Top 3 Best No-Income-Tax States for High Net Worth Individuals

If you’re a high net worth individual looking for ways to offset high taxes, you have probably considered moving to a no-income-tax state. This is something your wealth manager can help you work through, because the tax laws are constantly changing. For those with over $5 million liquid investable assets we suggest you request a copy of our 7 secrets book.

This article will help you sort through all this and see which states hold the most promise for your next residence, from a tax perspective.

Are Florida and Similar States Really Better for Your Finances?

If you are a high net worth family or individual living in a high-tax state such as California, New York, New Jersey, or Oregon, you’ve probably given some thought to moving to a no-income-tax state.

And if you hadn’t thought of it much before, you will now, with the recent passage of the new tax law.

The new law caps your federal tax deduction for state and local taxes at $10,000. While this doesn’t affect most people, it will cost our ultra-high net worth clients a pile of money, because they pay far more than $10k in state and local taxes – especially those who live in high tax states.

And you’ll pay even more if you also own investment real estate properties. (If you’re curious, here are each state’s income tax rates, ranked from highest to lowest)

So is the solution simply to move to a low or no-income-tax state?

It’s not that simple. Every state collects taxes. So while some may have no income tax, that must mean they charge higher taxes somewhere else. The question is – how does all this affect you and your high net worth or ultra-high net worth friends?

If you’re considering a change in residency and want to get an ally on your side, schedule a chat with Pillar Wealth Management CEO and co-founder, Hutch Ashoo. When you talk, be sure to mention you’re thinking about a change of residency. We will help you identify your best living options that will allow you to protect and secure more of your wealth.

To really dive into the decision of selecting a new state of residence, you must take a detailed look at each state you might consider moving to. What does each have in its favor, and what counts against it?

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There are a lot of considerations when you accumulate enough assets to reach ultra-high net worth status. You want to put extra thought into choosing the best financial advisor for your family, especially if you hope to optimize your portfolio and try taking advantage of the benefits tied to no-income-tax states.

The List – 9 No-Income-Tax States

First, let’s be clear on the list. The nine states that charge no income tax are Texas, Florida, Washington, Nevada, South Dakota, Wyoming, Alaska, New Hampshire, and Tennessee. The last two on that list, however, do charge a tax on dividends and investment income.

While that might not be a big deal for most people, it matters a great deal to most high net worth investors. Unless you are a rare exception among high net worth families, and do not earn a good portion of your income through investments, you can probably take Tennessee and New Hampshire off your list.

So that leaves seven states.

Winnowing the List

Without much effort, you can probably winnow this list down to just a couple states, based on your personal preferences. For instance, living in Alaska isn’t for most people. That’s why hardly anyone lives there.

Unless you like the idea of living in extreme cold and darkness during the winter, and being bathed in sunlight for 18 hours or more per day in the summer, Alaska probably isn’t for you.

Likewise, Wyoming is a mostly rural, hilly, windy state with pretty remote population centers. Wyoming is actually the least populated state in the nation, by number.

It gets hit with blizzards and fairly extreme winters. You’ll drive a lot, and you won’t get many out of town visitors. South Dakota is similar in many ways, though not quite as extreme.

If these attributes appeal to you – and they do for certain people – then those states would actually be at the top of your list, if you’re looking to move to a no-income-tax state.

However, since we know the majority of people do not prefer to live in those types of places, let’s consider the remaining four states: Florida, Texas, Washington, and Nevada.

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Remove Washington

Though Washington has a lot in its favor in terms of scenery, accessibility, cultural diversity, and business opportunities, it has one major point against it that matters in particular for high net worth and ultra-high net worth retirees.

Washington has the highest maximum estate tax in the nation and only a $2 million exemption, taking 20% of your estate if you are in the highest bracket. See all the states with estate or inheritance taxes.

With the federal government also taking 40% of your estate beyond the approximate $11 million exemption, ultra-high net worth individuals in Washington stand to lose over half their net worth upon their deaths!

You can do a few things to minimize your exposure to federal estate taxes, which we discuss in great detail in our book, The Art of Protecting Ultra-High Net Worth Portfolios And Estates: Strategies for Families Worth $25 Million to $500 Million, which you can get here. But when it comes to states, the best solution is simply to not live in one that charges this type of punitive tax.

So Washington is out.

Talk with us about your situation and why you’re thinking about moving to another state. We can run several residency scenarios based upon your personal situation.

Florida, Texas, and Nevada – Your Top 3 No-Income-Tax States

What’s so great about living in these states for high net worth individuals?

