What are the hidden costs in states with no income tax?

States with no income tax often compensate with higher property taxes, sales taxes, and various fees.

Which states have high property taxes despite no income tax?

New Hampshire and Texas are examples of states with no income tax but high property tax rates.

Are there other costs to consider besides taxes when moving?

Yes, homeowners insurance can be significantly higher in some states, like Florida, impacting overall affordability.

Home / Business and Economy / No-Income-Tax States: Hidden Costs Revealed

No-Income-Tax States: Hidden Costs Revealed

7 Dec, 2025

•

Summary

States with no income tax often raise other taxes to compensate.
Higher property or sales taxes can offset income tax savings.
Homeowners insurance costs can be significantly higher in some states.

No-Income-Tax States: Hidden Costs Revealed

Many Americans, particularly retirees, are drawn to states with no or low income tax, hoping to reduce their cost of living. States like Florida and Texas have seen significant migration from high-tax areas. However, these tax havens often implement higher property taxes, sales taxes, or other fees to make up for the lack of income tax revenue.

For instance, New Hampshire and Texas, despite having no income tax, rank among states with the highest property taxes. Similarly, Tennessee and Nevada charge some of the highest sales taxes nationwide. These alternative taxes can quickly erode any perceived savings from not paying income tax.

Beyond taxes, other costs can surprise newcomers. Florida, while exempting Social Security benefits from state income tax, has some of the nation's highest homeowners' insurance premiums. This highlights the importance of comprehensive research into all expenses, not just income tax, before relocating.