There are 9 US states with no income tax, but 2 still tax investment earnings in 2022
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no state income tax
- Most Americans file a state income tax return and a federal income tax return.
- As of 2022, the states with no regular income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
- New Hampshire and Washington still do tax certain investment earnings, so some residents might have to file a state tax return this spring.
- See Personal Finance Insider's picks for best tax software »
In general, you have to file a federal tax return if your total income is more than the standard deduction, which varies based on your age and filing status. Some instances require you to file even if your income is less than the standard deduction, such as having self-employment income, being claimed as a dependent on someone's tax return and having earned or unearned income above certain thresholds, and filing separately as a married couple with gross income of $5 or more.
Some people, however, are off the hook when it comes to filing a state tax return.
That's because nine US states don't impose state tax on regular income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. However, New Hampshire and Washington do still tax certain investment income. As of 2021, Tennessee fully repealed its state income tax on income earned from interest and dividends.
The states that do tax income have either a flat income tax — meaning everyone, regardless of how much they earn, pays the same percentage of their income to the government — or a progressive income tax, which means their tax rate is determined by how much they earn.
The map below lists the top tax rate in every state for the 2022 tax year (that's for taxes due this spring).
But living in a state with no income tax doesn't necessarily mean you're getting off scot-free. Texas and New Hampshire, for instance, may not tax your earnings, but they do have some of the highest property tax rates in the country, which could affect you if you're a property owner.
Likewise, Tennessee doesn't tax your paycheck, but it will get you in the checkout line. The state has one of the highest average state and local sales tax rates in the country at 9.55%, according to the Tax Foundation.
Answers to your tax questions
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Still, everyone is subject to federal income taxes regardless of where you live. How much you pay depends on how much you earn, your filing status, and what deductions are available to you.
After you file your taxes, you may get a state tax refund or a federal tax refund — or both if you live in a state that taxes income. The IRS says the fastest way to get your tax refund is the method already used by most taxpayers: filing electronically and selecting direct deposit as the method for receiving your refund.