Updated Checked by the Tax-Services.ca editorial team How we check
Florida, Nevada and South Dakota all say on their own official pages that they don’t tax personal income at the state level, and the Texas Comptroller’s list of taxes has no personal income tax on it. That’s a short answer to which states have no state tax. For a Canadian resident it comes with a catch: Canada still taxes your worldwide income, so a state’s zero doesn’t reach your Canadian return.
Which states have no state income tax?
The number you’ll see quoted changes with the source. South Dakota’s revenue page calls it “one of seven states” with no state income tax. Other sources give a different count, and lists differ on states that tax only some income. We could not confirm one complete official list, so we only name the states we could check ourselves.
| State | What the official page shows |
|---|---|
| Florida | Department of Revenue: “The State of Florida does not have a personal income tax.” |
| Nevada | Department of Taxation: the state does not impose a state income tax on individuals |
| South Dakota | Department of Revenue: one of seven states with no state income tax |
| Texas | Comptroller’s list of about 100 taxes and fees has no personal income tax in it |
Other states are said to belong on the list, and we didn’t verify them one by one. If you’re planning a move around it, read that state’s own revenue site.
Does a state with no income tax mean no tax?
No. Those states raise money elsewhere. The Texas Comptroller’s page lists sales tax, franchise tax, property tax, motor vehicle taxes, hotel tax and many others. So you swap one bill for a few others, and your own spending decides who comes out ahead. A big house in a high property tax area can wipe out the saving.
We won’t put a price on it, since state and local rates change and we didn’t check them for this page.
What does Canada charge while you’re a resident?
The same as always. The CRA wants income from sources outside Canada on the return of anyone who lived in Canada at any time in the year. A Canadian who spends winters in Florida and earns rent or dividends there still files those amounts at home. Our 2026 engine puts income tax on $60,000 of employment income in Ontario at $8,320.50, and it doesn’t care which state you sunbathe in.
To see your own figure, open the income tax calculator. If you’re weighing extra income, the marginal tax rate calculator shows what the next dollar would cost. Investors with a US brokerage account can see a sale example in the capital gains tax calculator.
Picture Marc and Linda, retired in Ottawa, who rent out a Florida condo for a few months a year. Florida has no personal income tax, so no state return is waiting. But the rent still goes on their Canadian return, converted to Canadian dollars, and it’s taxed at their usual rates. The zero on the Florida side only means one fewer bill, not a missing line at home.
What if a US state did tax you?
Then Canada gives you some relief, but only some. Under the federal foreign tax credit, a Canadian resident claims the smaller of the foreign tax actually paid and the Canadian tax on that income, using Form T2209 and line 40500. It follows that a state with no income tax gives you no credit to claim, because nothing was paid. A tax treaty can also affect who qualifies, and we haven’t looked at any state-level treaty rules.
A made-up example shows the limit. Say a state charged US$500 on some income, and Canada would have charged the equivalent of $700 on that same income. The credit is the smaller of the two, so $500. If Canada would only have charged $400, the credit stops at $400, and the extra $100 doesn’t come back as a refund.
Mistakes people make
The main one is thinking that leaving Canada for a no-tax state ends your Canadian tax. Your Canadian residency is a separate question from the state you pick, and your ties here decide it. We didn’t verify the CRA’s residency tests for this page, so read the CRA’s guidance on residency before you move, and get a cross-border adviser if a home, a business or a pension is involved. That’s one of the few cases where paying for advice is worth it.
Another slip is comparing take-home pay only. A state with no income tax can still have higher sales and property taxes. We haven’t priced those, so build your own list.
What should you check before choosing a state for a move?
- Your ties to Canada: a home, family, bank accounts and where you plan to spend your time.
- The state’s other taxes: sales, property and any local charges.
- Any foreign property you’d own, since reporting rules may apply on the Canadian side.
- The cost of health insurance, which can matter more than any tax.
None of these is a tax rule we verified here. They’re prompts for your own homework, and the official pages we named above are the place to start.
Where this information comes from
State statements come from the Florida Department of Revenue, the Nevada Department of Taxation, the South Dakota Department of Revenue and the Texas Comptroller. The foreign tax credit rules and the worldwide income rule come from the Canada Revenue Agency, and the Ontario example from our 2026 calculator. This website has no connection with the CRA, the IRS or any state or federal body.
Frequently asked questions
Which states have no state income tax?
Florida, Nevada and South Dakota say so on their official pages, and the Texas Comptroller's tax list has no personal income tax. We could not confirm a full official list.
Do Canadians in a no-tax state still pay Canadian tax?
A resident of Canada reports worldwide income to the CRA, whatever the state charges.
Do these states have other taxes?
Yes. The Texas Comptroller, for example, lists sales, franchise, property, motor vehicle and hotel taxes.
Can I claim a foreign tax credit in such a state?
The credit is the smaller of the foreign tax paid and the Canadian tax on that income. If no state income tax was paid, there is nothing to claim.
Does moving to one of these states end my Canadian residency?
Not by itself. Residency depends on your ties to Canada, and we did not verify the CRA tests, so read its residency guidance.