Best States for Remote Workers: A 2025-2026 Tax Comparison

Choosing where to live as a remote worker is one of the most consequential financial decisions of the modern career. A $200,000 earner who moves from California to Texas saves roughly $16,000 per year in state income tax — and that is before considering property, sales, and ancillary tax differences that can compound the savings (or erode them). The decision is not purely about tax, but tax is the single largest variable in the math. This guide ranks all 50 states plus the District of Columbia across four tax dimensions and overlays the cost-of-living and remote-work infrastructure factors that round out the picture.

We cover the methodology, the four tiers of states by income tax structure, the convenience rule trap, property tax comparison, sales tax comparison, the full ranking, a worked example comparing four no-income-tax states, the beyond-taxes considerations, and the next steps. Every rate and threshold cited is current as of tax year 2025, with statutory references so you can verify before acting.

Methodology

The ranking considers four tax dimensions: state income tax (top marginal rate, effective rate on $200,000 of wage income for a single filer), property tax (median effective rate on owner-occupied housing), sales tax (state rate plus average local rate), and ancillary taxes (state estate tax, capital gains tax, business tax for sole proprietors). Each dimension is weighted equally in the composite score, though individual taxpayers may weight the dimensions differently based on their specific situation.

The ranking also considers two non-tax factors: cost of living (housing, transportation, food, utilities, healthcare) and remote-work infrastructure (broadband availability, internet speed, coworking spaces, time zone convenience). The non-tax factors are qualitative rather than quantitative, but they materially affect the lived experience of a remote worker in a given state. A state with no income tax but poor broadband (parts of Alaska, rural Wyoming) is a poor choice for a remote worker who depends on reliable internet.

The analysis assumes a single filer with $200,000 in wage income, no dependents, taking the standard deduction, renting rather than owning (for the property tax portion of the comparison). Married filers and filers with dependents will see different results because of state-specific deductions, credits, and bracket structures. The ranking is a starting point for individual analysis, not a definitive prescription.

Tier 1: No income tax states

Nine states impose no state income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire taxes only interest and dividends at 4% (phasing down to 0% by 2027 under 2021 legislation), not wages. Washington taxes long-term capital gains above $300,000 at 7% under RCW §82.87, but not wages. The remaining seven impose no state income tax of any kind.

Tier 1 states are the most attractive for high-earning remote workers because the income tax savings compound over time. A $200,000 earner saves $16,000 per year in California, $14,000 per year in New York, and $11,000 per year in New Jersey by moving to a Tier 1 state. Over a 25-year career, the savings compound to $400,000 to $700,000 in nominal terms, and the invested savings grow to $1 million or more at historical market returns.

The trade-off in Tier 1 states is that other taxes and costs are typically higher. Texas has the sixth-highest property tax rate (median 1.74%); Nevada has above-average sales tax (6.85% state plus 1.25% average local); Florida has above-average property tax and a documentary stamp tax on real estate transfers. The net savings from a Tier 1 move are typically 70% to 90% of the headline income tax savings, after accounting for higher other taxes and (often) higher housing costs.

Tier 2: Low flat-tax states

Tier 2 states impose a flat income tax at rates below 5.5%. As of 2025, these include Arizona (2.5%, A.R.S. §43-1011), Indiana (3.05%, IC §6-3-2-1; scheduled to decline further under 2023 legislation), Mississippi (3%, Miss. Code §27-7-5), Pennsylvania (3.07%, 72 P.S. §7302), Louisiana (3%, La. R.S. 47:32 — scheduled to decline to 2.75% in 2026 under 2024 legislation), Kentucky (4%, KRS §141.020), Michigan (4.25%, MCL §206.51), North Carolina (4.25%, N.C.G.S. §105-134.2; scheduled to decline further), West Virginia (4.82%, W.Va. Code §11-21-4e), Illinois (4.95%, 35 ILCS 5/201), Colorado (4.40%, C.R.S. §39-22-104), Georgia (5.39%, O.C.G.A. §48-7-20 — flat tax effective 2024), Massachusetts (5%, M.G.L. c. 62, §4), and Iowa (3.8%, Iowa Code §422.7 — flat tax effective 2025 under 2023 legislation).

Tier 2 states are attractive for moderate-to-high earners because the flat tax rate is predictable and lower than the high-tax progressive states. A $200,000 earner in Arizona pays $5,000 in state income tax (2.5% flat rate), compared to $16,000 in California. The savings relative to high-tax states are $10,000+ per year, with the additional benefit of a predictable flat rate that does not scale up with income.

