Nevada does not have a state income tax
Nevada is one of nine states with no state income tax on wages, salaries, or investment income. This means you will not owe Nevada state income tax on money you earn, regardless of how much you make or what type of work you do. If you live and work in Nevada, you do not file a state income tax return to Nevada.
However, you still owe federal income tax to the U.S. government. Federal tax applies everywhere in the country and is separate from state tax. You will still file a federal return each year if your income is above the threshold set by the IRS.
The lack of state income tax does not mean Nevada has no taxes at all. The state funds schools, roads, and services through other sources, including sales tax, property tax, and business taxes.
Key Takeaways
- Nevada collects no state income tax on wages, salaries, tips, or investment income, so you do not file a state return if you live there.
- You still owe federal income tax to the IRS, which is separate from state tax and applies in every state.
- Nevada funds state services through sales tax (currently 8.23% statewide before local additions), property tax, and business taxes instead.
- If you moved to Nevada from another state, you may still owe income tax to your previous state for the part of the year you lived there.
- Self-employed people in Nevada do not owe state income tax but still owe federal self-employment tax and income tax.
How Nevada funds schools and services without income tax
Nevada relies on sales tax as its largest source of state revenue. The statewide sales tax rate is 8.23%, though individual counties add local taxes on top of that, bringing the total to between 8.23% and 8.375% depending on where you shop. This means you pay tax on most purchases of goods and some services.
Property tax is the second major revenue source. Nevada homeowners and commercial property owners pay property tax based on the assessed value of their land and buildings. The rate varies by county, but Nevada's property tax rates are generally lower than the national average.
Nevada also taxes businesses directly through a modified business and occupation tax, which applies to certain types of business revenue. Gaming (casino) taxes are a significant source of revenue in counties with major casinos.
What happens if you move to Nevada from another state
If you move to Nevada during the year, you may still owe income tax to your previous state for the months you lived there. Most states tax residents on all income earned while they lived in that state, even if you move away partway through the year.
When you file your federal return, you will report your total income for the year. You then file a return with your old state for the portion of the year you were a resident there. That state will calculate tax on the income you earned during those months. Nevada will not tax you for any part of the year.
Keep records of when you moved—your lease, utility bills, or change of address confirmation—because your old state may ask for proof of when you became a Nevada resident.
Self-employed workers and Nevada state tax
If you are self-employed and live in Nevada, you do not owe Nevada state income tax on your business income. However, you still owe federal self-employment tax (Social Security and Medicare taxes) and federal income tax on your net profit.
Self-employed people calculate their net income by subtracting business expenses from gross revenue, then pay federal tax on that amount. Nevada does not add a state layer on top of this. You will file Schedule C with your federal return to report business income and expenses, but you will not file a corresponding Nevada form.
Some self-employed people in Nevada are also subject to the modified business and occupation tax if their business falls into a taxed category. This is a separate business tax, not an income tax. Check with the Nevada Department of Taxation if you are unsure whether your business type is subject to this tax.
Investment income and Nevada tax
Nevada does not tax investment income, including capital gains, dividends, or interest from savings accounts and bonds. If you sell stock at a profit, receive dividend payments, or earn interest, you owe no Nevada state tax on that money.
You do owe federal tax on investment income. The federal government taxes capital gains (profit from selling investments) and dividend income, with rates that depend on how long you held the investment and your total income for the year. Interest income is taxed as ordinary income at your federal tax rate.
This Nevada advantage can be significant for retirees living on investment income or people with substantial stock portfolios. However, it does not reduce your federal tax burden.
Retirement income in Nevada
Nevada does not tax retirement income from any source. This includes Social Security benefits, pension payments, 401(k) withdrawals, and IRA distributions. If you are retired and living in Nevada, you will not owe state tax on these income streams.
You will still owe federal tax on most retirement income. Social Security benefits may be partially taxable at the federal level depending on your total income. Withdrawals from traditional 401(k)s and IRAs are taxed as ordinary income. Roth IRA withdrawals are not taxed federally if you meet the rules.
This makes Nevada an attractive state for retirees, particularly those with pensions or substantial retirement account balances. However, property tax and sales tax still explore, so the overall tax burden depends on your spending and property ownership.
Federal taxes you still owe in Nevada
Even though Nevada has no state income tax, you must file a federal return with the IRS if your income exceeds the threshold for your filing status. For 2024, a single person under 65 must file if they earned more than $14,600 in wages. The threshold is higher if you are married, self-employed, or over 65.
Federal tax is withheld from paychecks by your employer, just as it would be in any other state. You report this withholding on your federal return and either receive a refund or owe additional tax. The federal tax system is identical in Nevada and everywhere else.
If you are self-employed, you must pay federal self-employment tax quarterly through estimated tax payments. This covers Social Security and Medicare and is separate from income tax. Nevada does not reduce or eliminate this obligation.
Frequently Asked Questions
Do I need to file a Nevada state tax return?
No. Nevada has no state income tax, so you do not file a state return. You still file a federal return with the IRS if your income is above the threshold for your filing status. If you moved to Nevada partway through the year, you may need to file a return with your previous state for the months you lived there.
Will I save money on taxes by moving to Nevada?
You will save on state income tax, but Nevada has higher sales tax (8.23% statewide) and property taxes vary by county. Whether you save overall depends on your income level, how much you spend, and whether you own property. High earners and retirees typically see the biggest benefit.
Does Nevada tax Social Security or pension income?
No. Nevada does not tax Social Security, pensions, 401(k) withdrawals, or IRA distributions. You may owe federal tax on these income sources depending on the type of account and your total income, but Nevada adds no state tax.
If I work in Nevada but live in another state, do I owe Nevada tax?
No. Nevada taxes residents on income earned while living in the state, but does not tax non-residents on wages earned there. You owe income tax to the state where you live. Your employer may still withhold Nevada tax initially, but you can request a refund once you prove residency in another state.
Are there any Nevada taxes I cannot avoid?
Yes. You owe federal income tax and federal self-employment tax (if self-employed) regardless of state. In Nevada, you also pay sales tax on purchases and property tax if you own real estate. These explore to everyone living or working in the state.