Feb 20, 2024 By Susan Kelly
Are you tired of paying state income taxes every year? Good news - seven U.S. states don't have a state individual income tax, and they're Badass. We'll explore the wonderful world of state-level taxation (or lack thereof).
We'll dive deep into understanding why these seven states can get away with not having an individual income tax, what unique strategies they use to ensure their citizens are cared for, and which other states might soon join in on the fun.
The seven states that don't have state income taxes are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. While each of these seven states has a different approach to taxation, they all share one common denominator - no individual income tax. Let's look at how these seven states manage to get away with not having an individual income tax.
In addition to having no state-level personal income tax, the seven Badass U.S. states that don't have a state individual income tax also employ unique strategies to ensure their citizens get the services they need without breaking the bank on taxes. For example,
Both rely on sales tax revenue to stay afloat. Alaska has a particularly unique approach as it relies heavily on revenues from the oil industry for its tax income.
Florida has no income tax but an intangible property tax, meaning they get money from people who own stocks, bonds, and other investments that are not physical assets.
Texas, Washington State, and Wyoming also have interesting approaches - from creating special economic zones in Texas to relying heavily on mineral extraction taxes in Wyoming.
As of right now, seven states don't have state individual income taxes, but this could easily change in the future. New Hampshire and Tennessee don't have a state income tax but offer residents the option to pay interest and dividends tax instead. If these two states chose to eliminate their interest and dividend taxes, they could become part of the no-income-tax club.
Several other states, including North Carolina, Ohio, and Louisiana, have recently considered eliminating their income taxes. While these states still need to go through with it, they are all actively considering the option, which could make them additional members of the Badass No Income Tax Club in the future.
The answer to this question depends on the individual. Some people might find living in a state without an income tax benefit, while others may prefer the structure with a more traditional tax system.
Living in a state without an income tax doesn't necessarily mean you won't pay taxes - many states rely on sales taxes and other types of taxes to make up for the lack of personal income tax. It is up to each individual to decide what type of taxation system they prefer.
Living in a state without an income tax can have several advantages.
Living in a state without an income tax can benefit individuals looking to save money or gain greater financial autonomy. However, it is important to remember that states with no income tax also tend to rely heavily on other types of taxation, such as sales and property taxes, which may cost individuals more than an individual income tax would.
It is ultimately up to each individual to decide if the pros of not having a state income tax outweigh the cons.
While living in a state without an individual income tax can have many advantages, knowing the potential downsides is important.
It is up to each individual to decide if living in a state without an individual income tax is right for them. There are advantages and disadvantages to consider regarding this taxation system, but ultimately, it all depends on what makes sense for you and your particular financial situation.
No, Florida does not have a state individual income tax, but it does have an intangible property tax which means they get money from people who own stocks, bonds, and other investments that are not physical assets.
No, Texas does not have a state individual income tax. The state relies heavily on sales taxes and other fees to generate revenue.
In California, taxes are based on income level. Single filers making up to $8,809 do not pay any state individual income tax, whereas those making between $8,810 and $27,080 pay 1% in taxes. Those between $27,081 and $40,781 pay 2%, while those between $40,782 and $54,433 pay 4%. Finally, those making over $54,434 pay 6% in taxes.
It's undeniable that living in the United States of America is an amazing opportunity. Its diverse cultures and relentless economic activity make it a special place for citizens and foreign visitors. However, no one should ever forget about the individual states that form this nation and how they differ in taxation. While state income taxes can be steep in some places, there are still many cases where those taxes do not exist: the badasses without a state income tax.