Taxes – Tips & Information

With the 2020 Presidential Election campaigns under way, taxation has been a highly publicized topic. Tax simply doesn’t seem to be something that will see any true bipartisanship in for the near future. It is something that seems to polarize the supporters of the Democratic and Republican parties.

With that said, regardless of your political preference or income, we put together a few tips and thought it would be a good idea to share some tax information that most people don’t bother with unless they run into trouble with the IRS.

Seven (7) U.S. states don’t have personal income taxes, and five (5) don’t have any sales taxes, with two (2) states having both nearly no personal income taxes and sales taxes. However, some municipal governments charge local taxes in these states, even if the states do not!

The federal government, on the other hand, always charges taxes, regardless of state and municipal taxation.

Business owners, current and future: if you establish a corporation in one state with no corporate or sales tax, but conduct your actual business in another state with corporate and/or sales tax, you still need to pay these taxes.

Finally, even among the states that do charge sales taxes, some do not charge sales taxes for services – only sales taxes on goods.

Here’s a list of a few states and their taxation:

  1. Alaska: no personal income or sales tax.
  2. Delaware: no sales tax; gross receipt taxes on the sale of most goods & services.
  3. Florida: no personal income tax, but 6% sales tax.
  4. Montana: no sales tax – ranked as one of the fairest tax systems in the country!
  5. Nevada: no personal or corporate income tax, but it does have a, “gross receipts tax,” which is considered worse than corporate tax. Also has a 6.85% sales tax.
  6. New Hampshire: no personal income or sales tax, but requires residents to file a tax return when they have interest and dividence income in excess of $4,800 for married couples, and has a very high property tax.
  7. Oregon: no sales tax, but very high income tax.
  8. South Dakota: no personal or corporate income tax; 4% sales tax and various use taxes.
  9. Tennessee: no personal income tax; it does have a, “hall tax,” which taxes dividends and interest, as well as a 7% sales tax.
  10. Washington: no personal income tax; it does have a sales tax of 6.5%, and also allows localities to add as much as 3% on top of that.
  11. Wyoming: no personal or corporate income tax; 4% sales tax (state-implemented).

Here in Illinois, we have a 7% bus income tax of net income. The same in Delaware is 8.7%, based on its federal taxable income. Also in Illinois, sales taxes range from 6.25% to 11%, depending on the municipality. Tax, tax, tax! It matters to everyone, and everyone is bored by it, but it can have serious implications for anyone, and any business owner. We’re always fielding tax inquiries and have plenty of experience with the IRS and Illinois Department of Revenue, so don’t hesitate to reach out to us.