Best Countries with No Income Tax in 2026: Where to Keep More of Your Money

Seventeen countries worldwide charge zero personal income tax. For remote workers, entrepreneurs, and retirees looking to keep more of what they earn, the appeal is obvious. Move to a place where the government never takes a cut of your salary, freelance income, or pension — and your after-tax income jumps overnight.

But zero income tax does not mean zero cost. Some of these countries impose steep value-added taxes on everything you buy. Others have a cost of living so high that the tax savings evaporate at the grocery store. A few make it genuinely difficult to get a long-term visa. And if you hold a US passport, you still owe taxes to the IRS regardless of where you sleep at night.

This guide goes beyond the headline number. We rank every zero-tax and low-tax country by actual livability — factoring in VAT, cost of living, visa accessibility, healthcare, and quality of life — so you can make a decision based on your real financial picture, not just a rate on paper. If you want to compare destinations holistically, start with our country comparison tool or take the relocation quiz to find your best match.

Countries with Zero Personal Income Tax

The following countries impose no personal income tax on residents. Some have no income tax at all; others use a territorial system that effectively zeroes out tax on foreign-sourced income. The distinction matters: in a true zero-tax country, all income is untaxed regardless of source. In a territorial system, only income earned outside the country is exempt — local income is still taxed.

A few things jump out immediately. The cheapest zero-tax destinations — Paraguay and Panama — are not technically zero-tax. They use territorial tax systems that exempt foreign-sourced income. If you earn locally, you pay tax. But for remote workers, freelancers, and retirees with income from abroad, the practical result is the same: your income tax bill is zero.

On the other end, Monaco and the Cayman Islands offer true zero-tax status but at a cost of living that cancels out the savings for all but the wealthiest residents. A single person in Monaco can easily spend $8,000–$10,000 per month on basic living expenses. The tax savings on a $150,000 income (roughly $30,000–$40,000 compared to a mid-tax country) vanish when your rent alone exceeds $4,000 per month.

The sweet spot for most people is the UAE, Bahrain, and the territorial-system countries. These combine genuine tax savings with manageable living costs and realistic visa pathways.

Low-Tax Countries with Better Livability

Not every country needs to have a 0% rate to offer an exceptional tax deal. Several countries have designed tax regimes that effectively result in zero or near-zero taxation for foreign residents, while offering better infrastructure, healthcare, and quality of life than many true zero-tax jurisdictions.

Georgia deserves special attention. Under its Small Business Status program, freelancers and sole proprietors earning under 500,000 GEL (approximately $185,000) per year pay just 1% on gross revenue — no deductions needed, minimal paperwork. For digital nomads and freelancers, this is arguably the best tax deal on the planet when you factor in Tbilisi's low cost of living ($1,200–$1,800 per month), fast internet, and vibrant expat community.

Malaysia has historically not taxed foreign-sourced income for residents, making it a favorite for retirees and remote workers. The country periodically revisits these rules, so verify current status before committing. The MM2H (My Second Home) program offers long-term residency with favorable tax treatment.

Costa Rica operates a clean territorial system: income earned outside Costa Rica is simply not taxable, regardless of whether you remit it into the country. Combined with a dedicated digital nomad visa (requiring $3,000 per month income proof), Costa Rica offers an attractive package for remote workers who value nature, safety, and a relaxed pace of life.

Thailand's rules are in flux. Historically, foreign income that was not remitted to Thailand in the same calendar year it was earned was untaxed. Thailand has been tightening these rules, and new enforcement may capture more remittances. If Thailand is your target, get current advice from a local tax specialist before relying on the old framework.

For EU access, Bulgaria offers the lowest flat income tax in the European Union at just 10%. While not zero, the combination of EU residency rights, extremely low cost of living ($1,000–$1,500 per month in Sofia), and a simple flat-rate system makes it compelling for expats who need to be based in Europe.

Why “Zero Tax” Is Not Always What It Seems

The promise of zero income tax is powerful marketing, but the reality is more nuanced. Before you book a one-way ticket, understand the hidden costs and caveats that trip up even experienced expats.

US Citizens Still Owe US Taxes

The United States uses citizenship-based taxation. If you hold a US passport or green card, you owe federal income tax on your worldwide income regardless of where you live. Moving to a zero-tax country does not eliminate your US tax obligation — it just means you are not paying local taxes on top of it.

The Foreign Earned Income Exclusion (FEIE) can exclude up to $126,500 of earned income (2024 threshold, adjusted annually) from US tax, and the Foreign Tax Credit (FTC) offsets US taxes by amounts paid to foreign governments. In a zero-tax country, the FTC is useless (you paid nothing to offset), so the FEIE becomes your primary tool. For a deep dive, see our FEIE vs FTC comparison. Income above the FEIE threshold is still taxable by the US at your marginal rate.

Consumption Taxes Add Up

Many zero-tax countries compensate with heavy consumption taxes. The Bahamas charges 12% VAT on nearly everything. Monaco's 20% VAT (aligned with France) hits every purchase. Even the UAE's modest 5% VAT is a relatively recent addition (introduced 2018) that signals the direction of fiscal policy in the Gulf. Import duties, excise taxes on alcohol and tobacco, and fees on vehicles can push your effective tax burden higher than the headline 0% suggests.

Cost of Living Can Wipe Out Savings

Consider the math on Monaco. If you earn $200,000 per year and would pay roughly $45,000 in income tax in a mid-tax country, you “save” that amount by moving to Monaco. But your rent alone in Monaco will run $4,000–$8,000 per month for a modest apartment — $48,000–$96,000 per year. The tax savings are absorbed by housing costs before you even buy groceries. The same logic applies to Bermuda, the Cayman Islands, and parts of Dubai. Run the full cost comparison, not just the tax line.

