With gas prices, grocery bills, and other everyday costs rising, many people are looking for ways to keep more of what they earn and, in some cases, what they invest.
One area to find some relief? Nine states don’t tax capital gains (i.e., the money you make when you sell assets like stocks, a business, or even your home). And on the surface, that can mean keeping significantly more of your money after a big sale.
But that tax advantage on its own doesn’t answer a bigger question: Even with no state tax on capital gains, are these states actually less expensive places to live?
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In many cases, the answer depends on “everything else,” like housing costs, property taxes, insurance, and essential expenses that can eat into gains savings.
So, here’s how the nine states with no state-level capital gains tax stack up when you factor in the 2026 cost of living.
States with no capital gains tax ranked
To show whether the no-capital-gains-tax advantage translates into real-world affordability, we ranked the states primarily using the latest available cost-of-living data (BEA regional price-parity data), with housing trends (median home prices) and state and local tax burdens (sales and property taxes) factored in.
We also considered everyday expenses, like food, fuel, and housing, to assess how much capital gains tax savings might be offset in practice.
States with cost-of-living index scores below 100 are generally cheaper than the national average, while those above 100 are more expensive.
Cost of living in no-capital-gains tax states
(Image credit: Getty Images)
The comparisons below focus on typical statewide costs and tax structures. However, costs will always vary by household and depend on housing choices, spending habits, and individual tax situations.
So, when in doubt, consult a qualified and trusted tax professional or financial planner about how different tax landscapes might impact your personal financial situation.
1. Missouri: Low housing costs with broad capital gains relief
Cost of Living Index: 88 | Median Home: ~ $285K
Property tax: Approx. 0.8%
Sales tax: 4.2% state + 3–5% local
Tax structure: Missouri allows individuals to deduct 100% of capital gains from Missouri taxable income.
Tax challenge: Missouri’s low cost of living and relatively affordable housing make it attractive on paper, but the state still relies heavily on sales and property taxes. As a result, everyday spending and local tax bills can chip away at your capital gains savings.
Tax tip: The Show-Me State can be especially attractive from a tax perspective if your capital gains are large, but your overall spending remains modest. And lawmakers are considering a proposal that could eventually eliminate the state’s income tax.
For more information, see: Another State Could End Income Tax in 2026.
2. Tennessee: No income tax but rising urban costs
Cost of Living Index: 91 | Median Home: ~$350K
Property tax: Approx. 0.6%
Sales tax: 7% state + up to 2.75% local
Tax structure: No state income or capital gains tax
Tax challenge: In fast-growing cities like Nashville, rising home prices, combined with some of the highest sales tax rates in the country, mean that “no income tax” doesn’t automatically translate into low monthly costs for some residents.
Tax tip: Avoiding the fastest-growing and most expensive areas of Tennessee might help if you’re worried about housing costs. That, in turn, could help you realize more of the tax benefits the Volunteer State has to offer.
For more information, see: 10 Cheapest Places to Live in Tennessee.
3. South Dakota: Low-cost living with zero investment taxes
Cost of Living Index: 89 | Median Home: ~$310K
Property tax: Approx. 1.2%
Sales tax: 4.2% state + 2–3% local
Tax structure: No state income or capital gains tax
Tax challenge: According to an Institute on Taxation and Economic Policy (ITEP) analysis, sales taxes in the Mount Rushmore State bear part of the revenue burden. So, for some residents, everyday spending (groceries, fuel, basic goods) carries more weight over time, even without a personal income tax.
Tax tip: If your financial picture is built around big, infrequent gains rather than daily spending, South Dakota’s tax structure can stretch your savings further.
4. Texas: No capital gains tax but high property taxes
Cost of Living Index: 94 | Median Home: ~$340K
Property tax: Approx. 1.6%–1.9%
Sales tax: 6.25% state + up to 2% local
Tax structure: No state income or capital gains tax
Tax challenge: Property taxes in the Lone Star State effectively replace income taxes. That means even after a big financial gain, ongoing housing costs remain relatively high and predictable year after year
Tax tip: Run a property‑tax estimate before you buy, because that cost can narrow the benefit of Texas having no capital gains tax, and check out our report on the cheapest places to live in Texas.
