Do you know there are 9 US States with no Income tax on your salary? These states don’t levy the state income tax on the residents. Residents of these states get reduction in their overall tax burden.
So, Do you think moving to the states with no Income Tax can help you to keep more of your Hard Earned money? Or you’ll pay in extra other taxes to compensate the absence of State Income Tax that cancels the impact? Let’s get a detailed overview about the subjected matter:
List of 9 US States with No Income Tax
The below listed states don’t impose the State Income Tax on the resident’s Salary, but the Federal taxes will be applied according to the Federal Tax Brackets 2023-2024:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Let’s take a Closer look on the states with no income tax, and overview the benefits to live in these states.
Alaska
Alaska is considered as the best and most Tax Friendly State, Along with the State income tax it doesn’t have Sales Tax even. Alaskans can enjoy the lowest tax rate in the country.
Although, The cost of Living in Alaska is one of the highest in the U.S due to it’s Remote Location, so it might be expensive in the other ways. Like the property tax in Alaska is higher than the National Average. The Median Property Tax bill in Alaska is approximately $3,475. However most of the residents receive the extra amount as Stipend from the Alaska Permanent Fund Corporation. The Alaska State earns major part of it’s income from Oil & Gas Sector.
Florida
Florida is also considered as the Tax Friendly State with no income tax at all. The state of Sunshine otherwise known as Florida, generates the major part of its revenue from the Universities Fee, Real State Taxes and Highways Tax amounts. The cost of living in Florida is may not higher for the most of the residents.
Residents of Florida need to pay other taxes like Sales Tax and Corporate income taxes. Grocery and Drugs are exempted from the Sales Tax while Vehicles and Clothing contains the sales tax in their pricing. The property taxes in Florida is also higher than most of the other states. The Median Property Tax bill in Florida is comparatively lower than that of Alaska.
Nevada
Nevada is famous for Natural Beauty, Unique Attractions and Low Taxes, it is often known as “The Silver State”. The Entertainment Capital of the world – Las Vegas is also located in the state of Nevada. The major part of the tax burden is directed by Excise and Sales Tax. Also this state collects one of the highest part of Sin Taxes from Gambling & Alcohol, As millions of tourist visit the silver state every year which give boost to the Hospitality and Casinos Business, thus increase in the collection of sales tax and sin taxes.
The median property tax bill per Annum is Low as compared to other states. If moving to Nevada, It is important to see the benefits of living in the Entertainment Hub against the Higher living cost due to other taxes, including sales tax, sin tax and hospitality taxes.
New Hampshire
New Hampshire is one of the 9 US states with no income tax, as it don’t levy state income tax on the residents however 4% dividends and interest rate is applicable. Another benefit to live in New Hampshire is absence of Local Sales Tax. However the Property Tax in the State of Granite is Higher than the National Average. Despite of higher property tax, this state ranked # 4 for the best living state in the U.S. The median property tax bill in the state is approximately $6,050, which is higher than most of the U.S States.
South Dakota
South Dakota is famous as a paradise for Pheasant Hunters and Iconic monument, The Mount Rushmore. This state collects most of it’s revenue from taxes applied on Cigarette, Fuel and Alcohol. However, the state has property tax rates lower than the other states in the U.S. The Local sales tax rates ranges from 4.5% to 6.5% depending upon the locality, which are still lower among other states.
Further to above, The median property tax rate is slightly above the national average. Overall you can say that South Dakota is heaven for the retired persons and businesses which promotes American Cultures and Tourism. As the state is enriched with Natural Beauty comprises of Rugged Lands, Mountains, National Parks and Monuments.
Tennessee
Tennessee is Major Hub for Music, specially the city Nashville is otherwise Known as “Music City”. State doesn’t collect any type of Income tax from the residents but it does charge higher sales tax as compared to other states. It charge taxes on Cigarette, Alcohol, Beer and Fuel. The average Tax burden for Tennessee residents is approximately 7.6% which is third lowest nationwide.
The median property tax bill for the residents is also lower than the national average. The average charged amount in terms of property tax is around $1275. Tennessee state doesn’t levy taxes on investments or interests which make it attractive for Investors looking to invest in The United States of America.
Texas
The Lone Star State famous for NASA Space Center, The Alamo and expansive Attractions including but not limited to San Antonio Riverwalk. State relies on sales and property taxes to generate a good revenue. The total tax burden on texans is about 8.6%, which is comparatively lower than other states of the country. Texas is popular among the 9 US States with no income tax. The Average salary in Texas in usually higher in comparison many other states.
Further, the quality of Education, Healthcare Facilities and infrastructure in the Lone state is not as good as other states of U.S. Also the property taxes are higher than the National Average, but still it has the lowest overall tax burden on residents. The median property tax bill in the Texas is more than $3500 which is comparatively above in comparison to majority of U.S States.
Washington
The land of Space Needle doesn’t collect state income tax but still it is the least live able state due to above the average housing prices and cost of living. Fuel prices in Washington is also higher than other states of the country. The state also imposes the tax on long term capital gains, if the profit amount is more than $250,000.
The Median property tax bill for the residents of Evergreen State is approx. $3,600 which is more than the Average Property tax. However despite all above, The state offers higher quality of living including Education Quality, Healthcare Facilities and Infrastructure. So one should focus on all the parameters before moving to the Evergreen State.
Wyoming
Wyoming is also known as “Equality State” as it is the first state in The U.S to grant vote rights, serve juries and hold public offices. This state doesn’t charge income tax to residents and corporate sector. Wyoming, the least populated state in U.S generates most of its revenue from Minerals and Property taxes.
Considering the lower tax rates and living cost might be attractive but on the other side one must look in to Quality of Life too before moving to the Cow Boy State. As the Education Standards and other necessities may lack in this state as compared to other states.
If you're living in one of these states and want to calculate the Federal Taxes on your income, You can find the Salary Calculators to get financial insights including your Take home pay and Taxes breakdown.
1 thought on “9 US States with no Income Tax”