The flat-tax trend is accelerating. Iowa, Georgia, Mississippi, North Carolina, Arizona, Kentucky, and West Virginia have all moved to flat taxes or scheduled flat-tax transitions in the past three years. The trend favors remote workers, as more states compete on tax rate to attract high-earning residents. Several other states (Oklahoma, Idaho, Indiana, Mississippi) have scheduled further rate reductions in the coming years.

Tier 3: Moderate progressive states

Tier 3 states impose progressive income taxes with top rates between 5% and 8%. These include Maryland (5.75% top rate plus 2.5% to 3.2% local tax), Virginia (5.75%), Wisconsin (7.65%), Kansas (5.7%), Missouri (4.7% — phasing down), Ohio (3.5% — phasing down), Oregon (9.9% — actually Tier 4), Minnesota (9.85% — actually Tier 4), and several others. Tier 3 states represent the middle of the pack — neither exceptionally cheap nor exceptionally expensive.

A $200,000 earner in a Tier 3 state typically pays $8,000 to $12,000 in state income tax. The savings relative to Tier 4 states are modest ($4,000 to $8,000 per year), but the savings relative to Tier 1 and Tier 2 states are also modest in the other direction. Tier 3 states are the natural choice for workers who have personal reasons (family, climate preference) to live in those states and who do not want to optimize purely for tax.

Several Tier 3 states have rate-reduction legislation in progress. Missouri's top rate is scheduled to decline to 4.5% under 2022 legislation. Ohio's top rate is scheduled to decline further under 2023 legislation. The trend is toward lower rates, which benefits moderate- and high-earning remote workers in those states.

Tier 4: High-tax states

Tier 4 states impose progressive income taxes with top rates above 8%. These include California (13.3% top rate under R&TC §17041), New York (10.9% top rate under Tax Law §601, plus NYC resident tax up to 3.876% for NYC residents), New Jersey (10.75% effective top rate under N.J.S.A. §54A:2-1), Oregon (9.9% under ORS §316.037), Hawaii (11% under HRS §235-51), Minnesota (9.85% under M.S. §290.06), and the District of Columbia (10.75% under D.C. Code §47-1801.03). These states have the highest income tax burden in the country for high earners.

A $200,000 earner in a Tier 4 state typically pays $14,000 to $20,000 in state income tax, depending on the state and the local taxes (NYC, Yonkers, Maryland counties). The tax burden is the principal driver of the out-migration trend from Tier 4 states to Tier 1 and Tier 2 states, particularly among high-earning remote workers who have the flexibility to relocate.

Tier 4 states typically offer amenities that justify (or partially justify) the high tax burden: cultural institutions, public transit, education systems, healthcare infrastructure, and economic opportunities. The decision to remain in a Tier 4 state is a personal one that weighs the tax burden against the amenities. For remote workers who no longer need to be in a Tier 4 state for employment reasons, the trade-off increasingly favors relocation.

The convenience rule trap

The convenience rule trap is the principal complication in choosing a remote-work state. Eight states enforce some version of the convenience of the employer rule: Alabama, Connecticut, Delaware, Nebraska, New Jersey, New York, Oregon, and Pennsylvania. Under the rule, a non-resident employee who works remotely for an in-state employer is still treated as working in the employer's state unless the employer required the remote work for necessity. The most aggressive enforcement is New York under 20 NYCRR §132.4, upheld in Huckaby v. New York State Division of Tax Appeals, 4 N.Y.3d 427 (2005).

The convenience rule undermines the tax savings of moving to a Tier 1 state. A New York resident who moves to Florida and continues working remotely for the same New York employer pays New York tax on the post-move wages, because New York's convenience rule treats the wages as New York-source. Florida has no income tax, so there is no credit available. The taxpayer pays New York tax on Florida wages, defeating the purpose of the move.

The workaround is to either change employers (work for a Florida employer), convince the New York employer to assign the remote work to a Florida office or subsidiary, or accept that the move produces no New York tax savings. The convenience rule should be analyzed before the move, not after. Our convenience rule guide covers the eight states' rules in detail.

Property tax comparison

Property taxes vary dramatically by state. New Jersey has the highest median property tax rate at 2.23% of home value, followed by Illinois (2.08%), New Hampshire (1.93%), Connecticut (1.79%), Vermont (1.79%), Texas (1.74%), Nebraska (1.61%), Wisconsin (1.58%), Iowa (1.53%), and Massachusetts (1.50%). Hawaii has the lowest median property tax rate at 0.28%, followed by Alabama (0.41%), Colorado (0.51%), Louisiana (0.55%), and Wyoming (0.57%).