Let’s take a look at seven of the broadest benefits of living in a no-income-tax state. And to be clear – every state has its own minor differences, and tax laws can change at any time. These are general benefits, and do not necessarily all apply to all three of these states. Consult your tax accountant or wealth manager for specifics.

  1. No Worries about State and Local Tax Deductions

Living in these no-income-tax states, you will probably be able to claim your sales tax as a deduction for your federal taxes. The only caveat to this is if you own a lot of real estate in these states, or make some large purchases that incur five or six figures in sales taxes.

In those instances, you would lose out on the highest possible federal tax deduction. But since no state can offer any way around that, it’s a non-factor in terms of where you choose to live.

  1. No Estate Taxes

When you die, the state governments of Florida, Texas, and Nevada won’t take any of your wealth.

  1. Social Security and Pensions Belong to You

With no income tax, you will not have to pay state taxes for these retiree benefit programs. That amounts to huge savings compared to high tax states, which in some cases take over 10% of your income.

  1. Retirement Accounts Not Taxed

Living in a no-income tax state also means you will not pay state taxes on withdrawals from your IRA or 401k accounts. Protecting your wealth by minimizing your federal taxes from these accounts is one of the great challenges of having high net worth, so it’s a great relief to not have to worry about it at the state level.

  1. Doesn’t Matter Where You Lived Before

In case you’re wondering, even if you lived in a high tax state like New York or Oregon while you were contributing to your IRA and 401k accounts, when you move to a no-income-tax state, you avoid having to pay state taxes on the withdrawals.

  1. No Small Business Taxes Either

In Florida, the only businesses that pay taxes are C corporations. LLCs, partnerships, sole proprietors, and S corporations pay no state business taxes.

Texas and Nevada do not appear to be quite as free from business taxes as Florida, but they’re still much better than the high tax states. Again, check with a tax accountant to get these sorts of specifics.

But this is a point in favor that might edge Florida up to the top of your list. Here’s an article with more on Florida’s business tax laws.

  1. Homestead Exemption

Another point in Florida’s favor is what they call the homestead exemption. While perhaps not a huge benefit for someone with high net worth, this exemption lets you remove the first $25,000 of your home’s assessed value from school district property taxes, and the first $50,000 from all other types of property taxes.

Florida Might Be the One

Florida, more than any other state, seems to have gone out of its way to become the most tax-friendly state in the nation. Retirees don’t just move there for the sun. They also move there because it saves them a lot of money. And high net worth retirees will save even more.

In fact, we were working on a Wealth Management Analysis for an ultra-high net worth family planning to move to Florida. After we finished, we noticed something – something quite amazing:

With the exact same investment plan, this family would make $150,000 more living in Florida compared to living in California. Just by switching their residency and making no other changes, they make an extra six figures annually in Florida.

As you can see, a change of residence may be one of the easiest ways to improve the performance of your portfolio. And if you think that’s good, look at this one:

According to Business Insider, an ultra-high net worth investor making $10 million a year and who owns a $10 million home will pay $1.2 million more in taxes living in New York compared to Florida.

Every year!

See a full list of Florida’s tax benefits, from their state website

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Are you curious about how a change of residency could help you? If you would like more information about no-income-tax states, schedule a chat with CEO and co-founder Hutch Ashoo to start the conversation.

Other Taxes to Consider

Don’t forget – every state has to collect taxes somehow. Texas and Nevada both have very high property taxes, and most of these no-income-tax states have high sales taxes. Washington has the third highest gas tax in the nation, very similar to California’s.

However, what counts is your effective state tax rate. In other words, when you add it all up, what percentage of your income are you paying in state taxes?

For high net worth families with incomes in the top 20% living in one of the no-income-tax states, you will pay an average of 2.6% in state taxes, compared to 7.5% in the other states.

So on the average, it’s three times less costly for you and your high net worth friends to live in a no-income-tax state.

Ready to Choose Your Favorite No-Income-Tax State?

Hopefully this has given you a good start as you think about the pros and cons of moving to a no-income-tax state, and which one to choose.

Remember, you have to consider much more than just the tax situation. Weather is a major consideration, but so might be proximity to family and friends, lifestyle, political preferences, recreational opportunities, population density, real estate options, and so much more.

There is more to your decision about where to move than just money.

Here’s an article with more on what each no-tax state has in its favor

And, especially if you own a business or have investment real estate in your current state, moving to save on taxes isn’t so simple. Determining where your actual residence is, and whether it matters how you’re generating your income, requires additional consideration.

We’ll tackle that subject in our next article – How to Determine Residency for Tax Purposes


To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.

We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.

You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.

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