Seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee,
tax only dividend and interest income.
Since 1990 the nine US states without an income tax have seen twice the rate of job growth and 2.5 times the population growth of the states with
the highest income taxes.
Capital, jobs and economic development are migrating from high-tax states to low.
States Without Personal Income Tax
Seven of the 50 states do not have a personal income tax:
Florida once had tax on "intangible personal property" held on the first day of the year (stocks, bonds, mutual funds, money market funds, etc.)
but will be abolished starting in the year 2007.
Two other states, New Hampshire and Tennessee, tax only dividend and interest income.
Tennessee - does have tax on interest and dividends
New Hampshire - does have tax on interest and dividends
Will I Pay Less Taxes Overall in These States?
Not necessarily. States need revenue to function, and these states will have to make up for the lack of income tax somehow. New Hampshire
and Texas, for example, make up for it in property taxes. Both states have some of the highest property taxes in the nation. The cost of
higher property taxes, sales taxes, fuel taxes, and other taxes could amount to higher overall taxes in some of these states.
A central feature of the US economy is a reliance on private decision-making ("economic freedom")
in economic decision-making. This is enhanced by relatively low levels of regulation, taxation,
and government involvement, as well as a court system that generally protects property rights
and enforces contracts.