Report: Zero State Income Tax Benefits Wyoming Middle Class
A new study shows that Wyoming ranks among the top states for businesses and middle-class families.
There are many reasons, low regulations among them.
But the primary reason is the lack of an individual income tax, according to a new report.
Wyoming ranked No. 1 by the Washington, D.C.-based Tax Foundation along with Alaska, Florida, and South Dakota, which also don't have an income tax.
Tax Foundation annalist Janelle Fritts said states that score well in its "State Business Tax Climate Index" have many things in common including a flat, low-rate income tax with few deductions and exemptions.
“They also tend to protect married taxpayers from being taxed more heavily when filing jointly than they would filing as two single individuals,” Fritts said.
Not one of the states that scored near the top did anywhere near as well as Wyoming,
“Wyoming and other income tax-free states are leading the way in growth and opportunity,” Chris Cargill, president and CEO of Mountain States Policy Center, told The Center Square. “That policymakers stay true to keeping the state income tax free is one of the reasons why other states including Idaho and Montana continue to lower their rates.”
Wyoming is above the rest in the Western region.
Idaho ranked No. 19th.
Montana ranked No. 24.
States that score poorly on this component tend to have high tax rates and very progressive bracket structures.
They generally fail to index their brackets, exemptions, and deductions for inflation, do not allow the deduction of foreign or other state taxes, penalize married couples filing jointly, do not include LLCs and S corporations under the individual income tax code (instead taxing them as C corporations), and may impose an alternative minimum tax (AMT).
The poorest-performing states on this year’s individual income tax component are New York, California, New Jersey, Connecticut, and Hawaii. (Tax Foundation).
Add this to the list of reasons that Wyoming is a very affordable state to live in.