Healthcare Is Often Not Included

Zero-tax countries typically do not offer universal public healthcare to foreign residents. In the UAE, private health insurance is mandatory and costs $2,000–$5,000 per year for comprehensive coverage. In the Cayman Islands and Bermuda, healthcare costs are among the highest in the world. Panama and Paraguay offer affordable private healthcare, but the quality varies significantly by location. Budget $3,000–$8,000 per year for private health insurance in most zero-tax destinations.

Best Zero-Tax Countries by Persona

The right zero-tax destination depends on who you are and how you earn your money. Here is how the top options stack up for different profiles.

Digital Nomads

If you work remotely and earn income from clients or employers outside your country of residence, your priorities are fast internet, affordable living, visa flexibility, and a community of like-minded workers.

• UAE (Dubai): World-class infrastructure, fast internet, modern coworking spaces, and the Golden Visa provides long-term security. Cost is higher than Southeast Asia but manageable at $3,000–$4,000 per month.
• Georgia (Tbilisi): The 1% freelancer tax rate, combined with $1,200–$1,800 monthly costs and a booming nomad scene, makes this the best value destination for self-employed remote workers.
• Panama (Panama City): Territorial tax, US dollar economy, direct flights to North America, and the Friendly Nations Visa make it an easy choice for American nomads.

Retirees

Retirees need affordable healthcare, safety, a lower cost of living, and visa programs that welcome pension income rather than requiring active employment.

• Panama: The Pensionado visa is one of the world's best retirement visas, requiring just $1,000 per month in pension income. Territorial taxation means your foreign pension is untaxed. Retirees get discounts on healthcare, restaurants, flights, and utilities.
• Paraguay: The lowest cost of living on this list ($800–$1,200 per month), easy temporary residency, and a territorial tax system that exempts foreign income. Best for retirees who prioritize stretching their savings.
• Malaysia: Excellent healthcare, English widely spoken, and foreign income historically untaxed. The MM2H program provides long-term residency for retirees with savings.

Entrepreneurs

Business owners need a jurisdiction with strong banking infrastructure, ease of company formation, access to talent, and a tax environment that supports growth.

• UAE: Free zones offer 100% foreign ownership, no corporate tax on qualifying income (9% above AED 375,000 threshold introduced 2023), world-class banking, and strategic positioning between Europe and Asia.
• Cayman Islands: No corporate tax, no income tax, premier jurisdiction for fund structures and holding companies. Best for businesses with international revenue and high net worth founders.
• Bahrain: Rapidly growing fintech hub, no personal income tax, low cost of living by Gulf standards, and a government actively courting tech entrepreneurs with visa incentives and startup grants.

Families

Families need international schools, safe neighborhoods, reliable healthcare, and a community where children can thrive.

• UAE: Dubai and Abu Dhabi have dozens of international schools (British, American, IB curricula), world-class hospitals, extremely low crime, and a large expat family community. The Golden Visa now extends to families.
• Panama: Panama City has a growing selection of international schools, the healthcare system is strong (Johns Hopkins-affiliated hospital), and the Friendly Nations Visa covers the entire family.
• Bahrain: More affordable than the UAE with a similar family-friendly expat infrastructure. Good international schools, safe environment, and a welcoming culture.

How to Actually Move to a Zero-Tax Country

Understanding the tax advantages is step one. Actually obtaining legal residency is step two. Here are the most accessible visa pathways for the three most popular zero-tax destinations.

UAE Golden Visa

The UAE's Golden Visa grants 10-year renewable residency without requiring a local sponsor. The most accessible route for most people is the real estate pathway: purchase property worth AED 2 million ($545,000) or more. Alternatively, you can qualify as a skilled professional with a valid employment contract, or as an entrepreneur with an existing business. The process takes 2–4 weeks once documents are in order. Family members (spouse and children) are included on the same visa.

Panama Friendly Nations Visa

Panama's Friendly Nations Visa is available to citizens of over 50 countries (including the US, UK, Canada, and most EU nations). Requirements are straightforward: open a Panamanian bank account with a $5,000 minimum deposit, establish an “economic tie” (employment, business, or property ownership), and submit standard immigration documents. The visa grants immediate permanent residency. After 5 years, you can apply for Panamanian citizenship. Processing takes 3–6 months. An immigration attorney (typically $2,000–$4,000) handles the entire process.

Paraguay Temporary Residency

Paraguay offers one of the easiest residency processes in South America. Apply for temporary residency through the SUACE (one-stop immigration service), which requires a background check, proof of income or savings (approximately $5,000 in a Paraguayan bank), and basic documentation. Temporary residency converts to permanent residency after 3 years, and citizenship is available after 3 years of permanent residency. The entire process can be completed in 2–4 weeks for the initial application. Total cost including legal fees: $1,500–$3,000.

The Bottom Line

Zero-tax countries offer a genuine financial advantage, but the best choice depends on far more than the income tax rate. A country with 10% tax and $1,200 monthly costs (Georgia) can leave you with more money than a zero-tax country with $5,000 monthly costs (Cayman Islands). The tax rate is just one line in your budget.

For most people, the best-value destinations are Panama (territorial tax, easy visa, USD economy), UAE (true zero tax, world-class infrastructure), and Georgia (1% freelancer tax, lowest costs). Retirees should look hard at Paraguay for the unbeatable combination of low costs and territorial taxation. Entrepreneurs with capital will find the UAE's Golden Visa and free zone infrastructure hard to beat.

Use our tax comparison tool to see how these countries stack up against your current location, or browse individual country rankings to filter by what matters most to you — whether that is cost, safety, healthcare, or visa accessibility. And if you are an American planning this move, do not skip our digital nomad tax guide and expat tax obligations guide — the IRS does not care where you live.