US States Are Quietly Dropping Income Taxes

US States Are Quietly Dropping Income Taxes

( – The federal government might be determined to take an ever-larger share of the money Americans earn, but many states are moving in the opposite direction. There are now nine states that don’t collect income tax on their residents — and more look set to follow.

Millions of Americans are on the move, leaving failing blue states and heading for fresh pastures. Many factors can persuade people to make the move, from high crime to finding better schools for their children, but taxation is also a big incentive. It’s probably no coincidence that of the five states with the fastest predicted population growth for 2023 — Idaho, Utah, Texas, Nevada, and Florida — three have no state income tax, and a fourth is moving in that direction.

Right now, nine states don’t impose an income tax — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Grover Norquist, president of Americans for Tax Reform, says another 10 are in the process of slashing or eliminating theirs. North Carolina is “a few years away” from phasing out its levy on earnings, while North Dakota Governor Doug Burgum (R) announced last August that he plans to scrap individual income taxes for most residents.

States have gotten used to the revenue from income taxes, and phasing them out can be a long process. Norquist says Kentucky will need 12 years to get there, and “Louisiana is on a 15-year phasedown to zero.” West Virginia Governor Jim Justice (R) is facing opposition from his state senate but is still pushing for a permanent 10% income tax cut.

Americans are weary of high taxes; the two states with the highest income taxes — California and New York — saw the biggest drops in population from 2020-2021. The good news is that if you want to keep more of the money you earn, there’s a growing list of states that are happy to let you do that.

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