August 2, 2012: Seven States currently have no income tax. Two others only tax interest and dividend income. [note 1]
List of Seven States without an individual income tax:
List of Two States without an individual income tax but have taxes on tax interest and dividend income
- Alaska – no
individual tax but has a state corporate income tax. Like New Hampshire,
Alaska has no state sales tax. Alaska has annual Permanent Fund
Dividend for all citizens living in Alaska after two years.
- Florida –
no individual income tax but has a corporate income tax (at a 5% rate).
The state once had a tax on "intangible personal property" held on the
first day of the year (stocks, bonds, mutual funds, money market funds,
etc.), but it was abolished at the start of 2007.
- Nevada – has no individual or corporate income tax. Nevada gets most of its revenue from gambling and sales taxes.
- South Dakota – no individual income tax but has a state corporate income tax on financial institutions.
- Texas – no
individual income tax or corporate income tax. In May 2007, the
legislature replaced the franchise tax with a gross margins tax on
businesses (sole proprietorships and some partnerships were
automatically exempt; corporations with receipts below a certain level
were also exempt as were corporations whose tax liability was also below
a specified amount), which was amended in 2009 to increase the
exemption level. The Texas Constitution places severe restrictions on
passage of an individual income tax and use of its proceeds.
- Washington – no
individual tax but has a business and occupation tax (B&O) on gross
receipts, applied to "almost all businesses located or doing business in
Washington." It varies from 0.138% to 1.9% depending on the type of
- Wyoming has no individual or corporate income taxes.
- New Hampshire – has an
Interest and Dividends Tax of 5%, and a Business Profits Tax of 8.5%. A
Gambling Winnings Tax of 10% went into effect July 1, 2009 and was
repealed May 11, 2011. New Hampshire has no sales tax.
- Tennessee has a 6% tax
on income received from stocks and bonds not taxed ad valorem. WARNING! In
1932, the Tennessee Supreme Court struck down a broad-based individual
income tax that had passed the General Assembly, in the case of Evans v.
McCabe. However, a number of
Attorneys General have recently opined that, if properly worded, a state
income tax would be found constitutional by today's court, due to a
1971 constitutional amendment.