8 States in the US with No Income Tax (2022 Updated)
You have probably heard the phrase, “It’s not how much you earn, but it’s how much you save” to describe a very important wealth management principle.
The most obvious step is to reduce your cost of living, which varies vastly depending on location.
The amount you spend on rent, food, transportation, and even taxes could be worlds apart depending on where you live.
If you are looking to move for (potentially) more financial freedom, here's a list of states in the United States with no legislated income tax to give you more money-saving options.
Alaska
Alaska literally translates to “great land,” a most befitting name for a state that measures 1.723 million km² (almost four times larger than the state of California). While known for its chilly weather, most people would be surprised to see that there are bustling metropolitan cities with annual business revenues in the billions of dollars.
Most top industries though are still in the business of processing natural resources such as crude oil, natural gas, coal, and precious metals such as gold.
The state boasts of picturesque towns perfect for those looking to commune with nature. Local industries support tourism through bed and breakfasts, hotels, and transportation.
Its oil and petroleum industry fund much-needed government services, the savings from which are passed on to its residents through its zero individual income tax policy.
Florida
If cooler climes are not for you, then consider moving down south to Florida. Also known as the “Sunshine State”, it is famous for its beach resorts and nautical recreation activities as it is sunny almost all throughout the year. You can definitely do away with layered clothing during its mild winters which averages 76 to 80 degrees Fahrenheit. No need for chunky snow boots or thermal underwear here- a light sweater or windbreaker would do.
Miami Beach is renowned for its bustling nightlife, but if that’s not your thing then you can always make your way to Disney World or Universal Studios.
The state may not have income taxes but you still have to do your part as a resident if you own property (through property taxes) and pay levies on your purchases (through sales tax).
The cost of healthcare, housing, goods and services also costs less than most states. If all of this sounds appealing to you, then you may want to consider moving to sunny Florida.
Nevada
Another state with no income tax is Nevada.
Also known as the Silver State, it is the nation’s second-largest producer of silver after Alaska, aside from being one of the world’s largest sources of Gold (fourth-largest, in fact).
Its name comes from the Spanish word meaning “snow clad”, referencing the snow covered peaks of the Sierra Nevada.
Nevada is renowned for its lucrative tourism industry and is the casino capital of the United States. The combined generated income contributes significantly to the state’s coffers.
New Hampshire
New Hampshire is known as the Granite State because of the huge stone formations surrounding its terrain, but its name comes from the English who settled there in commemoration of Hampshire, England.
It is exceptionally picturesque and it is no wonder that tourism is the major source of income for many of its residents, followed by healthcare.
Housing options might vary considerably depending on where you live, with those closer to Boston fetching a higher price.
While the state offers no income and sales tax arrangements, it still pays to do a quick analysis of your expenses against your savings should you decide to move, as the cost of living is approximately 5 to 18 % higher than the average.
South Dakota
Another state with lower to no taxes is South Dakota. It is famous for the massive sculpture depicting US presidents George Washington, Thomas Jefferson, Theodore Roosevelt, and Abraham Lincoln carved into Mount Rushmore.
The affluent have recently turned to South Dakota for its many tax breaks such as the absence of income and capital gains taxes.
Tennessee
The name Tennessee has its origins in the Native American language that means Gathering Place.
It seems to have been providential as it has become known as a melting pot of culture, particularly music.
There are numerous music festivals and is known as the birthplace of many genres like blues, rock and roll, gospel, and soul.
Music lovers will definitely enjoy living in Nashville and Memphis which launched icons such as the king himself, Elvis Presley.
There is no state-mandated income tax, but cost of living varies greatly depending on which city you choose to settle in.
Texas
Like Tennessee, Texas also comes from a Native American word which means “friends”. The same virtue is reflected in the state’s motto which is Friendship.
Like most places in the world, job security in the “Lone Star State” was affected by the pandemic but is on a fast rebound.
It's easier to buy a home in Texas as they are priced lower than the national average. State laws also ensure greater leeway when it comes to paying your mortgage.
Except for winter, you can expect sunny weather all year round. It does snow in Texas, albeit a lot less than in other more northern states.
They also don’t charge their residents income tax, and coupled with affordable housing, could be the place for the financial reprieve you are looking for.
Wyoming
If you are a bit of a cowboy (or cowgirl), then living in Wyoming will be most enjoyable. The great outdoors is sure to appeal, as Wyoming has some of the cleanest air in the U.S.
From Yellowstone Park, to Bison ranches, there is a lot of nature to enjoy.
A word of caution though, winters can be extremely cold in Wyoming. Otherwise, the weather is just right for outdoor activities.
Aside from offering no income and corporate tax for its residents and businesses, they have also done away with estate tax, which makes it a good place to plan inheritances for the next generation.
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