Posted by Kristen on December 2, 2012
Are there states where you can live and you do not have to pay income tax?
Yes, there are seven American states that do not require residents to pay any income tax. In addition, to the states with no income tax there are two states that only tax dividends and interest income.
States with No Income Tax
Which states don’t have an income tax? They are:
- South Dakota
States With Limited Income Tax
The two states that tax only dividend and interest income are:
Why don’t these states have to collect an income tax?
These states have another way to fund state operations. Generally, these states may have a higher property or sales tax. They also may have higher taxes for fuel, alcohol, cigarettes, or other products and services. Or they can have a unique circumstance such as Alaska that has the sale of petroleum or Nevada that has gaming tax collections to fund the state.
More Tax Topics
You can get my latest articles full of valuable tips
and other information delivered directly to your email for free
simply by entering your email address below. Your address will never be sold or used for spam and you can unsubscribe at any time.
I have been fortunate to live in two of them for the past 6 years–Florida for two years, and now Texas. Woohoo to no state income tax!! Plus the cost of living here in Houston is much less than in the Northeast (where I came from).