Tax laws can be some of the most confounding parts of financial regulations. Though the majority of states have some form of income tax, there are seven out of the fifty U.S. states that do not collect taxes on their residents’ income. In this article, we will look at how these no income tax states operate their tax systems, and what implications that has for those living and working within them. There are currently seven states that do not impose a personal income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
Alaska: Alaska does not have an income tax, but it does not have a sales tax either. Instead, Alaska relies on other revenue sources for its funding. Alaska has the highest dividend payouts under its Permanent Fund Dividend and personal property taxes.
Florida: Florida does not collect income taxes on any level, so its citizens and residents pay no personal income taxes.
Nevada: Nevada also does not have an income tax or a sales tax, but the state does collect some other taxes such as gaming and entertainment taxes.
South Dakota: South Dakota also does not have an income tax, making it one of the most tax-friendly states in the country.
Texas: Texas does not collect an income tax, but it does have some of the highest property taxes in the country.
Washington: Washington does not collect an income tax, but it does have a sales tax.
Wyoming: Wyoming is one of only two states (the other is Alaska) that does not collect an income tax but still has a state sales tax.