Planning a move? By 2021, these 8 states will have no income tax

Income Tax

These states have no income tax

Listed alphabetically, here are the seven states you could live in right now without having to pay tax on your wage income.

1. Alaska

Alaska is one of the most tax-friendly places to live in the U.S., and is the only state to have no levied sales tax or state income tax. This means retirees can escape having any of their retirement income or Social Security benefits touched by the state of Alaska. To boot, senior homeowners over the age of 65, or a surviving spouse over age 60, are exempt from municipal taxes on the first $150,000 of assessed value of their home. The downside, the winters can be a bit harsh in Alaska, and access to medical care could be dicey if you don’t live near one of its few major cities.

2. Florida

Florida is an especially popular destination for retirees, and with good reason: There’s no state income tax, and therefore no tax on any retirement income. Long-time residents may also privy to a homestead exemption of up to $50,000 on their property, depending on the city or municipality in which they live. If there is a double-edged sword in Florida, it’s the weather. Florida’s temperate climate is perfect for folks of all ages, but it also gets hit by hurricanes more than any other state, leading to the highest home insurance costs in the country.

3. Nevada

Residents of Nevada are sure to feel like they’ve struck the jackpot given that it has no state income tax, as well as a relatively low state-levied 5.5% sales tax. Though there are no exemptions on property tax, Nevada’s property tax rate is well below the national average. With the biggest downsides likely being its very toasty summers, or its limited access to specialized medical care if you live outside of its very few major cities, Nevada has a lot to offer folks of all ages.

Income Tax

4. South Dakota

The home to Mount Rushmore is another state where your income can potentially stretch a bit farther. South Dakota has no state income tax, and its state-levied tax is just 4.5%. Additionally, an analysis by Money has shown that South Dakota has one of the lowest costs of living in the nation, allowing those with low- or mid-level incomes to stretch their dollars. Though median home prices are lower than the national average, property tax rates (as a percentage) are a bit higher than the national average, and South Dakota’s relatively sparse population could make specialized medical care a bit tougher to come by.

5. Texas

The Lone Star state is a popular destination for those who despise income taxes, as well as retirees who don’t want their retirement accounts touched. Homestead exemptions on property taxes are open to all residents of the state, with seniors over the age of 65 potentially qualifying for extra breaks. On the downside, Texas hits its residents with a pretty hefty 7% state sales tax, and its median property tax is high on a percentage basis, relative to the national average.

6. Washington

Calling the Evergreen State home comes with the sizable perk of no state income tax. This means Washington can’t touch any of your retirement income, should you choose to retire there. Its temperate climate, where all four seasons are represented, is another plus. However, Washingtonians should also prepare for a substantial state and local sales tax burden, as well as reasonably high nominal property tax bills, primarily as a result of higher property values than the national average.

7. Wyoming

Wyoming may have saved the best for last, because in addition to no state income tax, and therefore no tax on retirement income, its residents also face one of the lowest combined state and local tax levies in the country. Wyoming’s oil- and mineral-rich land provides an ample revenue stream, which means not having to pilfer the pockets of its residents via taxation. Even property taxes in Wyoming are well below average, with numerous relief programs in place. If there are downsides, it’s the state’s harsh winters and potentially sparse access to specialized medical care.

Income Tax

8. And by 2021: Tennessee

Finally, by 2021, the Volunteer State will also be income tax-free. As of right now, the Hall income tax allows for a relatively low tax rate on dividends and interest income above an exempted amount. In 2018, the Hall income tax rate is just 3%. Next year, it’ll be 2%, By 2020, just 1%. And beginning on Jan. 1, 2021, it’ll be completely phased out, allowing residents to keep all of their interest and dividend income, as well as avoiding state tax on wage and retirement income. When coupled with its relatively low property taxes, Tennessee could become popular with retirees. Just one downside to note: Its combined sales and local tax rate is among the highest in the country.

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How do the new US corporate tax rates compare globally? A Foolish Take

US corporate tax rates compare globally

President Donald Trump says he “unleashed an economic miracle” with his tax cuts last year. Trump was marking the six-month anniversary of the $1.5 trillion tax cuts.

The tax reform package that became law late last year had substantial impacts on American taxpayers. Major changes to the standard deduction, various credits and itemized deduction provisions, and individual tax rates left many people confused about whether they’d end up saving money or paying more on their individual returns. Yet there’s one area where tax reform unambiguously resulted in lower taxes: the corporate tax rate.

Prior to tax reform, the U.S. had a corporate tax rate that was just under 39%. That consisted of a 35% federal tax rate on corporate income, with the remainder coming from state-level taxes that most U.S. states impose. That put the U.S. in the top three countries in the world in terms of corporate tax, according to figures last year from the Tax Foundation. Now, though, federal rates on corporate income have fallen from 35% to 21%. That puts the total federal and state burden at around 24%, just above the worldwide average of roughly 23%.

Still, even when you ignore tax havens with little productive economic activity, the new U.S. rate is far from the lowest level you’ll find. Among major industrialized nations, Hungary leads the way, and Ireland isn’t too far behind.

US corporate tax rates compare globally

Proponents of tax reform argue that lower corporate tax rates will boost business profits, leading to greater levels of economic activity that should result in higher wages over time. Opponents argue that lower business tax rates will only concentrate more wealth in the hands of high-income taxpayers.

For many businesses, the biggest benefit of tax reform will come not from lower rates but rather from simplified calculations. With some complex tax breaks going away to help pay for lower tax rates, companies hope that the new tax regime will be easier to navigate as well as result in lower cost.

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