Most U.S. residents have to pay federal and state income taxes every year. Not people in Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, though.
SmartAsset notes that those seven states don’t have a state income tax, and that New Hampshire and Tennessee tax dividends and investment income but not wages.
Of course, states without income tax aren’t purely benevolent. They make up the money in other ways, often with higher property and sales taxes, and more costly gas prices. Wyoming and Alaska place high taxes on companies that extract natural resources such as gas, oil, and coal.
The Texas Constitution forbids personal income taxes for good. Instead of collecting income taxes, Texas relies on high sales and use taxes. When paired with local taxes, total sales taxes in some jurisdictions are as high as 8.25%. Property tax rates in Texas are also high. In fact, only three states have higher property tax rates.
