States With No Income Tax 2022
The US as a country has a very unique approach to how they handle politics. One of the greatest distinctions between the US and every other country is, logically, the states. Now, the states of the US can be viewed as separate entities. Although they make one big country, on an individual level, they all have different views and politics. Because of that, one should expect that the laws will differ depending on the state one is in. Today, we talk about states with no income tax and what advantages they provide to their residents. Now, moving to a new state needs to be done properly. Hence, you should consider hiring a professional moving company to help you. By contacting Best Cross Country Movers you will be one step closer to finding the right company for your process. Reliable movers can lower your moving expenses.
Which are the states with no income tax and should you consider moving there?
Healthcare, education, transportation, as well as many other local programs, depend on the income of the state. One of the biggest state financial contributors is the taxes the residents of certain states pay. Now, because laws and regulations of US states vary from state to state, one should know as much as possible about the situation in their own state. Each US state will have a different view on different politics, policies, programs, or federal decisions. Therefore, every state will have a different politic about taxes. Now, just because a state has no income taxes, or any other taxes, should not mean that life there is cheap. For example, on the list of states with the cheapest houses, you will not find any state that has no income tax. So, you should be wary that these things will be balanced in some way.
Is living in a “no income tax state” a good thing?
Generally speaking, we could say that it is a good thing. But this can vary from state to state. Most of the time states that do not tax this try to balance it out in a different field. So, for example, while a state might not have an income tax, it might have larger property taxes.
However, there are states that will allow you to have more financial freedom than others. Essentially, if you are to move into a state that has no income taxes, you will have a much higher chance of saving more money. Remember, moving to one of the states with no income tax might sound like a good idea, but doing deeper research is always smart. There can be things lying underneath the surface, that you would not be ready for if you decide to go into this blindly.
Are taxes the reason many Americans are moving?
Well, technically, yes they are. Among many other reasons, many Americans are looking to move to a state that is more “finance-friendly”. More importantly, many young professionals will aim to move to states that will help them save as much money as possible. Those places are, mostly, no-income-tax oriented.
Generally speaking, no income tax will do a favor to everyone that has an income. However, young professionals are the ones that will benefit from it the most, because they are at the start of their financial journey. So yes, many Americans do actually move because of taxes. Of course, we cannot generalize, because taxes are usually not the main reason for moving. Most of the time, they fall under the “cost of living” reason for moving.
Usually, when moving, it is more than just the taxes
Without a doubt, moving to a state that will not tax your salary is a big plus for the household economy. However, it is not always about the taxes. While some states might not impose such taxes, they might have a much higher cost of living than others that do. Therefore, taxes are just one variable you should take into consideration when moving. However, they do offer a great expense cut when living in a state that does not tax your paycheck.
Finances are usually the number one reason residential cross country movers relocate people. Granted, taxes are an important part of those financial plans. Be careful when making your choice. Calculate everything and ensure that moving to a certain state will help you gain that financial advantage. What if you move to a state that does not tax income, but doubles the property tax? Is it still worth it?
The US states with no income tax that you can take into consideration
- New Hampshire
- South Dakota
These are the nine states that will not tax your paycheck. Some of the states have never had income taxes, such as the state of Washington. Other states, like the state of Alaska, have recently changed the laws and regulations on income taxes. On the other hand, in Florida, you would usually have to pay other taxes more than usual, but you will have no income tax. Hence, one could say that finding the state that does favors to your finances in every aspect will be a hard job. However, no one said it is impossible. This is why it is important that you know what to look for and where. Write everything down and then compare each state to see which one works best for you.
- Corporate tax: 0.94%
- Sales tax: 1.76%
Now, Alaska is a state that has revoked income taxes in its recent history. This means that not always could you not pay taxes for your income. Today, Alaska is one of nine US states that alleviate this financial burden from its residents. However, other taxes in the state are slightly higher.
So, if you were to move to contact best cross country movers in Alaska to relocate there, you would be exempt from personal income taxes. The average sales tax for example is still a lot lower than other states in the US. The alternative way the state can collect money is through gas taxes, being at 14.35 cents per gallon. There is also a cigarette tax in the state of $1 per 20 pack.
