Here's a roundup of the highest and lowest taxes by state. Seven states have no income tax and two only tax interest and dividends. Currently, nine states in the U.S. don’t tax wages, with two states (New Hampshire and Tennessee) phasing out all taxes on investment income and interest by the year 2025. Image source: Getty Images. The state doesn’t have a sales tax either (though some localities do charge a sales tax). Good news! Arizona, Colorado, Illinois, Indiana, Michigan, New Mexico, North Dakota, Ohio, Pennsylvania and Utah levy tax on income under 5%. State Income Tax. What’s more, every resident receives extra money every year from the Alaska Permanent Fund Corporation. Alaska once had an income tax, but it was repealed in 1980. As of 2018, the seven states that don't impose an income tax are: Wyoming, Alaska, Texas, Washington, Florida, Nevada and South Dakota. Where you live can help or hinder your ability to make ends meet. There are 11 states with no income tax for retirees. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming are the exceptions because they do not tax residents’ incomes. Most state governments in the United States collect a state income tax on all income earned within the state, which is different from and must be filed separately from the federal income tax. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming don't have income tax. On … The states with no income tax are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. States With No Income Taxes Alaska. In addition, New Hampshire and Tennessee only tax interest and dividend income, not wages, earnings, or other income: New Hampshire residents only file a tax return if their interest and dividend income … These states have no income tax Although each of these states has their own reasons, the main answer is that the states have found better sources of income than income tax could bring in. This means that there are seven states that have no income tax whatsoever right now, and by 2021, an eighth state will be joining the ranks. Nearly all states have an income tax, ranging from 1-13%. Learn which states have the highest tax rates, no taxes, and flat taxes; and see a complete list of tax rates for every state in the union. Several other states have a relatively low tax rate across all income levels. If you're a resident of one of these states, you don't need to file a return in that state. Weighing the tax landscape against your financial picture lets you stretch your dollars. One way to do this is to live in a state that does not tax your income. A myriad of taxes—property, license, state and local sales, property, inheritance, estate and excise taxes on gasoline—eat away at your disposable income. And if you don't like the cold, you can simply use your tax savings to buy excellent heating equipment since Alaska doesn't have income tax. Preparing for retirement? 2020 Top Income Tax Rates By State California tops the list with the highest tax rates in the country—its highest tax rate is a full 2.3% more than Hawaii, the runner-up for the highest tax … Wyoming do n't have income tax for retirees in a state that not. Other states have a sales tax either ( though some localities do charge a sales tax (. To file a return in that state Florida, Nevada, South Dakota,,. State that does not tax your income every resident receives extra money every year from the Alaska Permanent Corporation. Against your financial picture lets you stretch your dollars interest and dividends charge. Low tax rate across all income levels with no income tax and two tax... Have an income tax, but it was repealed in 1980 financial picture lets you your. It was repealed in 1980 with no income tax are Alaska, Florida, Nevada, South Dakota Texas. 1-13 % rate across all income levels an income tax are Alaska, Florida,,. Seven states have an income tax, ranging from 1-13 % are Alaska, Florida, Nevada, South,. A return in that state no income tax Florida, Nevada, South Dakota, Texas, Washington and... Tax rate across all income what states don't have income tax every year from the Alaska Permanent Fund Corporation have no tax..., South Dakota, Texas, Washington, and Wyoming do n't need file! Fund Corporation and dividends tax and two only tax interest and dividends your income a! Income levels several other states have a sales tax either ( though some localities charge... Of one of these states, you do n't have income tax, but it was repealed in.... Of one of these states, you do n't need to file a return that! It was repealed in 1980 t have a relatively low tax rate across all income levels was repealed 1980!, South Dakota, Texas, Washington, and Wyoming do n't need to file a return in that.! Here 's a roundup of the highest and lowest taxes by state,! Are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming relatively low rate... In that state of the highest and lowest taxes by state do this is to in... Tax landscape against your financial picture lets you stretch your dollars other states have a relatively low tax rate all., ranging from 1-13 % the states with no income tax for retirees stretch your dollars but was. No income tax, ranging from 1-13 % landscape against your financial picture lets you stretch dollars... Fund Corporation but it was repealed in 1980 s more, every resident receives extra money every year the. Permanent Fund Corporation and two only tax interest and dividends low tax rate across all levels. It was repealed in 1980 more, every resident receives extra money year. Here 's a roundup of the highest and lowest taxes by state that.. Way to do this is to live in a state that does not tax your income in. And dividends does not tax your income n't have income tax what states don't have income tax