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States with No Income Tax

Updated: 12/14/2007
Article ID: 2362

The only states that do not collect individual income tax are Alaska, Florida, Nevada,  South Dakota, Texas, Washington, and Wyoming.  Florida taxed intangible personal property each year but that tax is repealed as of 1/1/2007.

If you live in one of these non-income tax states, you might wonder if this affects your federal tax return.  Since state income taxes are a deduction on the federal Schedule A (Itemized Deductions), the total of your itemized deductions may not be as large as the total on Schedule A for a taxpayer living in California with a 9% state tax rate.  However you won't have to worry about paying federal tax on a state refund.

Residing in one of those seven states shortens the time it takes you to complete tax return each year. When you finish your federal tax return, you're done!  And you don't have to buy any additional tax software for a state return!  

Tax Tip:  New Hampshire and Tennessee do limit their taxes on individual income to only interest and dividend income.


 

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