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. That means if you live and work in Nevada, you do not pay state income tax to Nevada — period. You still owe federal income tax to the IRS, and you still file a federal return every year. But the state itself takes nothing from your paycheck for income tax.

This is a permanent feature of Nevada law, not a temporary break or incentive. It has been this way since Nevada became a state in 1864. The state funds itself through sales tax, property tax, gaming taxes, and business taxes instead.

Key Takeaways

  • Nevada residents pay no state income tax on wages, salaries, investment income, or retirement distributions.
  • You still file and pay federal income tax to the IRS, even though Nevada has no state tax.
  • If you moved to Nevada from another state, you may still owe that state's income tax on income earned before you left.
  • Nevada's lack of income tax does not affect Social Security benefits, Medicare, or other federal programs.
  • Self-employed people and business owners in Nevada still pay federal self-employment tax and federal income tax.

How Nevada funds state services without income tax

Nevada relies on other revenue sources to pay for schools, roads, courts, and state agencies. The largest source is the sales tax, which is 6.85 percent statewide (some counties add local sales tax on top). Property taxes also fund local schools and county services. Gaming taxes — taxes on casino and sports betting revenue — bring in significant money because of Las Vegas and Reno.

Nevada also taxes businesses on their gross revenue through the Commerce Tax, which applies to businesses with revenue above a certain threshold. These combined sources replace what income tax would generate in other states. The trade-off is that Nevada residents and businesses pay higher sales and property taxes than many other states.

Federal income tax still applies in Nevada

Living in Nevada does not exempt you from federal income tax. You must file a federal return with the IRS every year if your income exceeds the threshold for your filing status. For 2024, that threshold is $14,600 for a single person under 65, though it varies by age and filing status.

Your federal tax rate depends on your income level and filing status, just as it does for people in other states. Nevada's lack of state income tax is a bonus on top of whatever you owe federally, not instead of it. If you have federal taxes withheld from your paycheck, those withholdings go to the IRS, not to Nevada.

What happens if you moved to Nevada from another state

If you recently moved to Nevada from a state with income tax, you may still owe that state's income tax on income you earned before you moved. Most states tax you on income earned while you were a resident, regardless of where you live now. You will need to file a part-year resident return with your old state for the months you lived there.

The key date is usually when you establish Nevada residency — typically when you get a Nevada driver's license, register to vote in Nevada, or buy a home here. Document the date you moved, because your old state will want to know when your residency ended. If you worked remotely for a company in another state, that state may also claim you owed tax on that income while you were a resident there.

Self-employed people and business owners in Nevada

If you are self-employed or own a business in Nevada, you do not pay Nevada state income tax on your business income. However, you still owe federal self-employment tax (Social Security and Medicare tax) and federal income tax on your net business income. Self-employment tax is 15.3 percent on net earnings above $400 per year.

You will also owe the Commerce Tax if your Nevada business revenue exceeds the threshold (currently $600,000 for most businesses, though it varies by industry). Keep records of your business income and expenses, because you will need them to file your federal return and to calculate your Commerce Tax liability.

Retirement income and investment income in Nevada

Nevada does not tax retirement distributions from 401(k)s, IRAs, pensions, or annuities. You do not pay state income tax on Social Security benefits, either. Investment income — dividends, capital gains, and interest — is also not taxed by Nevada.

This makes Nevada attractive to retirees, because they can withdraw from retirement accounts without losing a portion to state income tax. However, you still owe federal income tax on these sources. Social Security benefits may be taxable at the federal level depending on your total income, even though Nevada does not tax them.

How to file taxes as a Nevada resident

Because Nevada has no state income tax, you only file a federal return with the IRS. You do not file a state income tax return to Nevada. You file your federal return by April 15 each year (or the next business day if April 15 falls on a weekend).

If you owe Nevada sales tax because you run a business, you file sales tax returns with the Nevada Department of Taxation. If you owe the Commerce Tax, you file that separately. But for personal income tax, there is nothing to file with the state. Use the IRS website (irs.gov) to file your federal return, or work with a tax preparer if your situation is complex.

Frequently Asked Questions

Do I have to file a state tax return in Nevada?

No. Nevada has no state income tax, so you do not file a state income tax return. You file only your federal return with the IRS. If you own a business or owe sales tax, you file those returns separately with the Nevada Department of Taxation, but not an income tax return.

If I work for a company in California but live in Nevada, do I owe California income tax?

It depends on where you are considered a resident. If you moved to Nevada and established residency there, you typically owe California tax only on income earned while you were a California resident. If you still maintain a home in California or spend significant time there, California may claim you are a resident and tax your worldwide income. Consult a tax preparer familiar with your situation.

Does Nevada tax Social Security or retirement withdrawals?

No. Nevada does not tax Social Security benefits, 401(k) withdrawals, IRA distributions, pensions, or annuities. However, these sources may be taxable at the federal level, so you still owe federal income tax on them.

What if I am self-employed in Nevada — do I owe state income tax?

No state income tax, but you owe federal self-employment tax and federal income tax on your net business income. You may also owe Nevada's Commerce Tax if your business revenue exceeds the threshold. Keep detailed records of income and expenses for your federal return.

Can I claim Nevada residency to avoid income tax in my home state?

Moving to Nevada for tax reasons is legal, but you must actually establish residency there — get a Nevada address, driver's license, and voter registration. States can challenge residency claims if you maintain a home elsewhere or spend most of your time out of state. Work with a tax professional if you are considering a move for tax purposes.