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Taxes

state income tax

Most states levy an income tax on their residents that is in addition to the federal income tax. Laws vary from state to state but in most states the state income tax is a tax on the annual earnings of individuals, corporations, trusts, limited liability companies, and other legal entities.

There are nine states that do not have a state income tax—including Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. But New Hampshire levies a tax on capital gains and Washington state recently enacted a tax on extraordinary profits from the sale of financial assets over $250,000.

Texas is one of the nine states in the United States that does not impose a state income tax on individuals. This means that residents of Texas are not required to pay a state tax on their annual earnings, whether they are individuals or legal entities such as corporations, trusts, limited liability companies, etc. However, this does not exempt Texans from federal income tax obligations, which apply to all U.S. residents. While Texas does not have a personal income tax, it does generate revenue through other forms of taxation, such as sales tax, property tax, and franchise tax for certain businesses. It's important for residents and businesses in Texas to be aware of these other tax obligations and comply accordingly.


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