What You Should Know About Tax-Friendly U.S. Cities

by The Agency Team | Apr 15, 2025

As tax week arrives in the U.S., many buyers are taking a closer look at how state income taxes affect their bottom line and long-term financial picture—especially when it comes to real estate. Choosing a home in a tax-friendly state can significantly boost affordability and overall cash flow. Across the country, states like Florida, Washington, Nevada, and Texas are gaining attention not only for their lifestyle appeal but also for their financial advantages.

Here, Heather Stevens of The Agency Frisco in Texas and Dirk Hmura at The Agency’s new office in Vancouver, Washington, share timely insights into how buyers can make the most of these benefits.

Overall, why should state income tax be a key consideration when buying property? How does it impact a resident’s bottom line?

Heather: Texas has no state income tax, which means residents keep more of their earnings—boosting take-home pay and increasing home affordability. While property taxes are higher, the savings from not paying income tax often offset that cost, improving overall cash flow. This makes Texas especially appealing to home buyers.

Dirk: Washington doesn’t have an income tax either. The dollar goes further here, and with no income tax, you have more dollars. Vancouver is also just 15 minutes from Portland, Oregon, so residents can still enjoy the perks of a larger city but still be in a more tax-friendly location.

In your experience, how much of an impact does state income tax have on buyers’ decisions in your regions?

Heather: In my experience as an agent here in Frisco, the lack of state income tax is a major draw for many buyers—especially those relocating from high-tax states like California or New York. It often tips the scales in favor of purchasing here since the long-term savings can be substantial even with higher property taxes.

Dirk: There has been a significant migration of buyers heading north to Vancouver, Washington over the last several years. Remote work has made moving to a tax-friendly state an option and Vancouver has seen massive growth. It’s the fastest-growing city in the Northwest. The lack of state income tax has been a part of that, but Vancouver also has so much to offer with its waterfront, upscale suburbs, cute downtown and all of the outdoor recreation opportunities. I would also add that, initially, the dollar went further in Vancouver and the surrounding areas, but it’s now on par with Portland.

In 2025, what other markets are you seeing buyers show increased interest in due to tax benefits and affordability?

Heather: We see buyers being drawn to areas like North Carolina and Nashville as of recent. Raleigh offers affordability and is part of the Research Triangle Park, a hub for technology and research companies. Tennessee does not levy personal income tax, estate, or inheritance taxes, making Nashville an attractive destination for those seeking financial benefits.

Dirk: We have seen a lot of buyers move to Texas lately. Mainly due to the high-tech companies moving there, but being a tax-friendly state doesn’t hurt. It’s an interesting move as politically, Texas seems to be quite different compared to Washington.

What advice would you give buyers looking to take advantage of tax benefits when purchasing property in these regions?

Heather: I always tell buyers that while tax benefits—like no state income tax here in Texas—are a huge advantage, they shouldn’t be the only factor in your decision. It’s important to also consider property taxes, cost of living, school districts, job market stability, and long-term home value trends.

Dirk: Go visit! See if the “tax friendly” state is a good fit. Find a realtor that is well versed in the tax benefits, but also is well versed in the community.