If you want to avoid personal income tax, there are seven states that don’t tax personal income. Some offer this as an incentive for people to live there. Others balance it out by levying higher taxes on property and sales. The following article identifies states without personal income tax, as well as other areas where more taxes may be levied and possible reasons why a state might not have income taxes.
States Without Personal Income Tax
• Florida: While Florida has no personal income tax, the state does tax intangible personal property, such as stocks, bonds, loans, and more. Florida also has a fairly high sales tax and property tax. However, if your home in Florida is your main residence, you may be able to apply for a lower property tax. This, along with no personal income tax, is probably designed to entice more permanent residences and families to settle in Florida.
• Alaska: Because of the state revenue from petroleum, Alaska does not have a personal income tax. There is also no sales tax on a statewide basis, although counties may charge a sales tax. There are property taxes in some areas, but not all, and it is not a state tax. Alaska does not charge an intangible personal property tax. Overall, property taxes are very low. Alaska can do this because of the natural resources it has. Additionally, the low taxes are an incentive for people to move to the state.
• Nevada: Besides having no personal income tax, Nevada also has a fairly low personal property tax — about 35 percent of the assessed value of a property. There are also no intangible personal property taxes. The impetus may be to attract more people into the state. Also, the revenue generated from gambling may enable the state to keep taxes low.
• South Dakota: The state of South Dakota has neither personal income tax nor personal and property taxes. Personal and property taxes are based on the needs of the county or district in which the person lives; however, they are level-controlled by the state, and can be appealed. Like most other states listed, South Dakota probably offers this as an incentive for people to move there.
• Texas: In Texas, there is no personal income tax. Property taxes are based on the county or district. However, anyone can apply for an exemption from property taxes, especially if he or she is over 65 years of age.
• Washington: There are no personal income taxes in Washington. Property taxes vary based on where in the state a person resides.
• Wyoming: Like Washington, there are no personal income taxes and property taxes are based on the needs of the area in which you live. Also, like other small-population states listed above, the tax breaks are likely a way to get more people to live there.
Research Before You Move
While it is nice to have the promise of no personal income tax, research the other taxes in the state before you decide to move. It is best to be certain that you won’t be taxed more in another area and lose the money you might have saved. Also, if the state has no property tax but the counties do, research the specific county you would move into in order to learn what the property taxes are like. Once you can make an informed decision, you can enjoy life without personal income taxes.go to http://www.theguardian.com/money/2013/sep/28/child-benefit-pension-contributions-higher-earners for more updates.