Best States for Tax Domicile: 2025-2026 Guide for Expats & Nomads

If you're an American expat, digital nomad, or remote worker living abroad, choosing the right U.S. state for tax domicile is one of the most impactful financial decisions you can make. The wrong choice can cost you tens of thousands of dollars annually in unnecessary state income taxes. The right choice—establishing domicile in a zero-tax state—can eliminate state taxes entirely while you live and work overseas.

This comprehensive guide compares the 9 states with zero personal income tax—Florida, Texas, Nevada, South Dakota, Wyoming, Washington, Tennessee, Alaska, and New Hampshire—analyzing each for expat-friendliness, ease of domicile establishment, legal protections, and practical considerations. By the end, you'll know exactly which state is best for your situation and how to establish domicile before moving abroad.

Why Your State of Domicile Matters for Expats

Even if you live abroad for years, your U.S. state of domicile determines whether you owe state income tax on your worldwide income. As explained in our guide Do Expats Pay State Taxes, states like California and New York tax domiciliaries on worldwide income—even if you haven't set foot in the state for a decade.

How Much Can You Save?

The tax savings from choosing a zero-tax state are substantial:

• California top rate: 13.3% (saving ~$13,300/year on $100K income)
• New York top rate: 10.9% (saving ~$10,900/year on $100K income)
• New Jersey top rate: 10.75% (saving ~$10,750/year on $100K income)
• Massachusetts flat rate: 5% (saving ~$5,000/year on $100K income)

Over a 10-year expat career earning $100,000/year, establishing Florida domicile instead of staying in California saves approximately $133,000.

The 9 Zero-Tax States: Complete Comparison

Here are the 9 states with no personal income tax on wages and salaries:

State	Income Tax	Expat-Friendly?	Ease of Domicile	Best For
Florida	None	Excellent	Easy	Most expats, retirees
Texas	None	Excellent	Easy	Business owners, families
Nevada	None	Very Good	Easy	West Coast expats, privacy-focused
South Dakota	None	Excellent	Very Easy	Full-time nomads, RVers
Wyoming	None	Excellent	Very Easy	Privacy-focused, asset protection
Washington	None*	Good	Moderate	Tech workers (West Coast ties)
Tennessee	None**	Good	Easy	Southern ties, low cost of living
Alaska	None	Poor	Difficult	Rare (remote location)
New Hampshire	None***	Fair	Moderate	Northeast ties

*Washington has a 7% capital gains tax on high earners ($250K+ capital gains)
**Tennessee has a 1-2% tax on interest and dividends (being phased out)
***New Hampshire has a 5% tax on interest and dividends

Bottom line: Florida is the best choice for most expats due to its established infrastructure, Declaration of Domicile, strong audit protection, and zero tax on all income types. Texas is a close second, ideal for business owners. South Dakota and Wyoming are best for full-time nomads who want the easiest domicile establishment.

Ready to establish domicile? Your Tax Base helps expats establish Florida domicile with a physical street address, lease documentation, utility bills, and mail forwarding. Plans start at $14.99/month. Get started today.