in minutes with our free invoice generator: no sign-up, and download each invoice as a PDF.