The majority of the United States requires residents to pay state income tax. The seven states listed below offer residents the option to live without paying income tax to their state. This can save you thousands of dollars each year! If you’re considering moving to one of these states because of their lack of income tax, don’t forget that there are plenty of other important factors to consider in your decision, including climate, employment opportunities, cost of living, and so much more!
To learn more about these seven states and whether or not they might be right for you, keep reading below.
For starters, Alaska has no state income tax. Residents earn between $8,300 and $75,000 in annual taxable income without paying state taxes.
Alaska’s highest earners pay some of the lowest tax rates anywhere in America, at just 1 percent for earnings over $100,000. Plus, unlike many other states with low or no income taxes on top earners, Alaska’s state sales tax rate is also among one of America’s lowest (7 percent), meaning it doesn’t get much easier than that for high-income individuals who don’t want to pay state income taxes.
Thanks to a friendly business environment, Florida’s gross state product is one of the largest in America. The unemployment rate is high, but local businesses are hiring in various industries.
As one of the few states without an income tax, it’s also easy for employers and employees to keep more cash in their pockets. And when it comes to time for vacation or relocating, the Sunshine State has some great beaches and exciting cities like Miami and Tampa Bay.
Nevada doesn’t tax the wages earned in the state but taxes interest and dividends. Instead, it charges a state sales tax rate of 6.85 percent on goods and services. That’s higher than any state except Louisiana, Tennessee, and Arkansas.
If you do business in Nevada, you may be subject to its gross receipts tax as well, but at least there are plenty of ways to legally reduce your taxable income so that either rate taxes only your net income. In total, Nevada has five different rates for different types of businesses.
Also read: How Much Should You Save From Your Paycheck?
Most entrepreneurs will likely have to pay both rates. While some states have no corporate income tax, they often require corporations to pay franchise fees instead. Those fees can be important.
Residents of Texas don’t have to pay state income tax on any wages they earn or capital gains (investment profits). However, those who work outside Texas are still subject to federal taxes and may be required to pay a portion of their wages in taxes.
It’s also possible that some residents may owe state income tax depending on where they live or earn their income. If you aren’t sure whether you should be paying Wyoming state income tax, seek advice from a financial professional in your area.
Washington has no state income tax, though it has a high sales tax, which can make up for some or all lost income. Also, Washington’s taxes on goods and services are relatively low compared with other states; the state ranks 31st out of all 50 states in terms of total sales tax collections.
In general, it’s not as cheap as moving to one of our №1 states (Tennessee and New Hampshire), but it could be worth a look if you want to live near Seattle or another major city. If you work remotely from a home office, Washington might be an option, too, since there is no state income tax on non-wage income either.
Wyoming is arguably one of America’s most beautiful states. Not only is it gorgeous, but it also has no state income tax. Wyoming’s lack of a personal income tax, along with its low property taxes and high home values, make it an ideal state for retirees who plan on staying put in their homes for more than five years.
More than 3% of Wyoming’s population is over 65 years old, making it an excellent choice for seniors looking to get away from high-cost states like California and New York. Colorado seems a better bet, as there are only six states with better retiree living conditions, but Wyoming isn’t too far behind at №10.
7) New Hampshire
New Hampshire is one of seven states in America with no state income tax. As a result, your income-and therefore how much money you get to keep-will be higher than in most other states. In addition, New Hampshire is not an expensive place to live, especially if you have children.
The average cost of childcare is around $9/hour, versus $14/hour in most other parts of America. And finally, with no state income tax comes a lower cost for businesses; corporate taxes are so low that some companies will relocate their offices there because it’s just more affordable overall.
Also Read: Why Taxes Are Important For The Economy