There’s a saying that goes, nothing is permanent in life except for death and taxes. But apparently, this isn’t always true. Can you actually live without paying your income tax? Do you wonder if you can live in states with no income tax? The government charges income tax on the incomes of individuals and businesses. This tax serves as a fund to finance public services. It is about the many kinds of taxes that are important to support the government and its people.
Now that you know what an income tax is, you might ask yourself, are income tax important? What will happen to a state if there are no income taxes? How can a state-run without collecting income taxes from its citizens? Yes, income tax is very much important just like the other taxes. This is where the government gets its funds for projects and plans. But can you believe that there are actual places that don’t collect income taxes? If you’re interested in these places, this one is a good read.
Nevada, Alaska, New Hampshire, South Dakota, Florida, Wyoming, Tennessee, Texas, and Washington. These are the nine individual states that do not have their income taxes. These nine states have their reasons why they are not dependent on income taxes. They have several ways where to get their finances. Listed below are the income-tax free state in the United States of America:
Nevada is a state that does not pay for income tax. It is in the area in the west part of the United States. This makes this place famous for business owners. Retirees also choose this place to stay. The government dramatically relies its finances on other revenues. This is one reason why people don’t pay income taxes. People get their finances from high sale taxes from buying groceries and clothes. People in Nevada pay for their casino and hotel taxes. They also get charged for sin tax. Their citizens also pay to have their property taxes. But, this state has one of the lowest rates in property taxes. But Nevada has no inheritance tax. Also, this state does not have estate taxes.
Another U.S state on the list is Alaska. This state does not have a sales tax or income tax. The reason for this is, they depend their funds on other revenues. The citizens of Alaska receive payments from the Alaskan Permanent Fund Corporation every year. The government gets its finances on petroleum revenues. The Department of Revenue’s tax division makes reports on a regular basis. The department also has to issue an overview about the operations and new state laws.
The people of Alaska do not pay for income taxes. But they pay for vehicle rental tax and an excise tax. They also pay other taxes, such as general and local taxes. The General Sales Tax ranges from 1% to 7%. Local taxes include raw fish and bed taxes. Severance, liquor, gambling, and fuel transfer taxes are also on the list.
New Hampshire is a state that does not impose income taxes. This state is in New England, and it depends on other taxes. Thus, the government does not oblige their people to pay for income taxes. The government of New Hampshire is not dependent on income taxes. But they get tax interest and dividends. The Hampshire’s Senate has signed legislation about income taxes. The legislation is to reduce the investment in income tax by 1% every year. New Hampshire will fully implement the law by the year 2025.
The state dramatically relies on other taxes. They depend on excise taxes including alcohol taxes. The government also collects property tax from their residents. New Hampshire ranks as the third-highest in the country for a property tax rate with a tax rate of 2.20%. This state ranks third in the highest rate of median property in their country.
This state ranks second on “Best States to Live In” as featured in the U.S. News and World Report list. On the other hand, New Hampshire does not collect tax from local sales.
The fourth on the list is South Dakota, home of the Black Hills and Lakota Sioux. This state has a strong economy and depends much on tourism and farming.
This state does not impose income tax. Instead, the state depends on generating funds from other taxes. They collect taxes from cigarettes and alcohol. South Dakota implements sales tax rates lower than other states. But it charges property tax rates higher than in any state.
This state is helpful for retirees because of its friendly taxing scheme. . It is a place favorite for its distinct position. It abodes star player companies in the industry. The higher rates that the state imposes in property tax is the reason they do not collect income tax. The government gets its revenue on property and sales tax.
Sales taxes can be in 4.5% to 6.5%, depending on the location of your state. Despite not collecting income tax, the state provides the highest fund on education. This country is famous because of its tax-friendly atmosphere. The government does not charge the entire tax burden to the people.
Another no income tax state in the United States is Florida. This state is famous for its snowbird feature and also notable for its cozy and warm temperature. This place also is a home for many retirees. Their citizens do not have their regular duty of paying income taxes. It is the strength of this state that they do not let their citizens pay their income tax.
Florida depends on taxes coming from their sales. The property and sales taxes are higher than the national average. Thus, Florida is an income tax-free country. They rank as the 5th lowest in the country when it comes to the overall tax burden as they implement only 6.82%.
It is because of their 6.82% overall tax burden. This state also ranks 35th when it comes to affordability. It ranked tenth place higher than Alaska because of the above-average housing and living cost. But yet, this state landed at the 13th spot in “Best States to Live in’. This is in the U.S. News and World Report list. Florida is not assessing its estate tax. It means that there is no single portion of the inheritance to an individual that can go to the government.
