The Hidden Costs of Living in No-Income-Tax States

Lisa Mailhot  |  June 26, 2024

Sellers

The Hidden Costs of Living in No-Income-Tax States

 

Many Americans, in an effort to save more of their earnings, consider moving to states without an income tax. While the lack of state income tax can seem like a major financial break, this advantage may be offset by other rising costs in these regions.

Rising Home Prices in No-Income-Tax States

Data from Realtor.com® highlights that, over the past five years, home prices in states like Wyoming, New Hampshire, South Dakota, and Tennessee have increased significantly, surpassing the national average. This surge in housing costs is a key factor diminishing the savings from no income tax.

Escalating Additional Costs

Apart from home prices, residents in states such as Texas and Florida face steep insurance premiums due to climate-related risks. Additionally, these states often compensate for the lack of income tax with higher sales and property taxes, which can unexpectedly burden residents.

The Economic Trade-Offs

While saving on state income tax, residents might find themselves paying more through other channels. High demand for housing in these states drives up property values and, consequently, property taxes. Furthermore, states need to fund essential services, which often leads to increased sales taxes, impacting overall affordability.

By the Numbers: How Low-Tax States Stack Up

When comparing tax burdens across the nation, states with no income tax often show higher costs in other areas:

  • Florida boasts the highest homeowners insurance rates in the nation.
  • Texas, known for its significant revenue from the oil industry, also has high property and home insurance costs.
  • In states like New Hampshire and Wyoming, residents enjoy low sales taxes but face high property taxes and increasing home values.

Bottomline

If you're considering a move to a no-income-tax state for financial benefits, it's crucial to look beyond the apparent savings. Higher living costs in other areas might offset the benefits of no state income tax. For those looking to make a move and want a comprehensive understanding of the financial landscape, let's connect to ensure you're making the best decision for your future.

 

 

Reference: U.S. States With No Income Tax Aren’t as Affordable as You Might Think, Janet Siroto.

RECENT BLOG POSTS

Why New Homes Are Losing Ground to Resales

New-home sales slowed in July 2025 as affordability challenges weighed heavily on buyers, despite builder incentives and discounts. With prices dropping below existing… Read more

Job Security Anxiety Puts the Brakes on Homebuying

Nearly half of U.S. workers are reconsidering big financial moves like purchasing a home because of concerns over job stability, according to a new Redfin survey. Whil… Read more

July 2025 Housing Report Shows Growth in Southern Home Construction While Other Regions Experience Declines

July 2025 housing starts data shows single-family construction climbing in the South while slowing in other parts of the country. For Orange County buyers and sellers,… Read more

Permits for Apartments Drop 23% Will Rents Start Climbing?

Apartment-building permits slowed across the U.S. this past year, signaling tighter future rental supply even as demand firms back up. Here’s what the national trend—a… Read more

Mortgage Rates Just Hit a 4-Month Low — Opportunity Knocks for Orange County

Mortgage rates have dipped to their lowest point since April, creating new opportunities for buyers and shifting the negotiating landscape for sellers. This drop could… Read more

Renting a House or Apartment? Here's What You're Really Paying For

Renting a home comes with more than just monthly rent. Hidden costs like utilities, insurance, and maintenance can vary significantly between houses and apartments. Le… Read more

Mortgage Rates Hit 10-Month Low, Boosting Buyer Budgets

Mortgage rates have fallen to their lowest point in nearly a year, giving homebuyers more room in their budgets and creating fresh opportunities for sellers. Discover … Read more

Home Prices Drop in 14 U.S. Metros

Discover the latest housing market trends, including significant home price drops in major U.S. metros like West Palm Beach and Austin. Learn what these changes mean f… Read more

Home Prices Are Falling in These 4 Cities

Home values are now falling annually in four major U.S. cities, signaling a shift in the national housing market. Learn which metros are affected, why this matters, an… Read more

We are excited to assist you in finding your perfect home

Let's find a time that suits you best to chat about your goals, show you how we work, and figure out how we can help you the most