States with no individual income tax (2026)
9 states levy no individual income tax on self-employment income. That does not make them free of state tax. Most replace the income tax with something charged on gross receipts rather than on profit, and three of them reach ordinary freelance work with sales tax. This page sets out what each one charges instead, and where the line falls.
Federal 2026 data and state agency pages checked against the official publications, last on 2026-09-05 Runs in your browser — nothing you type is sent anywhere, not even when you reload or share the link No sign-up Methodology and data status
The federal bill is the same in all 9
Self-employment tax is federal. It funds Social Security and Medicare, it is charged in every state, and no state can waive it. A single filer with $90,000 of net profit and no other income owes $12,717 of self-employment tax and $6,599 of federal income tax — $19,316 in total — whether that profit is earned in Texas, in Florida or in a state with the highest income tax in the country. Choosing a no-income-tax state changes the state column only.
What it changes there is not always downward. Washington charges its Business & Occupation tax on gross receipts with no deduction for expenses, so a consultant with thin margins can pay more than an income tax would have taken — and since October 2025 it charges retail sales tax on much of what a developer or marketer sells. South Dakota taxes the freelance service itself. New Hampshire's filing threshold is measured on gross business income rather than on profit. The table below is the comparison that matters.
What each state charges instead
| State | Stands in for an income tax | Where it starts | Freelance services taxable? |
|---|---|---|---|
| Alaska | Nothing at state level; boroughs and cities tax locally | Set by each borough, not by the state | Depends on the borough — Anchorage has no sales tax, Juneau and Ketchikan do |
| Florida | Corporate income tax at 5.5%, which reaches C corporations only | Not applicable to a sole proprietor or a disregarded single-member LLC | No — tangible goods and a short list of named services only |
| New Hampshire | Business Profits Tax at 7.5% and Business Enterprise Tax at 0.55% | $109,000 of gross business income (BPT); $298,000 of receipts or enterprise value tax base (BET) | No sales tax of any kind |
| Nevada | Commerce Tax on Nevada gross revenue, at rates set by industry | $4,000,000 of Nevada gross revenue in the year | No — professional services are outside the sales tax |
| South Dakota | Sales tax charged on services as broadly as on goods | The first dollar, for anyone with a physical presence in the state | Yes — design, writing, consulting and photography are all taxable |
| Tennessee | Business tax on gross receipts, plus franchise and excise tax for entities | $100,000 of gross receipts, measured per in-state location | Mostly no, but software, telecommunications and several repair services are taxable |
| Texas | Franchise tax on margin, at 0.75% (0.375% for retail and wholesale) | $2,650,000 of annualized revenue for the 2026 and 2027 report years | Mostly no; data processing and information services are taxable |
| Washington | Business & Occupation tax on gross receipts, 1.5% for almost every freelancer | No tax-free allowance; registration required at $12,000 of gross, or at any size once you must collect sales tax | B&O always. Retail sales tax too, since 1 October 2025, for advertising, IT, web development, custom software, data processing and group workshops |
| Wyoming | Nothing at state level | Not applicable | No for design, writing, consulting and code. Yes for photography, which the Department's rules tax directly |
Licences and what a sole proprietor actually files
The second question is administrative rather than financial, and it is where these states differ most. Two of them ask a sole proprietor for nothing at all; two want a return every filing period whether or not any tax is due.
| State | State licence | What a sole proprietor files |
|---|---|---|
| Alaska | Alaska business licence, $50 a year ($25 if 65+ or a disabled veteran) | The licence renewal, and a local sales tax return only where the borough imposes one |
| Florida | No state licence; a county or city business tax receipt where one is imposed | Nothing at state level |
| New Hampshire | None at state level | Nothing below both thresholds; a BPT return above the first |
| Nevada | State business licence, $200 a year for a sole proprietor or LLC | The state business licence, or an exemption certificate filed every year |
| South Dakota | Sales tax licence, free, but required before the first taxable sale | Sales tax returns on the schedule the department assigns, including nil returns |
| Tennessee | Minimal activity licence from $3,000 of receipts; standard licence at $100,000 | A county and city licence; a business tax return once a location passes $100,000 |
| Texas | None at state level | Nothing — a sole proprietorship is outside the franchise tax entirely |
| Washington | State business licence, plus a separate city licence in many cities | B&O returns on the assigned schedule, unless granted active non-reporting status |
| Wyoming | Sales tax licence, $60 once, only if you sell taxable goods, photography or digital products | Nothing; an LLC files an annual report with a $60 minimum licence tax |
Three things the comparison usually gets wrong
"No income tax" is not "no state tax"
Five of these states run a tax on business receipts or margin: Washington's B&O, Texas's franchise tax, New Hampshire's Business Profits and Business Enterprise taxes, Nevada's Commerce Tax and Tennessee's business tax. Their thresholds are what decide whether a freelancer notices them, and those thresholds are set on gross rather than on profit in every case. A business with high revenue and low margins meets them sooner than its tax return would suggest.
The sales tax question is which category your work falls in
Most states tax goods and exempt professional services. Three of these nine do not, and each draws the line somewhere different.
South Dakota taxes services as broadly as goods. Design, writing, consulting and photography are all inside it, at 4.2% plus a municipal rate of up to 2%.
Washington changed on 1 October 2025. Advertising, IT support and IT consulting, custom website development, custom software, data processing and live online workshops became retail sales, which means a Washington developer or marketer now charges clients sales tax on work that was outside it the month before. Standalone graphic design stayed out. The same design bundled into an advertising campaign or a website build did not.
Wyoming looks like the safest of the nine and holds one trap. Its taxable services are a short closed list that professional work is absent from, and its definition of specified digital products covers only audio-visual works, audio works and books — so a delivered design file is outside it. Photography is not: the Department's own rules tax photography directly, however the images reach the client.
Tennessee sits in between, exempting most services while taxing software. In all of these the question to settle before invoicing is which category the work falls in, not whether anything physical changes hands.
The entity you trade through changes the paperwork, not the rate
Texas is the clearest case. A sole proprietorship is outside the franchise tax entirely and files nothing. A single-member LLC doing identical work owes no franchise tax below the threshold either, but is inside the tax and must file an information report every year to stay in good standing. Wyoming and Nevada make the same distinction through annual reports and licence fees. Forming an LLC in a no-income-tax state adds obligations; it does not remove them.
Does moving to one of these states save money?
Only if you become a resident of it. State income tax follows residency and the place where the work is performed, not the address on an invoice or the state an LLC was registered in. A freelancer living in California who forms a Wyoming LLC still files a California return on that income. Registering an entity in a no-income-tax state while living elsewhere generally adds a second set of filings without removing the first. The saving is real when the move is real, and the arithmetic then runs through your former state's part-year rules for the year of the move.
Every state in detail
Each page below runs the same federal calculation and then sets out that state's own obligations, with the agency pages they were read from and the date they were last checked.
States that do levy an income tax are listed on the full state index, with the rate each one applies to self-employment income.
How this page is checked
Every figure here comes from the state's own agency or statute, listed on that state's page with the date it was last read. The oldest of those checks is 2026-09-09; the most recent is 2026-09-09. Thresholds in several of these states are re-indexed on a two-year cycle, so a figure that was right last year is not automatically right this one — the Texas franchise threshold moved from $2.47 million to $2.65 million for the 2026 report year, and that change is in the corrections log.
Nothing on this page is in the calculators. They compute federal and state income tax; gross-receipts taxes, sales tax, licences and entity-level filings are outside their scope, which the methodology page states in full.