9 States That Don’t Tax Residents’ Income
The tax man cometh, the tax man taketh. There’s really no avoiding the government taking its piece of your pie, as great men have eloquently noted.
But there are still a few places of refuge from taxation. Several U.S. states do not impose a personal income tax, and there is no indication that will change anytime soon.
Sure, there are a bunch other taxes you will have to pay — federal income tax, property tax, sales tax, for example — but at least the following states let you hold on to your money for a moment.
Check out our slideshow to see which states do not charge a state tax on Tax Day.
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There is no personal state income tax for residents of The Last Frontier, and there hasn’t been one since 1980.
However, on April 10, Anchorage independent Rep. Alyse Galvin introduced a bill (House Bill 156) that would tax state residents 2% of annual income above $200,000 and $20 total for Alaskans that make less than that.
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The Sunshine State has its share of taxes that residents must pay, but no personal income tax, nor does it assess taxes on inheritance, gift taxes or intangible personal property. Forbes found that Florida had the sixth-lowest overall tax burden in 2022.
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The Silver State does not impose personal, business or corporate income taxes. However, the state does have the seventh-highest sales tax among all states, according to the Tax Foundation.
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The Granite State doesn’t tax residents’ W-2 wages but does assess a 5% tax on interest and dividend income, a tax which will be phased down to zero after 2026. But homeowners here can’t escape the third-largest property tax rate in the nation.
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The Mount Rushmore State does not assess a state income tax. Residents will also keep more money in their account in coming years, after Gov. Kristi Noem signed a bill in March that enacts the largest tax cut in state history and will lower the overall sales tax rate from 4.5% to 4.2% for a four-year period.
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The Volunteer State does not impose an earned income tax, though it does have a limited income tax on certain dividend and interest income.
But consumption of goods and services does take an added bite out of residents, with a sales tax rate that is the second-highest in the nation.
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The Lone Star State touts its “business-friendly climate — with no corporate or personal income tax.” But Texans don’t get off that easy. Consumption and property taxes are fairly high, as this report indicates.
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There is no personal state income tax or corporate tax in the Evergreen State, although there is a business and occupation (B&O) and/or public utility tax if you do business in the state.
There’s also a new tax coming down the pike — a statewide tax of 7% on capital gains of more than $250,000 from the sale of stocks and bonds, with exceptions.
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