Question of the Day: How many states do not have state income taxes?
Did you know that most people have to file tax returns for BOTH federal AND state income taxes? Listed below are 8 states that do not (as of 1/31/2023) have state income taxes.
Answer: 8 states including Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming
Note: New Hampshire taxes investment income but will eliminate those taxes by 2028.
Questions:
- How does your state's tax rate compare to other neighboring states?
- Do you think that states that have high state income tax rates (e.g., CA and NY) have to pay higher salaries to compensate employees for these high taxes? Why or why not?
- Can you name common taxes that people pay other than state and federal income taxes?
Behind the numbers: (Investopedia):
"Everybody wants a lower tax bill. One way to accomplish that might be to live in a state with no income tax. At present, seven states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming—levy no state income tax at all. Washington state levies an income tax on investment income and capital gains, but it is only for certain high earners.
Though Tennessee used to tax investment and interest income, the Hall income tax was fully repealed as of Jan. 1, 2021. Elsewhere, New Hampshire currently taxes investment and interest income but is set to phase out those taxes starting in 2023. That will bring the number of states with no income tax to nine by 2027."
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We update our taxes unit every year! Check out the updated Taxes Unit.
About the Author
Mason Butts
After graduating from UCLA with a Master's in Education, Mason spent 5 years as a science educator in a South Los Angeles public high school. He is committed to supporting the holistic growth of all students and empowering them to live a life of relational, academic, and financial success. Now settled in the Bay Area, Mason enjoys facilitating professional developments and partnering with educators as they prepare students for a bright financial future. When Mason is not building curriculum or planning a training, he can be found cycling, trying new foods, and exploring the outdoors.
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