No Income Tax States: Who Benefits From Living in One

Being in the United States, you owe federal tax and state tax. A way to accomplish having a lower tax bill is to live in a state with no income taxes. As of 2021, nine states are considered no income tax states.

Tennessee, as of 2021, just got rid of taxes on investment income, which would be dividends and capital-gains taxes and interest. New Hampshire does not tax earned personal income but has taxes on investment income and interest that will be phased out by 2023.

The great thing about these states having no income tax is that you can earn as much as you want without paying income tax to the state government. Even living in your retired life, you can live without worrying if your social security is income tax-free.

Here is a list of the nine no-income-tax states:

– Alaska – Florida – Nevada – New Hampshire – South Dakota – Tennessee – Texa – Washington – Wyoming

The benefit of moving to one of the no income tax states is pretty apparent. You do not need to pay income taxes on your income, which means you can keep more of your money and use the savings to invest the money. With more money, you can seek out more investments for your Roth IRA or other retirement accounts.

The perception is that the less income tax you pay, the more you can save. That is true in that assumption. At this point, you need to look into what states will do to generate income.

In no income tax states, the states impose taxes and various things such as higher sales tax or even higher property tax. That is a way to generate income for the state, and it is also the belief that plenty of people coming from out of state can create revenue from higher sales tax.

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