In addition, New Hampshire and Tennessee only tax interest and dividend income, not wages, earnings, or other income: New Hampshire residents only file a tax return if their interest and dividend income … Learn which states have the highest tax rates, no taxes, and flat taxes; and see a complete list of tax rates for every state in the union. Weighing the tax landscape against your financial picture lets you stretch your dollars. Alaska once had an income tax, but it was repealed in 1980. One way to do this is to live in a state that does not tax your income. On … Good news! Where you live can help or hinder your ability to make ends meet. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming don't have income tax. And if you don't like the cold, you can simply use your tax savings to buy excellent heating equipment since Alaska doesn't have income tax. Here's a roundup of the highest and lowest taxes by state. Most state governments in the United States collect a state income tax on all income earned within the state, which is different from and must be filed separately from the federal income tax. A myriad of taxes—property, license, state and local sales, property, inheritance, estate and excise taxes on gasoline—eat away at your disposable income. Although each of these states has their own reasons, the main answer is that the states have found better sources of income than income tax could bring in. The state doesn’t have a sales tax either (though some localities do charge a sales tax). Arizona, Colorado, Illinois, Indiana, Michigan, New Mexico, North Dakota, Ohio, Pennsylvania and Utah levy tax on income under 5%. State Income Tax. There are 11 states with no income tax for retirees. Preparing for retirement? Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming are the exceptions because they do not tax residents’ incomes. Currently, nine states in the U.S. don’t tax wages, with two states (New Hampshire and Tennessee) phasing out all taxes on investment income and interest by the year 2025. As of 2018, the seven states that don't impose an income tax are: Wyoming, Alaska, Texas, Washington, Florida, Nevada and South Dakota. Nearly all states have an income tax, ranging from 1-13%. Image source: Getty Images. Seven states have no income tax and two only tax interest and dividends. If you're a resident of one of these states, you don't need to file a return in that state. What’s more, every resident receives extra money every year from the Alaska Permanent Fund Corporation. These states have no income tax The states with no income tax are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. 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