Is there no income tax in USA?

If you are a U.S. citizen or a foreigner with a green card in the country, you must be wondering if there is no income tax in USA? In this article we will tell you all about it.

U.S. citizens and foreigners with a green card in the U.S. must pay taxes on their worldwide income, which means that they will pay on income earned anywhere in the world.

However, there are some places where there is no income tax in USA and in this article we will tell you about it.

Know the consequences of tax evasion:Is tax evasion illegal in the US?

Know the states where there is no income tax in USA

There are nine states where there is no income tax in USA, these states offer unique tax structures and sources of income that make you as an individual not having to pay income tax.

The states where you as an individual do not have to pay income tax in USA are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

Here’s everything you need to know about:What is the biggest tax evasion?

It should be noted that although many consider these states a financial paradise, the states mentioned above generate income from other taxes, such as property taxes and sales taxes.

Below we will discuss in more detail the states in which Is there no income tax in USA?

Alaska

There is no state income tax or sales tax in Alaska. In addition, all Alaskan residents receive an annual payment from the Alaska Permanent Fund Corp, which is made up of income and investment earnings from rents and royalties from mineral leases.

However, the cost of health care in Alaska is extremely high, ranking it as the fastest and highest rising health care state in the country.

Florida

The Sunshine State is one of the U.S. paradises for high-status individuals and retirees because they pay no state taxes. However, Florida’s sales and excise taxes are above the national average, but the tax burden is the fifth lowest in the country.

On the other hand, Florida imposes a business income tax of 5.55, however, sole proprietorships and S corporations are partially or totally exempted from that tax.

Nevada

There is no income tax in Nevada, but it does rely heavily on sales tax, which is very high. They also rely on casino and hotel taxes.

Also, with regard to affordability, Nevada has high living and housing costs, making it an expensive state to live in. With regard to health care, it has low costs.

New Hampshire

New Hampshire does not tax earned income, but it does tax dividends and interest. On the other hand, it is important to note that the Senate in the state passed legislation with the purpose of gradually eliminating the tax on investment income.

It should also be noted that New Hampshire does not have a state sales tax, however, it does collect excise taxes, including taxes on alcohol.

South Dakota

South Dakota has no income tax but raises revenue through taxes on cigarettes and alcohol. It also has one of the highest sales tax rates in the United States and its property tax rates are quite high.

Here’s all you need to know if you are abroad:Can I file my US taxes from abroad?

Tennessee

As of 2021, a plan was approved to eliminate taxes on income that is not derived from work. Therefore, Tennessee seeks to attract retirees with this measure.

It should also be noted that Tennessee’s total tax burden is the fourth lowest in the United States. In addition, it is considered one of the best states to live in.

Texas

In Texas personal income taxes are prohibited in the state constitution. However, the state relies on sales and excise income tax to pay the bill, it should also be noted that property taxes are high in Texas.

Washington

Washington has significant employers because they do not have corporate income taxes. But residents pay high sales and excise taxes, also gasoline is expensive in this state.

Also, the cost of living and housing in the state is higher than average, despite this, it is considered the second best state in the USA to live in.

Wyoming

Wyoming es el segundo estado menos densamente poblado y sus ciudadanos no pagan impuestos estatales sobre la renta personal ni corporativos. De igual forma, en este estado tampoco se pagan impuestos sobre la renta de jubilación. 

En este estado también disfrutan de bajas tasas de impuestos sobre ventas y es que al igual que Alaska, Wyoming grava los recursos naturales, primordialmente el petróleo para compensar la falta de impuestos. 

If you are about to file your taxes, this will interest you:How do I prepare my US tax return? 

Ya conoces cuáles son los estados que no pagan income tax in USA, ahora dinos ¿Te animas a emigrar a alguno de ellos?