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There are plenty of strategies to lower your tax bill, including contributing to retirement accounts, leveraging tax credits and maximizing itemized deductions. Or, if you’re really committed to paying less in taxes, you could move.
In nine states, income isn’t taxed — allowing residents to hold onto more of their hard-earned dollars. For retirees, this means that pension payouts, retirement account withdrawals and Social Security benefits aren’t subject to state taxes.
The ability to avoid income taxes can be compelling. But if you’re thinking about relocating for a lower tax bill, be aware that some states that don’t have income taxes levy hefty taxes in other areas.
Here’s what to know about the total tax burden in the nine states with no income tax.
Alaska
Alaska is one of the most tax-friendly states, especially for older adults. Not only is there no income tax in the Last Frontier, but also state law exempts the first $150,000 of assessed property value from property taxes for adults 65 and older. Its effective property tax rate is 1.07 percent.
There is no state estate tax, long-term capital gains tax or statewide sales tax — although a majority of Alaska’s municipalities levy a sales tax, with rates of typically 2 percent to 5 percent. Plus, residents receive an annual dividend payment from the Alaska Permanent Fund, which was established in 1976 from the state’s oil and mineral revenues. The 2024 dividend was $1,702.
Florida
Beyond its warm weather, Florida’s low tax burden is a big draw for both retirees and workers. The Sunshine State does not have an individual income tax, estate tax, inheritance tax or long-term capital gains tax. However, it does levy a statewide sales tax of 6 percent, which jumps to an average rate of 7 percent when combined with local sales tax.
The effective property tax rate on owner-occupied housing in Florida is 0.71 percent. Homeowners can apply for the state’s homestead exemption to decrease their property’s taxable value by as much as $50,000.
Nevada
Nevada does not tax capital gains, estates or inheritance. However, purchases are hit with a hefty state and local sales tax rate that averages 8.24 percent.
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