Wyoming does not impose several common taxes, making it an attractive location for individuals and businesses looking to minimize tax liabilities.
No State Taxes
Wyoming has no state income tax, gift tax, inheritance tax, estate tax, or capital gains tax. The state does not tax retirement income and boasts a stable political climate and a robust economy. Wyoming’s corporate and personal income tax rates are both 0%.
Property Taxes and Sales Tax Benefits
The state’s average property tax rate is 0.55%, which ranks as the 10th-lowest nationally. Prescription drugs and groceries are exempt from the 4-6% sales tax rate. Wyoming also imposes no tax on 401(k) plans, IRAs, or pensions, and Social Security benefits are also untaxed.
Trusts and Asset Protection
Trust companies in Wyoming manage over $30 billion in assets. Limited liability companies (LLCs) and family partnerships can shield assets from estate taxes indefinitely through the use of dynasty trusts. Wyoming does not tax the gifting of real estate to heirs, nor does it tax out-of-state retirement income.
Different U.S. states have become known as domestic tax havens due to their favorable tax policies for residents and businesses.
States with No Income Tax
Delaware, Montana, New Hampshire, and Nevada have no corporate or personal income tax. States like Alaska, Florida, and Texas also have no personal income tax, while states use different financial vehicles to offer tax benefits.
Tax Justice and Legal Considerations
According to the Tax Justice Network, the U.S. is a popular tax haven globally. However, using tax havens is only legal if the required taxes are paid to one’s home jurisdiction. The Pandora Papers have highlighted South Dakota as a particularly attractive state for avoiding estate taxes.
Additional Information on Wyoming’s Tax Policies
In Wyoming, real estate sales are tax-exempt, and both tangible and intangible assets can be sold tax-free. Most of the property tax revenue, over 60%, comes from mineral production, and these funds primarily support public schools. Instead of taxes, annual license fees apply to Wyoming corporations and LLCs. Non-U.S. residents also benefit from tax advantages in the state.
Dynasty Trusts in Wyoming
Dynasty trusts in Wyoming can protect real estate and other assets from federal estate taxes for up to 1,000 years, without needing to sell the property to pay these taxes. The trust must be based in Wyoming to utilize this advantage.