Countries With No Income Tax: What It Means for Americans and Canadians

A short list of jurisdictions have no personal income tax on what individuals earn from employment, although some still tax business income that an individual earns locally. A longer list tax only income earned inside their borders. Neither fact, on its own, ends the tax bill of an American or a Canadian. What decides that is the law of the country you are leaving, and that is where most plans go wrong.

This article sets out, as of October 2026, which jurisdictions have no personal income tax, how they differ from territorial systems, and what the United States and Canada still expect after you move.

Which countries have no personal income tax

The jurisdictions below do not levy personal income tax on individuals’ employment income as of October 2026. Business income is a separate question: running a business locally can bring its own tax, and the entries below note where an official source says so. The list is not exhaustive. It covers only places whose position we could confirm against a government source or a current professional tax summary.

Caribbean and the Atlantic

• The Bahamas. No personal income tax. The Immigration Department’s economic permanent residence route requires a minimum investment of $1.0 million in real estate or in zero coupon bonds of the Central Bank of The Bahamas, held for at least 10 years. Source Source
• Cayman Islands. No income or withholding taxes on individuals. People who do not intend to work locally generally look at the residency certificates for persons of independent means, which require a substantial local investment. Source
• Bermuda. No income tax on individuals. Source
• Antigua and Barbuda. No personal income tax on employment income since July 2016. Self-employed business income, from sole traders, partnerships and other unincorporated businesses, is subject to the Unincorporated Business Tax, charged on net business income at bands of 0%, 8% and 25%. Source The government operates the Antigua and Barbuda Citizenship by Investment Programme. Source
• St. Kitts and Nevis. Income tax on individuals was abolished in 1980, according to the Inland Revenue Department. The government also runs a citizenship by investment programme through its Citizenship by Investment Unit. Source Source

A passport from one of these countries is not the same thing as tax residence there, and it does not by itself change where you are taxed. Our Caribbean destinations pages cover individual jurisdictions.

Middle East

• United Arab Emirates. The UAE does not levy income tax on individuals. Source The Golden visa is a renewable long-term residence visa, valid for 5 or 10 years, that does not need a sponsor. Source Its real estate investor category requires a minimum of AED 2 million. Source Business income is treated differently. An individual conducting a business or business activity in the UAE falls within corporate tax when total annual business turnover exceeds AED 1 million. The standard rates are 0% on taxable income up to AED 375,000 and 9% on the portion above that amount, subject to applicable reliefs. Wages, personal investment income and real estate investment income are not treated as business income for this purpose. Source Source Source
• Kuwait and Bahrain. No personal income tax. Source Source
• Qatar and Saudi Arabia. No income tax on employment income such as salaries and wages. Source Source
• Oman. No personal income tax today, but one has been announced. It takes effect on 1 January 2028, at 5% on annual income above OMR 42,000. Source

Europe and Asia

• Monaco. Residents are not liable for income tax, with the exception of French nationals, who are covered by the 1963 convention between France and Monaco. The Monaco government states that this applies only to people who are genuinely established in the Principality. Source
• Brunei. No personal income tax on individuals. Source

In each of these places, “no income tax” describes one tax. Governments still raise revenue in other ways, covered below.

No income tax versus territorial tax

A second group of countries does have an income tax, but generally applies it only to income from local sources. This is called a territorial system.

• Costa Rica levies income tax on local income, irrespective of nationality or resident status. Source
• Panama bases its system on a territorial concept of income: residents are taxed on income from Panamanian sources. Source
• Paraguay taxes individuals on Paraguayan-source income; company income follows different rules. The rates on personal services income run from 8% to 10%. Source

For someone whose income comes from outside the country, a territorial system can produce a result close to that of a no-income-tax country.

The caveat matters. Whether income counts as foreign-source depends on the activity, where the work is actually performed, and how the business or the investments are owned. Work performed inside the country for a foreign client is not automatically foreign-source income. Confirm the treatment before you move, not after.

Why moving is not enough if you are Canadian

Canada taxes residents on their worldwide income, and residency is a question of fact. The Canada Revenue Agency looks first at significant residential ties: a home in Canada, a spouse or common-law partner in Canada, and dependants in Canada. Secondary ties, such as personal property and social and economic ties, can also count. Source

Three rules matter here:

• Residential ties. If you keep them, you can remain a factual resident of Canada while living abroad.
• The 183-day rule. Separately, a person without significant ties who stays in Canada for 183 days or more in a year can be a deemed resident for that year.
• Treaty tie-breakers. If you are also resident in a country that has a tax treaty with Canada, the treaty can make you a deemed non-resident. That only helps where a treaty exists and you qualify as a resident under it.

Leaving also has a cost. When you cease to be a resident, you are deemed to have disposed of certain property at fair market value, and you report the resulting gains on your return for the year you leave. This is commonly called departure tax. Canadian real property and registered plans such as RRSPs and TFSAs are among the exceptions. If your property was worth more than C$25,000 when you left, you generally have to list it on Form T1161. You can elect to defer payment until the property is actually sold, in some cases by providing security to the CRA. Source Source

The capital gains inclusion rate remains one-half. The proposed increase to two-thirds was cancelled by the federal government in March 2025. Source See our pages on leaving Canada and departure tax.