5. Wyoming: No income or capital gains tax with below-average costs
Cost of Living Index: 92 | Median Home: ~$340K
Property tax: Approx. 0.55%
Sales tax: 4% state + up to 6% local
Tax structure: No state income tax and no capital gains tax
Tax challenge: Property taxes remain relatively low on average, but Tax Foundation and NAR regional data show that local costs in Wyoming can shift quickly by county, especially in higher-demand energy and recreation areas.
Tax Tip: If you’re considering the Equality State, your monthly housing costs might be more manageable over time because property taxes are lower than in most states.
6. Nevada: Tax-free gains in a higher-cost state
Cost of Living Index: 105 | Median Home: ~$450K
Property tax: Approx. 0.6%–0.7%
Sales tax: 6.85% state + 1–3% local
Tax structure: No state income or capital gains tax
Tax challenge: Housing and services in Las Vegas and Reno have climbed above national averages, and combined with sales taxes, the everyday cost of living reduces how far those gains stretch in the Silver State.
7. Florida: No income tax but rising insurance costs
Cost of Living Index: 102 | Median Home: ~$410K
Property tax: Approx. 0.8%–1.1%
Sales tax: 6% state + up to 2% local
Tax structure: No state income or capital gains tax
Tax challenge: The real cost pressure in the Sunshine State is insurance. According to the Florida Office of Insurance Regulation, premiums have surged in many areas due to hurricane risk, meaning total housing costs (taxes + insurance) can rise well beyond what the absence of income tax would suggest.
Tax tip: If you’re considering Florida as a place to live, price homeowners’ insurance early and compare carriers, because that can change the affordability picture, even with zero personal income tax.
For more information, see: Florida Tax Trade-Off: Why 0% Income Tax Doesn’t Always Mean Cheaper in 2026.
8. New Hampshire: No wage tax but high housing costs
Cost of Living Index: 110 | Median Home: ~$500K
Property tax: Approx. 1.9%–2.1%
Sales tax: 0%
Tax structure: No tax on wages or capital gains
Tax challenge: Simplicity in the Granite State’s tax landscape comes with high fixed costs. Property taxes are among the highest in the country, according to the Tax Foundation, and limited housing supply pushes prices up, especially in commuter areas tied to Boston, per NAR data.
9. Alaska: No income tax but higher everyday prices
Cost of Living Index: 99 | Median Home: ~$390K
Property tax: Approx. 1.0%
Sales tax: 0% state + 1–3% local (varies)
Tax structure: No state income or capital gains tax
Tax challenge: Imported goods and fuel costs can drive up everyday spending in Alaska, meaning even with low taxes, your budget can feel more stretched in ordinary purchases.
Tax tip: Alaska’s Permanent Fund Dividend program can partially offset higher costs for some, making net income in the Last Frontier State surprisingly competitive.
Washington State: The no income tax state with a catch
Cost of Living Index: Above average in major metros
Property tax: Approx. 0.9%
Sales tax: 6.5% state + 2–4% local
Tax structure: Washington doesn’t make the main ranking because it doesn’t really fit the “no capital gains tax” grouping. That’s because, while the state has no broad-based personal income tax, Washington has a state capital gains tax that applies to gains exceeding a certain threshold (7% on gains over $250K for 2026).
And, as Kiplinger reported earlier this year, the Evergreen State enacted a new 9.9% millionaires’ tax set to take effect in 2028.
Tax challenge: For most residents, Washington still feels like a low‑tax environment because they don’t pay state income or capital gains tax. But high‑earning investors can face a very different picture when they sell large positions or cross income thresholds.
Tax Tip: Run a scenario that includes both the state capital gains tax and the new 9.9% millionaire tax so you can see whether your specific income and gain profile still benefits from Washington’s lack of a broad‑based personal income tax.
Are no-capital-gains-tax states cheaper? Bottom line
States with no capital gains tax can meaningfully increase your after-tax returns, but it’s only one piece of the equation when you’re considering places to live.
Once property taxes, sales taxes, housing costs, insurance, and everyday expenses are factored in, the states with the biggest tax advantages aren’t always the ones where your money actually goes the furthest.
And don’t forget about federal capital gains tax rates, which don’t depend on where you live, but rather on the type of asset, your federal taxable income, and how long you held the property sold.