- Sales tax: 6%
- Corporate tax: 5%
If we were to compare Florida with Alaska, we could see the difference between the sales and corporate taxes in these two states. Moving to Florida can be made easy if you hire best cross country movers in Florida to help you move. By doing so, you will be actively saving more money than doing the move yourself. Now, Florida has higher taxes than Alaska, but Florida also has a lot of tax exemptions. In addition, Florida also collects property taxes, which differ depending on the value of the market at the moment. Use taxes are enforced on people that purchase items from outside of the state and bring them in. Examples of this would be online purchases from another state or country.
- Sales tax: 8.23%
- Property tax: $533 per $100.000 of assessed home
Nevada is one of the most property tax-friendly states in the US. The property tax is one of the lowest in the entire US. Although the sales levy is about 6.85%, local businesses can add up to 1.53% of taxes on products. Because of that, the average sales tax is 8.23%. Now, because Nevada has a state and local effective tax rate of 9.7%, it falls in the middle of the “affordability” list. Moving to Nevada will be a lot easier with Nevada best cross country movers helping you.
- No sales taxes
- Property tax: $2.050 for every $100.000 assessed for the house
Although New Hampshire residents do not have sales or income taxes, they do have interest and dividends. Namely, there is a 5% tax rate on dividends and interest for every $2.400 for a single person. For joint filers, the tax rate applies on every $4.800.
Get in touch with best cross country movers in New Hampshire for a positive relocation experience. On the other hand, the state is working on phasing out these dividends and interest. The rate will be 4% in 2023, 3% in 2024, 2% in 2025, 1% in 2026, and it will be abolished in 2027.
- No corporate tax
- South Dakota residents do not file for tax returns
Although there are no corporate or income taxes, South Dakota does impose small taxes on financial institutions. These taxes allow the state to collect a bundle of funds that are going towards different initiatives and programs. In the past couple of years, South Dakota has become one of the biggest tax havens in the US. Moreover, in 1983 the state took the limit from the dynasty trust funds, allowing families to safely collect their wealth without a limit. Because of this, many Americans consider moving to South Dakota, one of the best US states with no income tax.
States with no income tax: Tennessee
- The state levies business, property, and sales taxes
- Tennessee is the state with the lowest taxes
Although Tennessee has no income taxes, there is a flat rate of 1% or 2% on any income that comes from interests or dividends. Approximately 60% of the state income comes from sales taxes. The general sales rate is about 7%.
On the other hand, the same way as Florida, Tennessee has a “use tax” on every purchase made outside of the state territory. If moving to Tennessee is what you want, consider hiring Tennessee best cross country movers. As a “tax haven”, living in Tennessee can help you create financial stability.
- Relies heavily on sales and property taxes
- The Texas constitutional amendment forbids imposing an income tax
Texas is one of those states that always try to make residents as happy as possible. Although there are no income taxes, Texas heavily relies on sale taxes, which are about 8% since 2019. The state also imposes the use taxes, like many other states we talked about. In fact, the average tax rate in Texas is slightly more than 5% higher than the average tax rate in New York. By forbidding the income tax increase through the constitution, the Texas government ensures its residents about their financial freedom.
States with no income tax: Wyoming
- More than 50% of tax income in the state comes from nonresidents
- With a sales tax of 4%, Wyoming has the lowest sale tax in the US
The effective state tax in Wyoming is very similar to the low rates of Alaska and Tennessee, being at 7%. On average, the property tax is around 0.57% of an effective rate.
The gas tax of Wyoming is lower than the average, being at 23 cents per gallon. Moreover, getting in touch with best cross country movers in Wyoming would also mean moving to a state that is one of the most tax-friendly states in the US.
- Has one of the highest effective state tax rates of 9.8%
- The sales taxes vary from county to county, ranging from 6.5% to 10.4%
To conclude our list of the US states with no income tax, we talk about Washington. This is the last state in the US that does not have any income taxes. However, the state of Washington has other taxes to compensate for having no income tax. Other taxes that are on a local level are usually very complex and would require learning and getting used to. Generally speaking, aside from the no income tax, Washington will not be so friendly towards your wallet and bank account.