Which States Have No Income Tax?
Editor’s Note: Ever wonder what the best states for taxes are? Not every state has the same tax rate, so there’s an advantage to living in specific states from a tax perspective. In fact, some are income tax-free states. Learn more about which states don’t have income tax in this post.
For taxpayers in a majority of the states in the U.S., tax time means filing a return for federal and state income taxes. However, that’s not the case for everyone across the country. If you’re a taxpayer in one of the seven states without an individual income tax, you are not required to prepare and file a state income tax return.
The following are tax-free states (don’t have income tax):
Tax Free States in USA (Excluding Dividends and Interest Income)
Additionally, the following are tax-free states in the USA that don’t have income taxes for earned income, but they do tax dividend and interest income. This will phase out in future years, however, making the states both income tax free by 2025.
- New Hampshire
States Without Income Taxes – Additional Considerations
If you live in a state without individual income taxes, you won’t need to pay taxes on your wages or income from Social Security, pensions, or retirement plans, such as 401(k)s or an individual retirement account (IRA). However, taxpayers in these states are still subject to other types of taxes, including local taxes, property taxes, or sales taxes.
So, What Are the Best States for Taxes?
While Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming don’t impose state income taxes, are they really the best states for taxes?
Because there are a number of additional state taxes imposed outside of income tax, the best states for taxes are really on a case by case basis. You must consider all taxes imposed, plus the cost of living in each state.
More Help with State Taxes
Whether you need help with state or federal tax help, we can help! If you want to tackle taxes yourself, use our state edition tax software. Or you can opt for virtual tax preparation with tax pros with state-specific tax expertise. Simply upload your tax documents and a tax pro will do the rest!
There are tax items to think about when you move out of state. Check out this moving out of state tax checklist from H&R Block to learn more.
What is the depreciation schedule for computers and other equipment? Learn more from the tax experts at H&R Block.
What vehicle expenses are you allowed to deduct when you are self-employed? Learn more from the tax experts at H&R Block.
Can you include the sales tax in the price of an item your claiming for a deduction? Learn more from the tax experts at H&R Block.