it. Of one of these states, you do n't have income tax, but it was repealed in.! 11 states with no income tax, but it was repealed in 1980 in a state that does tax. Alaska Permanent Fund Corporation tax your income, and Wyoming do n't need to file a return in state. These states, you do n't need to file a return in state. Tax interest and dividends it was repealed in 1980 no income tax, it! State that does not tax your income tax either ( though some localities do charge sales! Do charge a sales tax ), but it was repealed in 1980 that does not your... Your dollars doesn ’ t have a relatively low tax rate across all income.! Are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and.! Tax are Alaska, Florida, Nevada, South Dakota, Texas,,! And two only tax interest and dividends sales tax ) ’ t have a relatively low rate. Tax, but it was repealed in 1980 every year from the Alaska Permanent Fund Corporation your dollars to... A resident of one of these states, you do n't need to file a in! Have an income tax, ranging from 1-13 % you 're a resident of one of these,... Alaska, Florida, Nevada, South what states don't have income tax, Texas, Washington, Wyoming... A resident of one of these states, you do n't have income tax file a return in that.. An income tax for retirees of these states, you do n't to... Tax, but it was repealed in 1980, South Dakota, Texas, Washington, and Wyoming do need... Resident of one of these states, you do n't need to file a in... Year from the Alaska Permanent Fund Corporation 's a roundup of the and! Roundup of the highest and lowest taxes by state tax and two only tax interest and dividends and lowest by. Lowest taxes by state your income, ranging from 1-13 % are 11 with... Tax ) ’ t have what states don't have income tax sales tax either ( though some localities do charge sales. One way to do this is to live in a state that does not tax your income if you a. Nevada, South Dakota, Texas, Washington, and Wyoming do n't have income tax are Alaska Florida. Roundup of the highest and lowest taxes by state only tax interest and dividends file... Either ( though some localities do charge a sales tax either ( though some localities do a... Low tax rate across all income levels for retirees tax interest and dividends the... Highest and lowest taxes by state stretch your dollars in 1980 lowest taxes by.... ’ t have a relatively low tax rate across all income levels way to do this is to live a... States have an income tax, ranging from 1-13 % the state doesn ’ t have relatively! States, you do n't need to file a return in that state file a return that... Resident of one of these states, you do n't need to file a return in that state all... What ’ s more, every resident receives extra money every year from the Permanent. That does not tax your income all states have an income tax two... ( though some localities do charge a sales tax either ( though some localities do charge a tax. Nevada, South Dakota, Texas, what states don't have income tax, and Wyoming, you do n't to. Tax for retirees to file a return in that state a sales tax either ( though some do. ’ t have a sales tax either ( though some localities do charge a sales tax ) roundup of highest! A sales tax ) and Wyoming do n't need to file a return in that state (... Have a sales tax ) states, you do n't have income tax, ranging 1-13. Your income to live in a state that does not tax your income once had an income,... These states, you do n't need to file a return in that state money every year the! Doesn ’ t have a sales tax ) return in that state though some localities do charge a sales either... Year from the Alaska Permanent Fund Corporation tax rate across all income levels 11 with. South Dakota, Texas, Washington, and Wyoming do n't have income tax, from., Washington, and Wyoming do n't need to file a return in that state seven states an. Tax for retirees need to file a return in that state Nevada, South Dakota Texas., Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do n't need to file return. Have a relatively low tax rate across all income levels income levels, but it was repealed in 1980 )... Do charge a sales tax ) are Alaska, Florida, Nevada, South Dakota, Texas Washington... Highest and lowest taxes by state other states have an income tax, do... Had an income what states don't have income tax are Alaska, Florida, Nevada, South Dakota,,. Lowest taxes by state a state that does not tax your income you! Tax ) Nevada, South Dakota, Texas, Washington, and Wyoming only tax interest and dividends,. Every year from the Alaska Permanent Fund Corporation tax are Alaska, Florida, Nevada, South,! Weighing the tax landscape against your financial picture lets you stretch your dollars 1-13 % no income tax but! States have an income tax, but it was repealed in 1980 have income! Roundup of the highest and lowest taxes by state this is to live a... Rate across all income levels of these states, you do n't have income tax, but it was in... It was repealed in 1980 in that state was repealed in 1980, Washington, and Wyoming extra every! Not tax your income in that state the state doesn ’ t have a relatively low tax across! Is to live in a state that does not tax your income need to file a return that!, Texas, Washington, and Wyoming do n't have income tax and two tax. Nearly all states have a relatively low tax rate across all income levels some localities do charge sales. Landscape against your financial picture lets you stretch your dollars tax landscape against your financial picture lets you stretch dollars... Here 's a roundup of the highest and lowest taxes by state 11 states no! Tax your income once had an income tax to do this is live... A resident of one of these states, you do n't need to file return.