Most states require residents to pay a portion of their income in income tax. If you never lived in a state where you don’t pay income tax, it may sound a bit off and too good to be true but as of 2020, there are many states that do not impose income taxes.
However, this doesn’t mean the residents of the states without an income tax have a lower tax burden. There is a lot that goes into the total tax burden of a state. This also includes the state sales tax and the property tax. So if you’re going to move to a new state and no income tax return is one of your priorities, it shouldn’t be at all. Instead, check every state’s total tax burden here. This should give you an idea of what portion of your income is likely to go toward taxes.
In recent years, the number of states without income tax have gone up. Most recently, New Hampshire and Tennessee partially removed income taxes. For example, in Tennessee, you won’t pay taxes on your salary, wage, and other compensation.
Here is the full list of states without income tax.
- New Hampshire
- South Dakota
There used to be seven states without an income tax—with the addition of Tennessee and New Hampshire, we expect even more states to follow suit soon. Again, while no income tax sounds good and all, what matters is the total tax burden of the state. This is the average portion of people’s income tax goes to taxes. See how the above nine states stack up against each other for the total tax burden.
|States||Total Tax Burden|