12 Top Sources of Nontaxable Income
Most of the income you earn through work or investments is subject to federal income tax and, in some cases, to state taxes, as well.
There are certain categories of income that are exempt from income tax. Here are 12 that every taxpayer should know about.
- Disability Insurance Payments
- Employer-Provided Insurance
- Health Savings Accounts (HSAs)
- Life Insurance Payouts
- Earned Income in Seven States
- Corporate Income Earned in Six States
- Sale of a Principal Residence
- Financial Gifts
- Inheritances
- Municipal Bond Interest
- Up to $3,000 of Income Offset by Capital Losses
- Roth Retirement Account Income
If you are interested in utilizing one or more of these income categories, be sure to read the Investopedia article for the rules and restrictions involved.