For those wanting to keep as much of their income as possible, our tax attorneys have outlined all of the states that do not collect state taxes..
States Without Income Tax
Alaska: Known as one of the tax-friendliest places to live in America, Alaskan residents enjoy not only the absence of a state income tax, but also no levied sales tax!
Florida: One of the most popular retirement destinations in part due to the gentle climate, the state of Florida offers no state income tax. People who choose to retire in Florida enjoy not having to share any retirement income with the federal government.
Nevada: Not only does Nevada have no state income tax, it also has a low sales tax at 5.5 percent. Residents also enjoy property tax rates that are far below the national average, making it a popular state for property owners.
South Dakota: No state income tax and a low sales tax of 4.5 percent are contributing factors to South Dakota having one of the lowest costs of living in the United States.
Texas: A popular destination for retirees who don’t want to share their retirement income with the government, exemptions on property taxes are available to all state residents, with additional perks offered to individuals over the age of 65.
Washington: Although Washington boasts higher property tax bills due to the higher-than-average property values, residents also enjoy that coveted absence of a state income tax.
Wyoming: Not only does Wyoming have no state income tax, their residents are privy to one of the lowest state and local tax levies in the nation.
Tennessee: Finally, Tennessee will be the eighth state to enjoy the absence of state taxes. By 2021, Tennessee will join the ranks of state-tax free places to live. The Hall income tax rate that is currently low at 3 percent is slated to decrease to 2 percent in 2019, 1 percent in 2020, and as of January, 2021, will be down to zero.
While state taxes can be a significant factor to consider for many, there are certain perks and quality of living issues that some weigh as more important. Some may choose to retire to a state with no state taxes, while others may consider climate issues, location, or access to medical care of more importance when deciding where to move or retire. The absence of state taxes means that people can keep all wage and retirement income without having to share it with the government, as well as maintaining all of their dividend and interest income. It will be interesting to see if, after Tennessee joins the ranks of states with no taxes on wage income, more states will follow suit in the coming years.
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