Tennessee established its name as the Most Tax-Friendly State. This State sets to change from a tax investment earner to a no income tax earner like the eight other states. In 2016, the Tennessee governor signed a bill to reduce the percentage of the citizen’s unearned income tax. The imposed bill reduces 2% of the income tax in 2019 until the year 2022. This bill aims to cut the income tax in Tennessee, also known as the Hall Income.
Today, the State continues to grow steadfast to fill in the extending gap. Tennessee’s highest average state tax relies on the revenue of their beers. The average beer tax rate runs for about 1.29 dollars per gallon as of January 2020. Despite the brewing struggle, the state reported that the local sales tax reached 9.53%. The state gained the highest combined sales tax out of all the States in the United States. The Tax Foundation, a leading non-profit independent tax policy of the nation, released the data.
As an investment earner, Tennessee will soon become a friendly place for those who depend on investment income. Tennessee ranked 30th in the Best State to Live in 2019 and placed 22 for its affordability in 2018. If you wish to live in America, Tennessee is an excellent choice.
Texas, The Lone Star State, ranked fourth with 45.0 percent out of the states relying on property taxes. They ranked 4th by eliminating the personal income taxes collected from the people. Among other states, Texas depends on both high sales and expurgate taxes for the nation’s income.
The state holds a sales tax of 6.25 percent. These taxes have confined jurisdictions on local taxes. The state is expecting it to push to 1.94 percent from additional taxes. The said push was in great effect, which resulted in a combined rate of 8.19 percent.
They considered their sales tax rate as above-average. Texas also collects property tax higher than the average rates. Despite gaining a high tax rate in property and sales, Texas is surprisingly considered one of the lowest in the overall tax.
Living in this State is quite difficult. But if you wish to, here’s data collected by the U.S. News and World report. The data shows that Texas placed 23rd out of all the U.S. States for affordability, which lies on average. Despite this, it ranked lower, reaching 38th place among the best states to live in.
Washington has a young population among other states in the United States. This is surprising, having only 15.9 percent of residents aged 65 and up, together with many employers. The State never imposed a personal income tax. Since 2010, Washington disagrees with the proposed income tax of the State’s richest residents.
Despite the absence of corporate income tax, the State managed to find alternatives. They use different resources that the State has − businesses. Despite their resident’s status, taxpayers are among the State’s highest tax sales.
The State gains its taxes primarily on gasoline production. According to the Energy Information Administration, the tax they gain on gasoline fees charges 49.5 cents per gallon. This considers Washington the third-highest among other states like Pennsylvania and California. Aside from businesses, they acquire taxes on occupations, which is another link to collecting taxes.
State residents believe that Washington is a great place. This is despite the high rate of sales and expunged taxes, high cost of living, and the high price of their gasoline. Washington ranked the best state to live in the United States of America.
Wyoming is the second least densely populated state after Alaska. The citizens of the states live their lives to the fullest. This is because they don’t have personal or corporate state income taxes. The citizens of Wyoming do not also have retirement income taxes and low sales tax rates. The State’s average property tax rate falls only around 0.6 percent, with an average sales tax rate of 5.5 percent. With these low sales on tax rates, how did they manage to fill their State’s needs?
Like Alaska, the State generates its taxes with other things like natural resources. Wyoming State earns its taxes mainly with coal and oil drilling operations. Besides, Wyoming State also relies on property taxes where they ranked fifth with 44.5 percent.
The State has a low tax rate and average in terms of affordability. Wyoming ranked 31st in the Best State to Live in the United States.
Without a doubt, taxes have a significant effect on a state or a country’s operations. With these No Income Tax schemes, it spares individuals from the tax burden. It looks so beneficial for every citizen of different ages. This is an advantage, especially when it comes to securing wages. It doesn’t apply any deductions. But bear in mind that they still find other ways to loot for taxes.
A state couldn’t run effectively and efficiently without taxes. Keep in mind all the types of taxes you need to pay. It can be on natural resources or property costs. Summing it up makes it quite pricey and as high as paying personal income taxes too.
Planning to live in one of these states is somehow risky. You might think of how your pockets will be greatly affected. You may pay higher than your income tax if you plan to establish a firm or business as it will acquire business tax. But if you want to, for a fresh new start or just want to live near your relatives, you are welcome to live in these states without income taxes. The important thing to note is whether you are paying for income tax or not, it will do good for the government and the people.