We always hear that the tax structure in Nevada is more favorable than the tax structure in California, but what exactly does that mean? Let’s examine this in detail.
In California, C-corporations are taxed at a rate of 8.84% on the net taxable income, with the minimum tax being $800. This rate is higher than the average in the United States. Banks and financial C-corporations have an additional 2% of tax imposed. In Nevada, there is no income tax imposed on C-corporations.
In California S-corporations are taxed at a rate of 1.5% on the net taxable income, with the minimum tax being $800. In Nevada, there is no income tax imposed on S-corporations.
In California partnership LLCs pay a tax ranging from $1,700 to almost $12,000 per year depending on the net taxable income of the entity. In Nevada, there is no income tax imposed on LLCs or partnerships.
The minimum wage in California ranges from $10.50 to $11.00 per hour. The minimum wage in Nevada is $7.25.
Property taxes in California are in the range of 1.1% to 1.6% of the assessed land value. Nevada property taxes, one of the lowest in the nation, average 0.77% of the assessed land value.
The median home price in California is $600,000 while the median home price in Nevada is $300,000.
PERSONAL INCOME TAXES
The personal income tax rates in California range from 1% to 13.3%. Nevada has no personal income tax.
What does this all mean? Nevada really does provide a more favorable tax structure for both businesses and individuals.
Operating a business in Nevada, without an income tax liability, equates to more money available for reinvestment into the business. These excess funds can be used for hiring more employees, offering wage increases or employee benefits, purchasing newer equipment, or expansion.
For individuals, no income tax affords us the ability to purchase a home and add to our savings.
California has some of the most beautiful landscapes in the country as well as national parks, beaches, and Hollywood. Luckily for Nevadans, we can be there within ½ day drive. And when we arrive, we have money to spend.