States With No Income Tax
The states with the most tax-friendly brackets are the ones where there is no resort tax whatsoever. These states are:
- Washington
- Nevada
- Wyoming
- Alaska
- South Dakota
- Florido
- Texas
- Tennessee
- South Dakota
Upon achieving your domicile in the states aforementioned, you will not be liable to pay any taxes on state income at all. This is a strategy used by remote workers, retirees and even remote workers.
What About Other Taxes
Although income tax does not have to be paid, some states have higher fees in other domains such as sales tax or higher property tax. While the state of Texas is known for higher property taxes, Florida does have higher property insurance. Always take in consideration all taxes and not only the income tax.
How to Claim Residency in a Low-Tax State
Merely purchasing a home or a P.O. Box in a state with no taxes does not qualify to claim residency. Legal residency requires:
- Stay at your new domicile for over 183 days.
- Change your driver’s license, bank documents, and voter registration to your new state.
- Change your address on tax documents, bank accounts, and other official documents.
Important Things to Keep in Mind
- Residents who relocate to no tax states from high tax states like California or New York, these states tend to audit them aggressively.
- To avoid tax from a different state, you will need to get rid of majority ties with your former state.
Final Thoughts
Usually, no state income tax means claiming residency in that state, however there may be some legal hurdles to clear in establishing domicile. Failing to legally establish residency may have severe consequences. Reach out to us today in order to establish full legal compliance. Dimov NYC CPA is ready to present professional assistance.
