Home Affordability SimulatorBuy the house without giving up early retirement

States with no income tax: how much more house do they buy?

Nine states levy no tax on wage income. The usual framing is a percentage; the useful framing is what that percentage does to your plans over thirty years. This page runs the full Monte Carlo model — identical household, identical random market draws — three times: at a 0% state rate, at the 5% average-tax illustration used across this site, and at Oregon's ≈8.3% effective rate, the steepest in the model at a $220,000 income.

86%odds of financial independence by 60 at a 0% state rate (same purchase)
79%the same household's odds at a 5% effective state rate
75%and at Oregon's ≈8.3% effective rate
≈$139.7Kcomfortable purchase-price headroom separating 0% from Oregon

Run the zero-tax scenario with your own numbers →

Why the effect compounds

State income tax is subtracted from exactly the money that has to outrun your mortgage: the annual surplus you invest. A 5% effective rate on a $220,000 income is $11,000 a year that never reaches the portfolio — and unlike a one-time cost, it recurs every year while the portfolio it would have joined compounds. Across 1,000 simulated futures, that drag moves the odds of reaching independence by 60 by about 7 percentage points versus the average-tax case and 11 points versus Oregon — equivalent to roughly $98.5K of comfortable purchase-price headroom.

The honest caveat: no-tax states collect revenue somewhere. Property taxes (Texas), sales taxes (Tennessee, Washington), or severance revenue (Alaska, Wyoming) fill the gap, and property tax in particular is a housing cost this model takes seriously — it compounds against you on the home's growing value. Comparing specific states? Set both the state income tax rate and the property tax rate in the planner and let the simulation referee.

The illustrative household — identical in all three runs except the state income tax rate: married filing jointly, age 35, $220,000 gross income, buying a $650K home with 20% down, property tax held at 1.1% of value in every state. 1,000 simulated paths, fixed seed. Illustration for comparing tax regimes, not advice.

Common questions

Which states have no income tax in 2025?

Nine: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. New Hampshire joined the list in 2025 when its tax on interest and dividends was fully repealed; Washington still taxes some capital gains above a high threshold, which this model does not attempt to capture.

Is a no-tax state automatically cheaper to own a home in?

No. States without income taxes often lean harder on property and sales taxes — Texas is the classic example, with property tax rates roughly double the national average. The simulation on this page holds property tax constant to isolate the income-tax effect; on a real move you should raise the property-tax input to the destination county's rate and let the model re-grade the purchase.

How much is zero income tax worth to a home buyer?

For the illustrative $220,000 household on this page, moving the state income tax rate from 5% to zero shifts the odds of reaching financial independence by the target age by about 7 percentage points — roughly $98.5K of comfortable purchase-price headroom. Versus a high-tax state like Oregon the swing is larger still.

The nine no-income-tax states

Or see every state's page, including the ones where the tax drag runs the other way — California, Oregon, and Hawaii among them.