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We all pay income taxes. However all we often hear about in the headlines is income taxes imposed by individuals at the federal level (IRS). However, ~41 states also apply an income tax with rates fluctuating from 1% to 13% of your state taxable income. This post highlights the states with no income tax, listed below:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- Wyoming
- New Hampshire*
- Tennessee*
*States only tax non-earned income (investment income) such as interest & dividend income. Further, in 2021 Tennessee is expected to become the 8th tax-free state.
However, states do need to receive their money from other sources. Below is an image depicting how states with no personal income tax generate revenue.
Source: The balance
For Retirees
If you are a retiree, most of your income may be generated from the social security checks you receive (second, third or fourth Wednesday of each month depending on when you were born). If that is the case, chances are you would like to keep every dollar possible. Below is a chart that lays out which states don’t tax social security income. Note, states without an income tax also don’t tax social security income (Double Whammy!).
Source: Retirement living
Disclaimer: The information provided herein is intended solely for informational purposes and no person(s) or other third-party may rely upon it as financial, tax, or legal advice or use it for any other purposes. As a result, Royal Financial, and any affiliates, assume no responsibility whatsoever to readers, or any other persons for that matter, as a result of the information contained herein.