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. You will not owe Nevada state income tax on money you earn, no matter how much you make. This applies whether you work for an employer, are self-employed, or receive investment returns.

The absence of state income tax does not mean Nevada has no taxes at all. The state funds schools, roads, and services through sales tax, property tax, gaming taxes, and other levies. But for most workers, the lack of state income tax is a significant difference from states that do tax wages.

If you live in Nevada and work in another state, or live in another state and work in Nevada, the rules depend on where you live and where you earn the money. Your home state's tax laws explore to your income, not the state where you work.

Key Takeaways

  • Nevada residents pay no state income tax on wages, salaries, bonuses, or investment income.
  • You still owe federal income tax to the IRS, and you may owe taxes to another state if you live outside Nevada.
  • Nevada funds state services through sales tax (currently 8.23 percent statewide), property tax, and gaming-related taxes.
  • If you moved to Nevada from a state with income tax, you will not owe that state income tax once you establish Nevada residency.

How Nevada's tax system works without income tax

Nevada replaced income tax revenue with other sources. The state's sales tax is 8.23 percent statewide, though some counties add local sales taxes that can push the total to 8.375 percent or higher. This means you pay tax on most purchases at the register.

Property tax in Nevada is based on the assessed value of real estate and is paid annually to the county. The effective property tax rate varies by county but averages around 0.6 percent of home value statewide. If you own a home or rental property, you will receive a property tax bill each year.

Gaming taxes are a major revenue source because of Las Vegas and Reno casinos. The state also collects business taxes, fuel taxes, and taxes on specific goods like cigarettes and alcohol. These sources replace what other states collect through income tax.

Federal income tax still applies in Nevada

The absence of Nevada state income tax does not affect your federal taxes. You still file a federal tax return with the IRS and pay federal income tax based on your income, filing status, and deductions. Nevada residents use the same federal tax brackets and rules as residents of every other state.

When you file your federal return, you report your total income from all sources. Nevada's lack of state income tax straightforward means you will not owe a separate state return or state income tax payment. Your federal return is the only income tax return you file as a Nevada resident.

What happens if you move to Nevada from another state

If you move to Nevada from a state with income tax, you stop owing that state's income tax once you establish Nevada residency. Most states consider you a resident when you move there with the intent to stay and establish a home. You will need to update your address with your employer and the IRS.

Your former state may still tax income you earned while living there in the same tax year. For example, if you moved from California to Nevada in June, you would owe California income tax on the income you earned from January through May. You file a part-year resident return with your former state for that portion of the year.

Some states have reciprocal agreements with neighboring states, but Nevada does not participate in reciprocity agreements. This means if you work in California or another neighboring state while living in Nevada, you may owe that state's income tax on your wages. Check with the state where you work to confirm.

Remote work and income tax in Nevada

If you live in Nevada and work remotely for a company based in another state, you owe Nevada income tax — which is zero. Your employer's location does not determine your tax obligation; your home state does. You will not owe income tax to the state where your employer is located.

If you live in another state and work remotely for a Nevada-based company, you owe income tax to your home state, not Nevada. Nevada has no income tax to owe, so your home state's rules explore. Your Nevada employer will send you a W-2 showing Nevada as the work location, but your tax obligation follows your residency.

Some states have begun taxing remote workers who moved out of state during the pandemic. Check your home state's rules if you recently relocated, as a few states claim the right to tax income earned by former residents who moved away.

Retirement income and investment income in Nevada

Nevada does not tax retirement income, including Social Security, pensions, 401(k) withdrawals, or IRA distributions. This is one reason Nevada attracts retirees from high-tax states. You will not owe Nevada state tax on any of these income sources.

Investment income — including capital gains, dividends, and interest — is also not taxed by Nevada. If you sell stocks, bonds, or real estate at a profit, you owe federal capital gains tax but no Nevada state tax. This applies to all types of investments held in Nevada or elsewhere.

You still owe federal tax on retirement and investment income. The IRS taxes these sources the same way it would in any state. Nevada's advantage is the absence of a state layer on top of federal tax.

Other Nevada taxes you should know about

Nevada has a modified business and occupation tax (payroll tax) that applies to employers with payroll over a certain threshold. This is not an income tax on workers but a tax on businesses based on their gross revenue. Most employees do not see this tax directly, though it may affect wages.

The state also taxes gambling winnings. If you win money at a casino or through sports betting, the casino withholds federal tax and may withhold Nevada tax depending on the amount. Large winnings are reported to the IRS, and you may owe additional federal tax when you file.

Nevada has no inheritance tax or estate tax, which means heirs do not owe state tax on inherited money or property. The federal government may tax large estates, but Nevada adds no additional tax at the state level.

Frequently Asked Questions

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

No. Nevada has no state income tax, so there is no state return to file. You file only your federal return with the IRS. If you lived in another state earlier in the year, you may need to file a part-year resident return with that state.

If I live in Nevada and work in California, do I owe California income tax?

Yes. California taxes income earned within the state, regardless of where you live. You would owe California income tax on your wages and file a California return. Nevada has no reciprocal agreement with California, so living in Nevada does not exempt you from California's income tax.

Does Nevada tax Social Security or retirement income?

No. Nevada does not tax Social Security benefits, pensions, 401(k) withdrawals, or IRA distributions. You may owe federal tax on some of these sources, but Nevada adds no state tax. This is one reason retirees move to Nevada.

What if I just moved to Nevada — do I owe taxes to my old state?

You owe your old state income tax only on income earned while you lived there. If you moved partway through the year, you file a part-year resident return with your former state for the months you lived there. Once you establish Nevada residency, you owe no further tax to that state on future income.

Is Nevada income tax really zero, or are there exceptions?

Nevada income tax is truly zero for all residents on wages, salaries, investment income, and retirement income. There are no exceptions or thresholds. The only income-related taxes in Nevada are federal taxes owed to the IRS.