How Much Is Income Tax in Nevada?

Nevada does not levy a state income tax on its residents, meaning individuals do not pay state taxes on their wages, salaries, or other personal income. While this simplifies financial planning, other tax obligations still apply.

Nevada’s Approach to Individual Income

Nevada does not tax personal earnings, including wages, salaries, bonuses, and commissions. Investment income, such as interest, dividends, and capital gains, is also exempt from state-level taxation. This policy extends to retirement income, pension funds, and Social Security benefits, none of which are taxed by the state.

Residents do not need to file a state income tax return based on their earned income. This can impact the overall tax burden for those considering a move to Nevada or for current residents. However, establishing Nevada residency requires demonstrating intent to make it a permanent home, including obtaining a Nevada driver’s license and registering vehicles in the state.

Business Taxes Related to Income or Wages

While individual income is not subject to state tax, businesses in Nevada have specific tax responsibilities related to wages. The Nevada Modified Business Tax (MBT) is a payroll tax imposed on employers, levied on the total gross wages paid to employees, including salaries, tips, bonuses, and commissions. Its purpose is to help fund the state’s Unemployment Insurance Trust Fund.

As of 2023, the standard MBT rate for most general businesses is 1.17% of taxable wages. Employers are subject to this tax if their total quarterly wages exceed $50,000, meaning the first $50,000 of gross wages paid in a quarter remains untaxed. For financial institutions, a different MBT rate of 1.554% applies on wages after health benefit deductions, with no wage exemption. Businesses must file quarterly MBT returns and remit payments by specific due dates, generally the last day of the month following the end of the quarter.

Federal Income Tax Obligations

The absence of a state income tax in Nevada does not eliminate federal income tax obligations. All Nevada residents and businesses remain subject to federal income tax on their earnings, as federal taxes apply nationwide regardless of state residency or business operation. Individuals and entities in Nevada must comply with federal tax laws, including filing annual income tax returns with the Internal Revenue Service (IRS).

Federal income tax rates are progressive, meaning the tax rate increases as taxable income rises. Employers in Nevada are required to withhold federal income taxes from employee paychecks throughout the year, ensuring taxes are paid as income is earned.