A big chunk taken out of your paycheck goes to state income tax. The rates vary depending on where you live, but did you know there are seven states with no income tax? Instead, these states fund their local operations through other means. Here is a small breakdown of how they make money:
Wyoming : Wyoming also doesn’t have a corporate income tax, so much of the state’s revenue comes from coal mining and property taxes.
Washington : To make up for no state income tax, Washington residents face some of the highest sales and gasoline taxes in the United States.
Texas : Not surprising, local revenue in the Lone Star States comes from its oil and gas royalties. Like Washington, residents pay higher sales tax, too.
South Dakota : Personal taxes, property taxes, cigarette excises, bank franchises, ore taxes, and energy mineral severance are examples of taxes South Dakotans pay to help drive revenue to their state.
Nevada : As the home to Las Vegas and Reno, Nevada’s state revenue is comprised mostly from gambling-related fees and taxes, as well as sales tax.
Florida : With its sunny temperatures and inviting beaches, Florida hauls in its revenue from tourism-related sales tax, and above average property taxes.
Alaska : Alaskans do not pay income or sales tax. Rather, the state makes money via its petroleum efforts.
Other states that withhold less than the norm are New Hampshire and Tennessee. New Hampshire does not tax an individual's W-2 wages, but does tax income from dividends and interest at 5%. Likewise, Tennessee does not tax earned income, but taxes dividends and interest at 6%.
These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.