The State of Nevada is known for its casinos and landscapes. It houses the infamous Sin City- Las Vegas. Asides from the diverse culture and vibrant nightlife Nevada has to offer, it is also a comfortable place to live if you’re contemplating tax benefits. It is a tax-friendly state. For a fact, taxes in the State are below the national average.
The Nevada tax system ranks 7th on the State Business Tax Climate Index. The major source of tax revenue is Sales tax. This is because of the presence of hotels and casinos in the State. Items like alcohol and cigarettes are taxed. Nevada is one of the eight states without an income tax. Common taxes in Nevada are property, commerce, and excise tax.
To understand the tax system of Nevada, basic knowledge of the types of taxes is required. Let’s have a rundown of the types of taxes.
Types of Taxes
- Sales Tax: This is a charge levied on the sale of certain items and services.
- Property Tax: This is a tax imposed on real or personal property of an individual or corporate body.
- Commerce Tax: This type of tax is specific to Nevada. It was passed by the legislature in 2015. It is imposed on businesses with over $4 million in gross revenue in a taxable year.
- Gift Tax
- Unitary tax
- Payroll tax
- Excise Tax
- Personal Income Tax
- Corporate Income Tax etc.
Tax System in Nevada
The rates for each type of tax differ. Likewise, there is a difference between State and Local (district) taxes. Like other states, there are fixed federal taxes and local taxes set by the state. Here are the rates of different taxes in Nevada:
Sales Tax
The state sales tax rate is 6.85% and the highest district sales tax rate set by the local government is 1.53%. In total, the average sales tax rate is 8.23%.
Payroll Tax
As an employer, you are expected to remit the payroll tax. It is usually deducted from gross wages. Examples of deductibles in a company are:
- Health Insurance Tax – 1.45%
- Social Security Tax – 6.2%
- Non-employment Tax – 6% for the first $7000 paid to an employee.
Property Tax
The property tax rate in Nevada is $5.00 per $100 of assessed value.
Commerce Tax
The Commerce tax rate depends on the type of business. It is only applicable to businesses with an annual income exceeding $4 million. Let’s consider the tax rates of various industries:
- Agriculture – 0.063%
- Manufacturing – 0.091%
- Trade
- Wholesale – 0.101%
- Retail – 0.111%
- Oil & Gas and related services – 0.051%
- Construction – 0.083%
- Utilities and Telecommunications – 0.136%
- Warehousing and Storage – 0.128%
- Publishing, Software, and Date Processing – 0.253%
- Real Estate – 0.250%
- Education – 0.281%
- Finance – 0.111%
- Companies and Enterprises – 0.137%
- Waste Management – 0.261%
- Administration – 0.154%
- Healthcare – 0.190%
- Arts ( This includes recreation and entertainment) – 0.240%
- Accommodation – 0.200%
- Food services – 0.194%
- Professional Services – 0.181%
- Others – 0.142%
Excise Tax
The excise tax rate in Nevada is 0.75% for gross revenue over $20 million but not exceeding $150 million. For gross revenue over $150 million, the rate is 1.10%.
What are the benefits of the Nevada tax system?
Many taxes are not applicable in Nevada. For instance, the state does not have an income tax. For federal income tax, some corporations remit 21%.
Also, limited liability companies and partnerships do not pay income taxes as a legal entity. However, participants pay income taxes on their behalf based on the shares allocated to them.
Other taxes not paid in Nevada include:
- Franchise Tax
- Gift or Inheritance Tax
- Estate Tax
- Unitary Tax
What tax exemptions are present in Nevada?
There are exemptions for each type of tax. They include:
Property tax
The exemptions pertain to both personal and real property. The following persons can apply for a property tax exemption:
- Blind persons – $4200 is deducted from the assessed value of the property.
- Veterans – $2800 less the assessed value.
- Surviving spouse – $1400 for assessed value deduction.
NB: The exemptions stated above strictly apply to residents of Nevada.
Sales Tax
Certain items are exempt from sales tax. They include:
- Most grocery products
- Medication
- Medical devices
- Some types of machinery
- Raw materials
- Newspapers
- Transportation services
- Digital products.
Commerce Tax
There is no exemption from commerce tax per se but for a gross revenue lower than $4 million in a taxable year, no commerce tax return is expected to be filed.
Nevada is a good choice of residency for businesses, companies, and individuals. There are tax benefits and exemptions granted to natural and corporate bodies in the state. You don’t have to worry about inheritance, income, or withholding taxes in Nevada. The tax atmosphere makes it easier for businesses to thrive. No wonder it was ranked in 7th place in the State Business Tax Climate Index.
