Quick Answer
The best states for freelancers are Texas, Florida, Nevada, Tennessee, Washington, Wyoming, and South Dakota—all with no state income tax. A freelancer earning $75,000 could save $3,000-$9,750 annually compared to high-tax states like California (13.3%) or New York (10.9%).
Best Answer
James Okafor, EA
Best for established freelancers considering relocation or comparing state tax burdens for business planning
The no-tax states: Clear winners for freelancer taxes
Seven states impose no state income tax on freelancers: Texas, Florida, Nevada, Tennessee, Washington, Wyoming, and South Dakota. For high-earning freelancers, this represents massive savings. Alaska and New Hampshire also have no wage income tax, but Alaska has no state tax infrastructure, and New Hampshire taxes investment income.
Real savings comparison: $75,000 freelance income
Let's calculate the annual state tax burden for a freelancer earning $75,000 (after business deductions) across different states:
No-tax states: $0
Low-tax states:
High-tax states:
Ultra-high earners ($200,000+ income):
Beyond income tax: Other factors to consider
Sales tax impact: No-income-tax states often compensate with higher sales taxes:
Property taxes: Affect freelancers who own homes or office space:
Business-friendly policies:
State-specific considerations for freelancers
Multi-state income complications:
Business expense treatment:
Quarterly payment requirements vary:
The "tax haven" tier for freelancers
Tier 1 - No income tax:
Texas, Florida, Nevada, Tennessee, Washington, Wyoming, South Dakota
Tier 2 - Low flat rates (under 5%):
Colorado (4.40%), Utah (4.85%), North Carolina (4.75%)
Tier 3 - Moderate progressive rates:
Georgia (5.75%), Arizona (2.59%-4.50%), Virginia (2%-5.75%)
Avoid for high earners:
California, New York, New Jersey, Oregon, Minnesota, Hawaii
What you should do
1. Calculate your potential savings using current and projected income levels
2. Consider total tax burden including sales tax, property tax, and local taxes
3. Factor in cost of living differences between states
4. Review client proximity and business relationship requirements
5. Consult with a tax professional about residency requirements and nexus rules
For freelancers earning over $50,000 annually, relocating to a no-tax state could provide substantial savings that compound over time.
Key takeaway: Freelancers can save $3,000-$20,000+ annually by choosing no-income-tax states, but must consider sales tax, property tax, cost of living, and business factors in their decision.
*Sources: [Tax Foundation State Tax Rankings](https://taxfoundation.org/), [IRS Publication 505](https://www.irs.gov/pub/irs-pdf/p505.pdf)*
Key Takeaway: No-income-tax states (Texas, Florida, Nevada, Tennessee, Washington, Wyoming, South Dakota) offer the best tax advantages for freelancers, potentially saving $3,000-$20,000+ annually.
Annual state tax burden comparison for freelancers by income level
| State | $30,000 Income | $75,000 Income | $150,000 Income | Tax Rate |
|---|---|---|---|---|
| Texas/Florida/Nevada | $0 | $0 | $0 | 0% |
| Georgia | $1,725 | $4,313 | $8,625 | 5.75% |
| Colorado | $1,320 | $3,300 | $6,600 | 4.40% |
| North Carolina | $1,425 | $3,563 | $7,125 | 4.75% |
| California | $2,790 | $6,975 | $16,275 | 9.3%-13.3% |
| New York | $2,055 | $5,138 | $12,338 | 6.85%-10.9% |
More Perspectives
James Okafor, EA
Best for new freelancers who want to understand state tax differences without getting overwhelmed
Simple rule: No state income tax = more money in your pocket
As a new freelancer, the math is straightforward: seven states don't tax your freelance income at all. If you're just starting out and have location flexibility, these states offer the clearest tax advantage.
The "Big 7" no-tax states: Texas, Florida, Nevada, Tennessee, Washington, Wyoming, South Dakota
Real example: Your first $30,000 in freelance income
Let's say you earn $30,000 in your first year of freelancing:
In Texas or Florida: $0 state tax
In Georgia: $1,725 (5.75%)
In California: $2,790+ (9.3% bracket)
In New York: $2,055+ (6.85% bracket)
That's real money you could reinvest in your business, save for emergencies, or use for equipment upgrades.
What new freelancers should know about each no-tax state
Texas: Large freelancer community, major cities, no corporate tax either
Florida: Growing tech scene, no estate tax, warm weather year-round
Nevada: No corporate tax, close to California clients, Las Vegas and Reno hubs
Tennessee: Low cost of living, Nashville creative scene, no tax on investments
Washington: Seattle tech industry, high minimum wage, but high sales tax
Wyoming: Lowest overall tax burden, great for online-only freelancers
South Dakota: Very low cost of living, minimal business regulations
Don't forget the hidden costs
While no state income tax sounds perfect, consider:
If you can't move right now
Stuck in a high-tax state? Focus on:
Key takeaway: New freelancers in no-tax states keep 100% of their income from state taxes, while those in high-tax states can lose 5-13% annually—money better spent growing your business.
*Sources: [Tax Foundation](https://taxfoundation.org/), [IRS Publication 334](https://www.irs.gov/pub/irs-pdf/p334.pdf)*
Key Takeaway: New freelancers can keep 100% of their income from state taxes by choosing one of seven no-tax states, saving thousands annually compared to high-tax states.
Sources
- Tax Foundation State Rankings — Comprehensive state tax policy analysis and rankings
- IRS Publication 505 — Tax Withholding and Estimated Tax
Related Questions
Reviewed by James Okafor, EA on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.