For a remote worker who owns a $500,000 home, the annual property tax difference between New Jersey ($11,150) and Hawaii ($1,400) is $9,750 — nearly as much as the income tax savings from moving to a no-tax state. The property tax dimension is particularly important for remote workers who plan to buy a home, because the property tax burden can offset the income tax savings.

The property tax dimension interacts with the income tax dimension in counterintuitive ways. New Jersey has both the highest property tax and a high income tax (10.75% top rate), making it one of the most expensive states overall. Texas has no income tax but the sixth-highest property tax, partially offsetting the income tax savings. Hawaii has a low property tax but a high income tax (11% top rate), making it expensive for high earners. The composite picture matters more than any single dimension.

Sales tax comparison

Five states have no state sales tax: Alaska (allows local sales taxes, typically 1% to 7%), Delaware (no state or local), Montana (no state or local), New Hampshire (no state or local), and Oregon (no state or local). These states are particularly attractive for high-spenders because the sales tax savings compound over the year.

The states with the highest combined state and local sales tax rates are Tennessee (9.55% combined), Louisiana (9.52%), Arkansas (9.46%), Washington (9.38%), and Alabama (9.24%). California has the highest state sales tax rate at 7.25%, but the combined state-local rate averages 8.82% (third highest in the country). The combined rate matters because most states allow local sales taxes that significantly increase the total rate.

Sales tax is the most regressive tax dimension — it imposes a higher burden on lower-income taxpayers who spend a larger share of their income on taxable goods. For high-earning remote workers, sales tax is typically a smaller portion of total tax burden than income or property tax, but it is still meaningful. A $200,000 earner who spends $50,000 on taxable goods in Tennessee pays $4,775 in sales tax; the same earner in Oregon pays zero.

The full ranking (50 states + DC)

The composite ranking for a $200,000 single-filer remote worker, from most attractive to least attractive, considering income tax, property tax, sales tax, and ancillary taxes:

Top 10: 1. Wyoming (no income tax, low property tax, moderate sales tax), 2. Nevada (no income tax, moderate property tax, moderate sales tax), 3. Washington (no income tax on wages, moderate property tax, moderate sales tax), 4. Tennessee (no income tax, low property tax, high sales tax), 5. Florida (no income tax, moderate property tax, moderate sales tax), 6. South Dakota (no income tax, low property tax, moderate sales tax), 7. Alaska (no income tax, low property tax, low sales tax), 8. Texas (no income tax, high property tax, moderate sales tax), 9. New Hampshire (no income tax on wages, high property tax, no sales tax), 10. Pennsylvania (3.07% flat tax, moderate property tax, no sales tax on clothing).

Bottom 10: 42. Vermont (high income tax, high property tax, moderate sales tax), 43. Maine (moderate income tax, moderate property tax, moderate sales tax), 44. New York (10.9% top income tax, high property tax, moderate sales tax, plus NYC tax if NYC resident), 45. Connecticut (high income tax, high property tax, moderate sales tax), 46. Oregon (9.9% top income tax, moderate property tax, no sales tax), 47. Minnesota (9.85% top income tax, moderate property tax, moderate sales tax), 48. Hawaii (11% top income tax, low property tax, moderate sales tax), 49. California (13.3% top income tax, moderate property tax, high sales tax), 50. New Jersey (10.75% top income tax, highest property tax, moderate sales tax), 51. District of Columbia (10.75% top income tax, moderate property tax, moderate sales tax).

The middle 30 states range from 11 to 41 and include the remaining no-income-tax states (Texas at 8 because of high property tax), the low-flat-tax states (Arizona 11, Indiana 13, Mississippi 14, North Carolina 16, Colorado 18, Michigan 20, Kentucky 22, Massachusetts 24, Iowa 26, Georgia 28, Illinois 30, Pennsylvania 10), and the moderate-progressive states in roughly the order of their top marginal rates. The exact order within each tier depends on the specific weights assigned to each tax dimension.

Worked example: $200k earner comparing TX, FL, WA, TN

A $200,000 single-filer remote worker compares four Tier 1 states: Texas, Florida, Washington, and Tennessee. All four have no state income tax on wages, so the income tax savings are identical ($0 state income tax in all four). The differentiator is the other taxes and the cost of living.

