Another U.S. state that doesn’t tax unemployment benefits either is Tennessee. In fact, the Volunteer State has no income tax. Still, as for the 2020 tax year, some interest and dividends were subject to the Hall Tax at a 1 percent rate.
When it comes to sales taxes, Tennessee has a 7 percent levy, but it can go higher. On the sales of single items, there’s an additional state tax (2.75 percent). However, the tax actually applies to the portion of the sales price (from $1,600 to $3,200). And as if that weren’t enough, localities have their own rate, adding as much as 2.75 percent.
Texas, Washington, and Wyoming don’t tax your unemployment compensation either. So is the state you live in on your side or not?
Also of interest: These 9 States With No Income Tax Have Other Hidden Taxes