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Nevada Taxes: What You Need to Know

Federal Income Tax

Nevada residents are subject to federal income tax, which operates under a progressive tax system. For 2024, the federal tax rates range from 10% to 37%, depending on taxable income. The specific tax brackets are structured as follows:

• 10% on income up to $11,000
• 12% on income from $11,001 to $44,725
• 22% on income from $44,726 to $95,375
• 24% on income from $95,376 to $182,100
• 32% on income from $182,101 to $231,250
• 35% on income from $231,251 to $578,125
• 37% on income exceeding $578,125

This progressive structure ensures that higher earners contribute a larger percentage of their income in taxes compared to those with lower incomes. This means that as a taxpayer’s income increases, so does their tax rate, which helps to redistribute the tax burden more equitably across different income levels.

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State Income Tax

One of the most distinctive features of Nevada’s tax system is its absence of a state income tax. This allows residents to retain a greater portion of their earnings compared to individuals in states that impose income taxes. The lack of a state income tax is especially appealing to high-income earners, retirees, and individuals seeking a lower overall tax burden. Nevada’s favorable tax climate contributes to its attractiveness as a destination for businesses and individuals looking for economic opportunities.

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Local Taxes

Although Nevada does not impose a state income tax, local jurisdictions have the authority to levy certain taxes. The statewide sales tax is set at 6.85%, but combined rates can be higher in specific areas; for example, in Las Vegas, the total can reach up to 8.375%. This tax structure supports local governments and public services while keeping overall tax rates relatively low compared to many other states.

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Additionally, property taxes are assessed at the local level. While there are no local income taxes, the property tax rates vary by county, with some areas experiencing higher rates due to local funding needs.

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FICA & State Insurance Taxes in Nevada in 2024

FICA Taxes

Nevada residents, like all U.S. workers, are required to pay FICA taxes, which fund Social Security and Medicare programs. The FICA tax rates for 2024 are:

• Social Security Tax: 6.2% on wages up to $168,600.
• Medicare Tax: 1.45% on all wages, with an additional 0.9% surtax on income exceeding $200,000.

These contributions ensure eligibility for federal retirement and healthcare benefits.

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Pre-Tax Deductions (Medical Insurance, 401K, etc.) in Nevada in 2024

Pre-tax deductions play a critical role in helping Nevada residents reduce their taxable income, which in turn lowers their overall tax burden. By taking advantage of these deductions, individuals can maximize their take-home pay while simultaneously saving for future expenses, such as healthcare and retirement. Below are common types of pre-tax deductions available in Nevada:

Health Insurance Premiums

Employee contributions to employer-sponsored health insurance plans, including medical, dental, and vision coverage, are typically deducted from gross income before taxes. This means that employees pay their premiums using pre-tax dollars, which effectively reduces their taxable income. As a result, individuals not only save on their monthly premiums but also decrease their federal and state tax liabilities. This benefit encourages employees to enroll in health plans, promoting overall well-being.

401(k) Contributions

Contributions to 401(k) retirement accounts are also made on a pre-tax basis, allowing individuals to save for retirement while lowering their current taxable income. For 2024, the maximum contribution limit for 401(k) plans is $23,000. Additionally, individuals aged 50 and older can contribute an extra $7,500 as a catch-up contribution. This strategy not only helps in accumulating retirement savings but also provides significant tax advantages, as contributions are taxed only upon withdrawal in retirement, ideally when the individual may be in a lower tax bracket.

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Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA)

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) allow for pre-tax contributions that can be used for qualified medical expenses. For 2024:

• HSA Contribution Limits:
  • $4,150 for individuals
  • $8,300 for families

HSAs are available to those enrolled in high-deductible health plans and provide tax-free withdrawals for qualifying medical expenses. FSAs allow employees to set aside up to $3,050 for medical expenses, offering flexibility in managing healthcare costs while providing tax benefits.

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Summary of Tax Types and Rates in Nevada

Median Household Income in Nevada (2024)

The median household income in Nevada is a significant indicator of the economic well-being of residents and provides insight into the overall financial landscape of the state. As of 2023, the median household income in Nevada is $76,364.

Recent Growth in Median Household Income

Nevada’s median household income has shown consistent growth, highlighting the state’s ability to attract new businesses and foster economic development. The following table provides a snapshot of the progression of median household income over recent years:

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Nevada Tax Brackets 2024

Since Nevada does not impose a state income tax, residents only need to consider federal tax brackets when calculating their overall tax liabilities. The federal tax system remains progressive, meaning that individuals with higher incomes contribute a larger percentage of their earnings compared to lower-income earners. This structure allows for equitable taxation based on an individual’s ability to pay.

Local Taxes

While there is no state income tax in Nevada, local jurisdictions may have their own taxes, such as sales and property taxes. Understanding these local tax obligations is essential for effective financial planning.

Nevada stands out from most other states due to the absence of a state income tax, which simplifies tax planning for residents. This feature significantly benefits individuals and businesses alike, making Nevada a popular choice for those looking to retain more of their earnings. Residents of Nevada only need to account for federal tax brackets when determining their tax obligations, as the state does not impose its own income tax.