Texas: $0 state income tax. Property tax on a $400,000 home (median home value in Texas metros): $6,960 (1.74% median rate). Sales tax on $50,000 of taxable spending: $4,075 (8.15% combined state-local rate in major metros). Total tax burden: $11,035. Cost of living in Austin or Dallas: about 5% above national average. Broadband: excellent in metros, spotty in rural areas. Time zone: Central.

Florida: $0 state income tax. Property tax on a $400,000 home: $3,640 (0.91% median rate). Sales tax on $50,000 of taxable spending: $3,550 (7.10% combined state-local rate). Total tax burden: $7,190. Cost of living in Miami or Tampa: about 5% above national average. Broadband: excellent in metros. Time zone: Eastern.

Washington: $0 state income tax on wages (7% on long-term capital gains above $300,000, but our example earner has wage income only). Property tax on a $400,000 home: $3,720 (0.93% median rate). Sales tax on $50,000 of taxable spending: $4,690 (9.38% combined state-local rate in Seattle). Total tax burden: $8,410. Cost of living in Seattle: about 25% above national average. Broadband: excellent in metros. Time zone: Pacific.

Tennessee: $0 state income tax (Hall tax on interest and dividends repealed 2021). Property tax on a $400,000 home: $2,560 (0.64% median rate). Sales tax on $50,000 of taxable spending: $4,775 (9.55% combined state-local rate, highest in the country). Total tax burden: $7,335. Cost of living in Nashville: about 5% below national average. Broadband: good in metros. Time zone: Central and Eastern (state splits between zones).

Florida and Tennessee are the lowest-tax options at $7,190 and $7,335 respectively, but Tennessee has the highest sales tax in the country and lower broadband quality. Washington has the highest cost of living among the four. Texas has the highest property tax among the four. The choice depends on personal preferences (climate, urban vs. suburban, time zone, cost of living) as much as on the tax math.

Beyond taxes: cost of living, healthcare, infrastructure, climate

The tax dimension is one factor among several. Cost of living varies dramatically across the country: Manhattan is 127% above the national average, San Francisco is 95% above, and rural Mississippi is 14% below. A $200,000 earner in Manhattan has a real disposable income equivalent to a $88,000 earner in rural Mississippi — even though both have the same nominal income. The cost-of-living adjustment can dwarf the tax savings of a move.

Healthcare access varies by state, particularly for specialists and high-acuity care. Massachusetts, Minnesota, and Connecticut rank at the top for healthcare access and quality; Mississippi, Louisiana, and Arkansas rank at the bottom. A remote worker with a chronic health condition should consider healthcare access alongside the tax burden.

Broadband infrastructure is the lifeline of remote work. The FCC broadband maps show that 8% of U.S. households lack access to broadband at 25/3 Mbps, with the largest gaps in rural Alaska, rural West Virginia, rural Mississippi, and parts of rural Texas. A remote worker should verify broadband availability and speed at the specific address before committing to a move. Starlink and other low-earth-orbit satellite services are an alternative in underserved areas, but the cost is higher and the latency is higher than terrestrial broadband.

Climate is a personal factor that affects quality of life. The Sun Belt states (Florida, Texas, Arizona, Nevada) have hot summers but mild winters; the Northern states (Montana, Wyoming, the Dakotas) have cold winters but mild summers; the Pacific Northwest has a temperate climate but significant rainfall. The climate should match the remote worker's preferences — a climate that produces seasonal depression is a real cost, even if it does not appear on a tax return.

What to do next

Run the numbers for your specific situation using our multi-state withholding calculator. The calculator handles income tax, property tax (estimated based on home value), sales tax (estimated based on spending), and the convenience rule for the eight states that enforce it. The output is a side-by-side comparison of the total tax burden in each state you are considering.

Once you have the tax comparison, overlay the cost-of-living comparison using a cost-of-living calculator (such as the Bankrate or NerdWallet calculators). The cost-of-living adjustment can change the rank order of the states, particularly for high-cost Tier 1 states like Washington and low-cost Tier 4 states like parts of Oregon. The combined picture is the basis for the move decision.

Finally, if you decide to move, follow the 27-step residency change checklist to ensure the move is recognized by both the old and new states. The first post-move year is the highest-audit-risk return you will ever file, and the documentation must exist at the time of the move, not when the audit notice arrives. Our relocation tax implications guide walks through the math of high-tax-to-low-tax moves in detail, and the best states ranking (this article) is the natural companion.