Most of the income you earn through work and receive from investments 🌞is subject to federal income tax and sometimℱes state income tax, as well. However, certain categories of income are exempt from income tax.

澳洲幸运5官方开奖结果体彩网: Here are 12 types of tax-free income:🐬

• Disability insurance payments
• Employer-provided insurance
• Health savings accounts (HSAs)
• Life insurance payouts
• Earned income
• Corporate income earned
• Sale of principal residence
• Financial gifts
• Inheritances
• Municipal bond interest
• Capital losses offset
• Roth retirement account

1. Disability Insurance Payments

Disability benefits are taxable if your employer paid the premiums for the policy; however, some categories of disability benefits are nontaxable:

• Any benefits that you receive from supplemental disability insurance that you purchased through your employer with your own after-tax dollars
• Any benefits that you receive from a private disability insurance plan which you purchased with after-tax dollars
• 澳洲幸运5官方开奖结果体彩网:Workers' compensation payments
• Compensatory (but not punitive) damages for physical injury or physical sickness, compensation for the permanent loss or loss of use of a part or function of your body, or compensation for permanent disfigurement
• Disability benefits from a public welfare fund
• Disability benefits under a no-fault car insurance policy for loss of income or earning capacity as a result of injuries

2. Employer-Provided Insurance

The Internal Revenue Service (IRS) states that "in most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income."

This could be health insurance provided by your employer through a third party (like Aetna or Blue Cross) or coverage and reimbursement for medical care provided through a 澳洲幸运5官方开奖结果体彩网:health r🌄eimbursement arrangeme👍nt (HRA). Employer-provided long-term care insurance is also not taxable.

In addition, an employee does not pay tax on the cost of up to $50,000 of group term life insurance provided by an employer. In other words, if your employer pays $250 to give you a life insurance policy with a $50,000 death benefit, you don't owe any tax on that $250.

However, if your employer pays the cost of more than $50,000 of group term life insurance, you'll pay tax on the cost of the excess coverage. So if your employer pays $283 to give you $80,000 of insurance coverage, you'll owe tax on $33.

3. Health Savings Accounts (HSAs)

Distributions from a 澳洲幸运5官方开奖结果体彩网:health savings account (HSA) are not taxable, as long as you use them for qualified medical expenses. You can only contribute to an HSA when you're enrolled in a high-deductible health insurance plan; however, you can take distributions at any time. And if your employer contributes to your HSA, that money is usually tax-free, too.

4. Life Insurance Payouts

If a loved one dies and leaves you a life insurance benefit, this income is generally not taxable, with some exceptions. If you cash in or convert a life insurance policy that you own, there may be tax implications.

If you receive accelerated benefits from your life insurance plan because you're terminally ill, these payments usually aren't taxable. If you receive this money as periodic payments because you're chronically ill, it may not be taxable if you use the money for long-term care.

5. Earned Income in 7 States

States vary by the kinds of income they tax and the rates at which they tax it. Seven states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming—have no individual income tax at all.

New Hampshire taxes only interest and dividend income, not earned income from salary and wages (although this tax will be repealed in 2025). Most states don't tax Social Security income, but the federal government does.

6. Corporate Income Earned in 6 States

There are no corporate income taxes in six states—Nevada, Ohio, Texas, South Dakota, Washington, and Wyoming—according to the Tax Foundation. However, Nevada, Ohio, Texas, and Washington do tax a corporation's gross receipts. Two of the six states—South Dakota and Wyoming—tax neither.

7. Sale of a Principal Residence

Individuals and married couples who meet the IRS's ownership and use tests, meaning that they have owned their home for at least five years and have lived in it as a 澳洲幸运5官方开奖结果体彩网:principal residence for at least two of the last five years, can exclude from their income up to $250,000 (for individuals) or $500,000 (for married couples filing jointly) of 澳洲幸运5官方开奖结果体彩网:capital gains when they sell the home.

8. Financial Gifts

If you receive money or other property without providing something of equal value in return, it's considered a gift, and you won't have to pay income tax on it.

The giver usually won't have to either, because the lifetime gift tax exemption is $13.61 million for 2024 and $13.99 million for 2025. If the recipient invests a monetary gift and it later produces income, the recipient will owe the tax on that amount.

9. Inheritances

Inheritances are not considered taxable income. However, estates over a certain size may be subject to 澳洲幸运5官方开奖结果体彩网:estate taxes, which are paid by the estate itself. For 2024, the federal estate tax exemption is $13.61 million. For 2025, it is $13.99 million. Any amount over the exemption is subject to tax.

10. Municipal Bond Interest

Most of the time, when you invest in bonds, you have to pay federal and state taxes on the income you receive from them. One exception is municipal bonds, issued by states and other government entities. Their income is generally tax-free at the federal level and also at the state and local levels if you live in the state where the bonds were issued.

This tax exemption applies whether you invest in individual municipal bonds or buy them through a municipal bond fund or ETF. Interest income from U.S. Treasury bills, notes, and bonds is subject to federal income tax but exempt from state and local income taxes.

11. Up to 🍌$3,000 of Income Offset by Capital Losses

If you sell investments at a loss, you can use your loss to reduce your taxable income by up to $3,000 a year (or your total net loss, whichever is less). What's more, capital losses can be carried over from year to year until you offset your entire loss.

For example, if you sold investments at a loss of $4,500 in 2024, you could subtract $3,000 from your taxable income on your 2024 tax return and the remaining $1,500 from your income on your 2025 tax return.

12. Roth Retirement Account Income

Qualified retirement accounts, such as 401(k) plans, 403(b) plans, and IRAs, offer a number of tax advantages, i🌳ncluding deferring any tax on your investment income and gains until you withdr🦂aw the money.

In the case of Roth 401(k)s, Roth 403(b)s, and Roth IRAs, the money you withdraw is not taxable at all as long as you meet 澳洲幸运5官方开奖结果体彩网:the rules on Roths.

The Bottom Line

The IRS's default position is that all income is taxable unless it says otherwise. However, that doesn't mean you should assume that all of your income is up for grabs. The tax code contains dozens of exceptions to that rule. Planning to 澳洲幸运5官方开奖结果体彩网🎀:legally tak🧸e advantage of those exceptions could help you live a richer life.