Nevada does not have a state income tax
Nevada is one of nine states with no state income tax on wages, salaries, or other personal income. You will not file a Nevada state income tax return, and Nevada will not withhold income tax from your paycheck. This applies whether you work in Nevada, live in Nevada, or both.
However, Nevada does collect other taxes. The state has a sales tax, property taxes, and business taxes. If you own a business or rental property in Nevada, you may owe state taxes on that income even though wage earners do not.
If you moved to Nevada from a state with income tax, or if you work across state lines, you still owe federal income tax to the IRS. Nevada's lack of state income tax does not change your federal obligations.
Key Takeaways
- Nevada collects no tax on wages, salaries, tips, or other personal income from employment.
- You will not file a Nevada state income tax return even if you live and work in the state full-time.
- Nevada funds state services through sales tax, property tax, and business taxes instead.
- Federal income tax is still owed to the IRS regardless of Nevada's state policy.
- Self-employed people and business owners may owe Nevada taxes on business income depending on the structure of their business.
What taxes Nevada does collect
Without state income tax, Nevada relies on other revenue sources. The state sales tax is 6.85 percent, though counties can add local sales tax on top of that rate. Property taxes in Nevada are among the lowest in the nation but still apply to real estate you own.
Nevada also taxes businesses. The state has a Modified Business and Occupation Tax (MBOT) that applies to certain business activities. If you are self-employed or own a business, you may owe this tax even though wage earners do not owe income tax.
Gaming taxes are significant in Nevada because of the casino industry, but these apply to gaming establishments, not to individuals who gamble. If you win money at a casino, you may owe federal income tax on those winnings, but Nevada will not tax them at the state level.
Federal income tax still applies to Nevada residents
Living in Nevada does not reduce or eliminate your federal income tax obligation. You must file a federal tax return with the IRS if your income exceeds the threshold for your filing status. The IRS collects federal income tax from all states, including Nevada.
If you moved to Nevada from another state during the year, you may owe income tax to your previous state for the months you lived there. Some states tax residents on all income earned during the tax year, even after they move away. Check with your former state's tax authority about your obligations.
Remote workers living in Nevada but employed by companies in other states generally owe federal tax only, not state income tax to Nevada or the employer's state. However, if you work for a company in a state that taxes nonresidents on wages earned within that state, you may owe tax to that state. This is rare but does occur in a few states.
Self-employed people and business owners in Nevada
If you are self-employed or own a business in Nevada, your tax situation is more complex than a wage earner's. You will not owe Nevada state income tax on your business income, but you will owe federal self-employment tax and federal income tax on your profits.
Nevada's Modified Business and Occupation Tax (MBOT) applies to certain types of business activity. The tax rate and whether you owe it depend on your industry and business structure. Retailers, wholesalers, manufacturers, and service providers may all have different obligations. You should contact the Nevada Department of Taxation or a tax professional to determine whether your business owes MBOT.
If you operate as a sole proprietor, partnership, S-corporation, or C-corporation, the rules differ. Some business structures may be exempt from MBOT, while others are not. The state provides a tax guide for businesses, but the rules are specific enough that professional guidance is often worth the cost.
Retirement income and investment income in Nevada
Nevada does not tax retirement income, including Social Security, pensions, or distributions from retirement accounts like 401(k)s or IRAs. This is one reason Nevada attracts retirees from other states. You will not owe Nevada state tax on these income sources.
Investment income — interest, dividends, capital gains — is also not taxed by Nevada. If you sell stocks, bonds, or real estate at a profit, Nevada will not tax that gain. However, the federal government will tax capital gains and investment income, so you still owe federal tax on these sources.
Rental income from property you own in Nevada is not subject to Nevada state income tax, but you will owe federal income tax on the net income after deducting expenses. If you own rental property in another state, you may owe income tax to that state as well.
Moving to Nevada and tax residency
If you are moving to Nevada from a state with income tax, you will stop owing that state's income tax once you establish Nevada residency. Most states consider you a resident based on where you spend the majority of your time or where you maintain a permanent home. The exact rules vary by state.
Some states tax residents on all income earned during the year they move, even if you leave partway through. Others tax you only on income earned while you were a resident. You should contact your former state's tax authority to understand your obligations for the year you move.
Nevada does not have a state income tax, so there is no residency requirement or residency tax. You can move to Nevada and immediately stop owing Nevada state income tax on wages. However, you must still file federal taxes and pay any taxes owed to your previous state for the portion of the year you lived there.
Frequently Asked Questions
Do I need to file a Nevada state income tax return?
No. Nevada does not require state income tax returns from residents or workers. You will not file a state return to Nevada, but you must still file a federal return with the IRS if your income exceeds the threshold for your filing status.
Will Nevada tax my Social Security or pension?
No. Nevada does not tax Social Security benefits, pensions, or distributions from retirement accounts. This applies to all retirement income sources, including 401(k)s, IRAs, and annuities.
If I work remotely for a company in California, do I owe California income tax?
No, if you live in Nevada and work remotely. You owe federal income tax only. California taxes residents on all income, but once you move to Nevada and establish residency there, you are no longer a California resident. You may owe California tax for the portion of the year you lived there before moving.
Does Nevada tax business income?
Nevada does not tax business income as personal income, but certain businesses may owe the Modified Business and Occupation Tax (MBOT) depending on their industry and structure. You should contact the Nevada Department of Taxation to determine whether your business owes this tax.
What if I won money gambling in Nevada?
Nevada does not tax gambling winnings at the state level, but the federal government does. You must report casino winnings on your federal tax return and pay federal income tax on them. The casino may issue you a form documenting large winnings.