9 States With No Income Tax
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We are aware of the powerful draw that no income tax can have on your decision to move. It is not a tiny thing to skip paying your income taxes, especially in the days of inflation.
Roadway Moving gathered information about nine states in the U.S. that don’t have an income tax. This doesn’t mean that those are more affordable overall. Still, it gives them some special spark to influence your next relocation choice!
Let’s dive right in.
The states with no income taxes are Nevada, South Dakota, Texas, Florida, Alaska, Tennessee, Wyoming, Washington, and New Hampshire.
Not only that Nevada doesn’t have a state income tax, but it has one of the lowest property taxes in the U.S. More precisely, Nevada’s property taxes are 0,48%, almost double the times less than the national average of 0,99%.
This state is ranked 22nd out of 50, considering its overall tax burden of 8.23%.
There’s a catch. Sales taxes in Nevada are high and rely on grocery, clothes, alcohol, and gambling taxes. There are exceptions, though. You won’t pay a sales tax in Nevada when purchasing particular prescribed medicine, machinery, or medical devices.
2. South Dakota
When discussing South Dakota, it is essential to point out why there are no state income taxes!
South Dakota has high property and sales tax, and it is home to a couple of major credit card companies, which keeps its residents from state income taxes.
When talking in numbers, South Dakota’s total tax burden is 7.37%. Average property taxes are $2,900, and sales taxes can get up to 8%. The things saved from sales taxes are prescription medications, replacement parts, and livestock.
Texas is ranked 19th on the list of states with the lowest overall taxes. Its total tax burden is 8.19%, a product of very high property and sales taxes. Still, it is one of the most affordable states to live in and a widespread relocation for Californians.
While it is in the top 20 of the most affordable tax-considered states, it has the seventh highest property taxes in the U.S. Those are $3,900 yearly.
Sales taxes are 6.25% on all sales, rentals, and leases.
This one is special since it is the hotspot for spending retirement days! Besides wonderful weather and outstanding beaches, Florida is tax-friendly toward retirees. None of the Social Security income tax, withdrawals from retirement accounts, and marginal state tax exist in Florida.
When talking about all the others that are not retirees, you should know that the total tax burden in Florida is 6.97%, and sales taxes go from 2.5% to 5%.
This is the first state on our list without income and sales taxes! Yes, you’ve read that right. That is not the end. Alaska has the lowest total tax burden out of all 50 states! It is just 5.10%. It can’t get better than this.
We still need to break it out to you; the cost of living in Alaska is high. Your beers will cost you more than anywhere else since Alaska has the second-highest beer tax in the U.S.
The only pebble in Alaska’s shoe is its high property tax, which is 51.8%
Living in Tennessee is expensive. It doesn’t have a state income tax, but it has the nation’s highest combined sales tax rate (9.53%).
Tennessee has the highest beer tax of any state, at $1.3 per gallon. It is a way to compensate for the shortfall in other taxes. You could survive without beer for some time, right?
Wyoming has few citizens since it is the second least densely populated state. Those living in Wyoming enjoy the lack of personal and corporate state and retirement income taxes. In addition, they enjoy low sales taxes (maximum of 8%). When talking about property taxes, Wyoming has the 10th lowest property taxes, which are 0.61%! This brings us to a total tax burden of 6.14%.
For example, Wyoming makes up for its lack of taxes by taxing oil.
Washington is another state without an income tax, but high-income earners still need to pay capital gains tax. The total tax burden is 8.34%, and retail sales tax comprises the state rate of 6.5% and the local sale tax rate, which depends on the location.
An important fact to know is that Washington has one of the highest tax rates on gasoline in the U.S., with a gallon being 49.4 cents.
9. New Hampshire
With the third highest property tax rate in the country (1.86%), New Hampshire has a lot to give back to its fellow citizens. No state income tax and no sales tax (except on alcohol). It is enough for you to live a partly relaxed life.
After adding all of this up, we get the total tax burden for New Hampshire to be 6.84%.