NEW YORK, March 11, 2020 — Texas is one of seven states that manages to function without relying on individual income taxes, reports financial news website 247wallst.com. To identify the states with no income tax, 24/7 Wall St. reviewed the tax code in each state using the latest tax data compiled by tax policy research organization Tax Foundation. Click HERE to read the full article and HERE for more information on each state.
Texas
> 2018 personal income per capita: $50,355 (25th lowest)
> 2018 total state tax collections per capita: $2,102 (2nd lowest)
> 2018 state debt per capita: $1,795 (8th lowest)
> Largest source of state+local tax revenue: Property tax (45.0% of total)
Texas is one of several resource-rich states that do not levy a tax on personal income. The Lone Star State is home to some 40% of U.S. proved oil reserves, and it is able to leverage the energy industry to partially offset the lost individual income tax revenue. The state collected $3.4 billion in revenue from oil production and another $1.4 billion from natural gas production in its fiscal 2018.
Relatively high property taxes also help keep the Texas state government funded. Homeowners in Texas pay the equivalent of 1.7% of their property value in taxes per year, more than in all but six other states. State and local governments collected the equivalent of $1,872 in property taxes per resident in fiscal 2017, more than the $1,617 average per capita collection across all states.
Seven States With No Income Taxes
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- Wyoming
Click HERE for more information on each state.
In the vast majority of states, individual income taxes represent over 15% of annual tax revenue. Because income tax is such an important and reliable revenue source, the states with no income tax make up for the lost potential revenue in other ways.
Two states on this list, for example, have major tourist industries and raise revenue through higher than average sales taxes. Three other states are rich in natural resources and are able to bring in additional revenue through taxes on mineral and gas extraction operations.
