Data Notice: Tax figures in this article reflect 2026 IRS and state tax rules. State tax structures change; confirm current rules with your state’s department of revenue. [freelance-taxes-no-income-tax-states]

Freelance Taxes in No-Income-Tax States: Still Owe?

Tax information in this article is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently, and individual circumstances vary. Consult a qualified tax professional or CPA for guidance specific to your situation.

Living in a state with no income tax does not mean you owe nothing. Freelancers in Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming still face significant tax obligations. This guide explains exactly what you do and do not owe.

What You Still Owe

Federal Self-Employment Tax: 15.3%

Self-employment tax is a federal tax — no state can exempt you from it. The 15.3% SE tax (12.4% Social Security + 2.9% Medicare) applies to 92.35% of your net self-employment income regardless of your state of residence.

At $80,000 in net freelance income, your SE tax is approximately $11,304 — and no state residency choice changes this.

Federal Income Tax: 10%–37%

Federal income tax applies to all US taxpayers regardless of state. Your freelance income is taxed at ordinary rates after deductions.

Combined federal burden example ($80,000 net freelance income, single):

Tax Type	Amount
Self-employment tax	~$11,304
Federal income tax (after standard deduction + half SE deduction)	~$9,200
Total federal tax	~$20,504
Effective federal rate	~25.6%

Quarterly Estimated Payments

You must make quarterly estimated payments to the IRS on the same schedule as freelancers in any other state. See Quarterly Estimated Tax Payments for Freelancers.

What You Do NOT Owe

State Income Tax: $0

Freelancers in these nine states pay zero state income tax on their freelance earnings:

State	Additional State Taxes to Note
Alaska	No income tax, no state sales tax
Florida	No income tax; 6% state sales tax
Nevada	No income tax; commerce tax for businesses over $4M revenue
New Hampshire	No income tax on earned income
South Dakota	No income tax
Tennessee	No income tax on earned income
Texas	No income tax; franchise tax for businesses over $2.47M revenue
Washington	No income tax; 7% capital gains excise tax on gains over $270,000
Wyoming	No income tax

State Estimated Tax Payments: $0

Since there is no state income tax, there are no state quarterly estimated payments required.

The Savings: How Much Do You Actually Save?

Compared to a freelancer earning the same amount in a high-tax state:

Net SE Income	Federal Tax (Same Everywhere)	CA State Tax	NY State Tax	TX/FL/WA State Tax	Annual Savings
$50,000	~$12,597	~$2,800	~$2,600	$0	$2,600–$2,800
$80,000	~$20,504	~$5,200	~$4,800	$0	$4,800–$5,200
$100,000	~$26,357	~$7,000	~$6,300	$0	$6,300–$7,000
$150,000	~$39,900	~$12,500	~$9,800	$0	$9,800–$12,500
$200,000	~$53,600	~$18,200	~$13,500	$0	$13,500–$18,200

At higher income levels, the savings from living in a no-income-tax state can exceed $10,000–$20,000 per year.

Other Tax Considerations in No-Income-Tax States

No income tax does not mean no taxes. These states generate revenue through other mechanisms:

Sales Tax

Most no-income-tax states have sales tax:

Tennessee: 7% state rate (one of the highest in the nation)
Washington: 6.5% state rate + local additions (total often 9%+)
Texas: 6.25% state + up to 2% local
Florida: 6% state + up to 2% local
Nevada: 6.85% state + local additions
Alaska: No state sales tax (some municipalities levy local taxes)

Property Tax

Some no-income-tax states have higher-than-average property taxes:

Texas: Effective rate ~1.60% (among the highest nationally)
New Hampshire: Effective rate ~1.86%
Florida: Effective rate ~0.86%
Washington: Effective rate ~0.84%

Franchise/Gross Receipts Taxes

Texas and Washington impose business-level taxes (franchise tax and B&O tax respectively) that can affect larger freelance operations, though most solo freelancers fall below the thresholds.

Moving to a No-Income-Tax State: Tax Implications

If you are considering relocating to reduce state taxes, be aware of:

Establishing Residency

You must genuinely establish residency in the new state. Key factors:

Physical presence (spending the majority of your time there)
Driver’s license and vehicle registration
Voter registration
Banking relationships
Primary mailing address

Severing Ties with Your Former State

High-tax states (especially California and New York) actively audit departing residents. To avoid claims from your former state:

Sell or lease your former residence
Transfer professional licenses
Update all legal documents (will, trusts, contracts)
Move your daily life — gym membership, medical providers, social activities

Part-Year Returns

In the year you move, you typically file a part-year resident return in both states.

Common Mistakes

Assuming no state tax means low overall taxes — Federal SE tax is the same everywhere; it is often the largest component
Not considering cost of living — Lower taxes may be offset by higher housing or insurance costs
Failing to properly establish residency — Your former state may continue to claim you as a resident
Working remotely for clients in high-tax states — Some states (notably New York) may try to tax you based on where the client is located
Ignoring other state taxes — Sales tax, property tax, and business taxes can partially offset income tax savings

Key Takeaways

Freelancers in no-income-tax states still owe federal SE tax (15.3%) and federal income tax (10%–37%)
The state income tax savings range from $2,500 to $20,000+ depending on income
Other taxes (sales, property, franchise) partially offset the income tax benefit
Moving to a no-income-tax state requires genuinely establishing residency
Quarterly estimated payments are still required to the IRS

For state-by-state rules, see State Freelance Tax Rules: Where You Owe and Why. For SE tax calculations, see How to Calculate Self-Employment Tax Step by Step. For the complete overview, see our Complete Guide to Freelance Taxes in 2026. Also review the existing States with No Income Tax 2026.

Sources

Self-Employment Tax — Internal Revenue Service — accessed March 28, 2026
Estimated Taxes — Internal Revenue Service — accessed March 28, 2026
IRS Releases Tax Inflation Adjustments for Tax Year 2026 — Internal Revenue Service — accessed March 28, 2026