The 2025 tax season is upon us, and while many Americans will need to file state income taxes, not everyone is required to do so. According to USA Today, the rules around state tax filing can be complex and vary significantly by location. What this really means is that taxpayers need to carefully review their specific situation to determine if they have an obligation to file a state return this year.
Who Needs to File?
In general, you'll need to file a state tax return if you earned income in a state that collects income tax. Most states fall into this category, with the notable exceptions of Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. Residents of these states typically don't need to worry about state income taxes.
However, the bigger picture here is that even if you live in a state without an income tax, you may still need to file if you earned money there through work, investments, or other sources. H&R Block explains that the rules can get quite complex, so it's important to double-check your specific circumstances.
Potential Penalties for Non-Compliance
Failing to file a required state tax return can come with some serious consequences. According to the IRS, penalties can include back taxes owed, interest charges, and even criminal prosecution in some cases. The bottom line is that it's generally not worth the risk to skip out on state taxes if you have an obligation to file.
That said, taxpayers in no-income-tax states or with very low earnings may be able to avoid the headache. The key is to carefully review your situation and make an informed decision. Consulting a tax professional is also a wise move to ensure you're meeting all your obligations.
The Bottom Line
While the majority of Americans will need to file state taxes for 2025, there are some exceptions. Ultimately, it comes down to your specific income sources and where you live. By understanding the rules and planning ahead, you can ensure you're in compliance without any unpleasant surprises come tax season.