Benefits of Living in a State with No Income Tax

Daniella Cressman

Disclaimer: This information is accurate and true to the best of my knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Honestly, taxes can be extremely high, especially if you rake in a lot of cash during the year.

Nonetheless, moving to a state with no income tax will likely benefit people of all socioeconomic circumstances.

"Living in a state that doesn’t tax income can be a major advantage – especially to those in high income households. While many states force high earners to pay high taxes, states without personal income tax do not tax their earnings at all. This allows high earners to save much more of their money. For this reason, many wealthy individuals choose to live the majority of the year in states without a state income tax. Of course, not having to pay state income tax also benefits individuals of all income classes. Come tax season, residents of these states are able to pocket their hard-earned money and save for retirement, vacations, school tuition and more." —Marian White

Unfortunately, every decision has its downside, and the states with no income tax—Washington, Alaska, Texas, Florida, Nevada, South Dakota, and Wyoming— tend to have exceptionally high sales taxes and property taxes.

"Be aware that if a state doesn’t impose state income tax, it typically makes up for it by raising taxes elsewhere. For instance, while Texas and New Hampshire do not tax earned income, they do have exceptionally high property tax rates, according to Business Insider. In addition, many of these states also impose high sales tax on groceries and goods. Bankrate points out that Tennessee has one of the highest sales tax rates in the country, charging a 7 percent sales tax statewide. The website also notes that 'Texas and Nevada have above-average sales taxes, and Texas also has higher-than-average effective property tax rates. Florida relies on sales taxes, and its property taxes are above the national average.'"—Marian White

That being said, it's still arguably worth it to move to a state that doesn't charge income tax, especially if you anticipate earning a significant amount in the next few years: you'll be able to save and invest a lot more of your earnings.

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Canadian-American author writing about local politics, personal finance, & dining in Albuquerque.

Albuquerque, NM

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