Out of 50 states and several territories that make up the United States, only seven states do not have income tax. An additional two states tax only personal income from dividends and interest revenue. Even though these states may not have an income tax, they have other ways of gaining revenue. In some of these nine states, other taxes are applied, such as a sales tax, or the state is wealthy from industry revenues within its borders.
States With No Income Tax
The states with no income tax are Alaska, New Hampshire, Tennessee, Florida, South Dakota, Washington, Nevada, Texas, and Wyoming.
New Hampshire and Tennessee are unique because they tax interest and dividend income. This means that technically they do have an income tax, but it does not follow the same pattern as the other 41 states.
A state that doesn't tax personal income has other taxes and means of obtaining money from its citizens. Out of the nine states that don't have income tax, only Alaska and New Hampshire don't have a sales tax. Alaska doesn't charge these taxes because it has petroleum revenues that take the burden off the citizens. New Hampshire has the third highest property tax in the nation. They tax property both locally and on a state level. Their high property tax covers the state's expenses.
- South Dakota Road Sign image by Andy Dean from Fotolia.com