After you leave, Canada still taxes income you receive from Canadian sources. The usual withholding rate on payments such as dividends, rent and pensions is 25%, unless a treaty reduces it. Source

Why moving is not enough if you are American

The United States taxes its citizens and resident aliens on worldwide income wherever they live. A citizen who becomes a resident of the Bahamas or the UAE generally has the same federal filing obligations as before. Source Leaving the U.S. changes which reliefs are available, not whether you file.

The main relief is the foreign earned income exclusion. For tax year 2026 it is US$132,900, up from US$130,000 for 2025. Source To claim it:

• your tax home must be in a foreign country, and you do not have a foreign tax home for any period in which your abode is in the United States; and
• you must meet either the physical presence test, which requires at least 330 full days in a foreign country during any period of 12 consecutive months, or the bona fide residence test, which requires being a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. Source Source

The exclusion covers earned income, meaning pay for personal services. It does not cover pensions or investment income such as dividends, interest and capital gains. For the self-employed, it reduces regular income tax but not self-employment tax. The foreign tax credit is available only for foreign income taxes actually imposed on you, so in a country with no income tax there is generally nothing to credit against U.S. tax on income above the exclusion. Source

Renouncing citizenship ends citizenship-based worldwide taxation, but it does not end every U.S. tax obligation, and it can trigger the exit tax. You are a covered expatriate if any one of these applies:

• your net worth is US$2 million or more on the date of expatriation;
• your average annual net income tax for the five preceding tax years is more than US$211,000 (the figure for expatriations in 2026); or
• you fail to certify on Form 8854 that you complied with all U.S. federal tax obligations for the five preceding years. Source

A covered expatriate is treated as having sold all property at fair market value on the day before expatriation. For 2026, the first US$910,000 of the resulting gain is excluded. Certain dual citizens from birth and certain minors are excepted from the first two tests. The same regime can apply to long-term green card holders, meaning lawful permanent residents in at least 8 of the last 15 tax years. Source Source

After renouncing, a former citizen is generally taxed as a nonresident alien: U.S.-source income remains taxable, in many cases at a flat 30% or a lower treaty rate. Source Gifts and bequests from a covered expatriate to U.S. persons can also be subject to U.S. tax.

What else to weigh before choosing a country

• The taxes that replace income tax. The Bahamas, for example, administers VAT, business licence fees and real property tax. Source Bahrain has no personal income tax but does require social insurance contributions from people employed there. Source
• Cost of living. Price housing, schooling, health insurance and travel home before you compare tax rates.
• Residency requirements. Investment routes can require seven-figure sums and long holding periods. A residence permit is also not the same as tax residence.
• Substance and time spent. Canada looks at your ties and your days, and the U.S. physical presence test counts full days abroad.
• Banking. Opening accounts as a new resident can take time and documentation.
• Your structure. Companies, trusts and each income stream are taxed under their own rules in each country involved.

Frequently asked questions

Which countries have no income tax in 2026?

As of October 2026, jurisdictions with no personal income tax on employment income include the Bahamas, the Cayman Islands, Bermuda, Antigua and Barbuda, St. Kitts and Nevis, the United Arab Emirates, Kuwait, Bahrain, Monaco (other than for French nationals) and Brunei. Qatar and Saudi Arabia do not tax employment income. Business income can still be taxed: Antigua and Barbuda taxes self-employed business income, and in the UAE an individual’s business with turnover above AED 1 million falls under corporate tax. The list is not complete.

Do U.S. citizens pay U.S. tax if they live in a country with no income tax?

Generally yes. U.S. citizens are taxed on worldwide income wherever they live. The foreign earned income exclusion (US$132,900 for 2026) can help if you qualify, but it does not cover investment income or self-employment tax.

Can a Canadian stop paying Canadian tax by moving to a no-income-tax country?

Only by actually ceasing to be a Canadian resident, which depends on your residential ties and your days in Canada, not on your new address. Departure tax can apply when you leave, and Canadian-source income remains taxable afterwards.

What is the difference between a no-income-tax country and a territorial tax country?

A no-income-tax country does not tax individuals’ employment income, although some still tax business income in certain cases, as Antigua and Barbuda and the UAE do. A territorial country, such as Costa Rica, Panama or Paraguay, taxes local-source income and generally leaves foreign-source income outside its income tax.

Is Oman still a country with no income tax?

For now. Oman’s personal income tax is effective from 1 January 2028, at 5% on annual income above OMR 42,000.

Does a second passport change my taxes?

Not by itself. Tax generally follows residence, and for Americans it also follows citizenship. A second citizenship does not remove U.S. citizenship or end Canadian residency.

If you want to see what staying where you are costs you over time, the free Cost of Staying calculator gives an estimate. If you are ready to look at your own facts, the Global Strategy Service is where that work starts.

Disclaimer: The content in this article is simplified for general informational purposes and does not apply to all situations. Readers should not make or refrain from making any decisions based on this information without first consulting a qualified professional. To look at your own situation, send us your details at the bottom of this page or start with our Global Strategy Service.