Wyoming does not have a state income tax

Wyoming is one of nine states with no state income tax on wages, salaries, or investment income. You will not file a Wyoming state income tax return, and your employer will not withhold state income tax from your paycheck. This applies whether you work in Wyoming, live there, or both.

However, no state income tax does not mean no state taxes at all. Wyoming funds its government through other sources: sales tax, property tax, excise taxes on specific goods, and taxes on businesses and minerals. If you live or work in Wyoming, you will still owe federal income tax to the IRS, and you may owe taxes to other states depending on where you earned income.

Key Takeaways

  • Wyoming residents and workers pay no state income tax on wages, salaries, bonuses, or investment income.
  • You still owe federal income tax to the IRS even though Wyoming has no state income tax.
  • Wyoming funds state services through sales tax (currently 4 percent statewide), property tax, and business taxes instead.
  • If you worked in another state during the year, you may owe income tax to that state even if you live in Wyoming.
  • Wyoming has no inheritance tax or estate tax, which can affect how you plan to pass assets to heirs.

How Wyoming's tax system works without income tax

Wyoming replaced its reliance on income tax with other revenue sources. The state collects a 4 percent sales tax on most purchases, though counties and cities can add their own local sales taxes on top of that. Property tax rates vary by county but are generally lower than the national average. Wyoming also taxes mineral extraction heavily — oil, gas, and coal production generate significant state revenue.

Businesses in Wyoming pay corporate income tax, but the state offers tax incentives for certain industries and has no tax on retirement income for residents over 59½. This combination means Wyoming's tax burden falls differently on different groups: people who spend heavily on goods and services pay more in sales tax, property owners pay property tax, and workers avoid income tax entirely.

Federal income tax still applies in Wyoming

Not paying Wyoming state income tax does not reduce what you owe the federal government. You must file a federal tax return with the IRS if your income exceeds the threshold for your filing status. For 2024, that threshold is $14,600 for a single filer under 65, though the amount changes yearly and depends on your age and filing status.

Your federal tax return works the same way whether you live in Wyoming or any other state. You report all income, claim deductions and credits you are may have access to to, and pay federal tax based on the federal tax brackets. The IRS does not care that Wyoming has no state income tax — federal tax is separate and required.

What happens if you worked in another state

If you lived in Wyoming but worked in a state with income tax — Colorado, Utah, or another neighboring state — you may owe income tax to that state. Most states tax income earned within their borders, regardless of where the worker lives. You would file a return in the state where you worked and report the income you earned there.

Wyoming offers a credit for taxes paid to other states, which prevents you from being taxed twice on the same income. However, the credit is limited and may not cover the full amount you owe to the other state. If you worked in multiple states during the year, you will need to file returns in each one and coordinate the credits carefully. A tax professional can help you sort this out if your situation is complex.

Sales tax and property tax in Wyoming

Because Wyoming has no income tax, the state relies more heavily on sales tax and property tax than many other states. The statewide sales tax rate is 4 percent, but most counties and cities add local sales taxes on top of that. Your total sales tax rate depends on where you shop — in Cheyenne, for example, the combined rate is higher than in a rural county with no local addition.

Property tax in Wyoming is assessed by county and varies widely. The statewide average effective property tax rate is lower than the national average, but your actual bill depends on your county's assessment practices and tax rate. If you own a home or land in Wyoming, you will receive a property tax bill from your county assessor, and that tax is not deductible on your Wyoming state return (because there is no Wyoming state return). You can deduct property tax on your federal return up to $10,000 per year.

Wyoming inheritance and estate tax

Wyoming has no state inheritance tax and no state estate tax. This means if you inherit money or property from someone who lived in Wyoming, you will not owe Wyoming state tax on that inheritance. Your heirs will not owe Wyoming tax on what you leave them either.

However, the federal government does have an estate tax that applies to very large estates. For 2024, the federal estate tax exemption is $13.61 million per person, meaning estates smaller than that amount owe no federal estate tax. If your estate is larger than that, your heirs may owe federal tax. Wyoming's lack of state estate tax does not change federal rules, and it does not affect income tax your heirs owe on money they earn after inheriting.

Retirement income and Wyoming taxes

Wyoming does not tax retirement income for residents age 59½ and older. This includes Social Security, pensions, 401(k) withdrawals, and IRA distributions. If you are retired and living in Wyoming, you will not owe Wyoming state tax on these income sources.

This benefit applies only to Wyoming residents, and only to income received after you turn 59½. If you move to Wyoming after retiring, you can claim the exemption starting the year you turn 59½. You still owe federal income tax on retirement income — Wyoming's exemption is state-level only. The federal government taxes most retirement income the same way it taxes wages.

Frequently Asked Questions

Do I have to file a Wyoming state tax return?

No. Wyoming has no state income tax, so you do not file a Wyoming state income tax return. You still file a federal return with the IRS if your income exceeds the federal threshold for your filing status.

If I live in Wyoming but work in Colorado, what taxes do I owe?

You owe federal income tax to the IRS and Colorado state income tax to Colorado on the income you earned there. Wyoming offers a credit for taxes paid to other states, which you claim on your federal return to avoid double taxation on the same income.

Does Wyoming have sales tax?

Yes. Wyoming's statewide sales tax is 4 percent, and most counties and cities add local sales taxes on top of that. Your total rate depends on where you make the purchase. Groceries and prescription medications are generally exempt from sales tax.

Is Social Security taxed in Wyoming?

Wyoming does not tax Social Security income for residents age 59½ and older. You still owe federal income tax on Social Security if your combined income exceeds the federal threshold, which varies by filing status.

What if I inherit money from someone in Wyoming?

You will not owe Wyoming state inheritance tax or estate tax. The federal government may tax very large estates, but only if the estate exceeds $13.61 million in 2024. Most inheritances are not subject to federal tax.