Comparison•2025 Tax Year•Last verified: January 2026
Nevada vs Arizona: Side Hustle Tax Comparison 2025
Compare Nevada and Arizona taxes for freelancers and gig workers. Nevada has no income tax while Arizona has a flat 2.5% - see which is better for you.
Nevada and Arizona are neighboring Southwest states that both attract Californians fleeing high taxes. But they take different approaches: Nevada has zero state income tax, while Arizona has a flat 2.5% rate—one of the lowest in the nation.
For side hustlers choosing between Las Vegas and Phoenix (or their surrounding areas), the tax difference is real but modest. This comparison helps you understand when that 2.5% matters and when other factors should drive your decision.
**Why This Comparison Matters:**
Both Nevada and Arizona are top destinations for California migrants:
- **Nevada**: Zero income tax, gaming/tourism economy, Las Vegas and Reno
- **Arizona**: 2.5% flat tax, diversified economy, Phoenix and Tucson
- **Both are close to California**: Easy to maintain CA relationships
- **Both have desert climates**: Hot summers, mild winters
- **Both are growing rapidly**: Population boom from CA migration
For side hustlers, the question is whether Arizona's 2.5% tax (vs Nevada's 0%) is worth the trade-off for Arizona's potentially better economy, services, or lifestyle fit.
Side-by-Side Tax Comparison
| Metric | Nevada | Arizona |
|---|---|---|
| State Income Tax Rate | 0% (no income tax) | 2.5% (flat) |
| State Tax Filing Required | No | Yes (Form 140) |
| Federal SE Tax | 15.3% | 15.3% |
| Est. Tax on $15K Side Hustle* | ~$5,424 | ~$5,799 |
| Annual Savings (NV vs AZ)* | ~$375 | — |
| Property Tax (Avg Rate) | 0.55% | 0.62% |
| Sales Tax (State + Avg Local) | 8.23% | 8.40% |
| Major City | Las Vegas, Reno | Phoenix, Tucson |
| Summer Temps | 105-115°F (LV) | 105-115°F (PHX) |
*Assumes single filer with $60,000 W-2 income + $15,000 net side hustle income. Actual taxes vary based on deductions, filing status, and total income.
Nevada Analysis
**Nevada Tax Analysis for Side Hustlers**
Nevada has no state income tax, making it the tax-optimal choice between these two states.
**Key Nevada Tax Facts (2025):**
- **State Income Tax**: 0%
- **Tax Type**: None
- **Filing Requirement**: No state income tax return required
- **Commerce Tax**: Only for businesses over $4 million revenue
**Example**: If you earn $55,000 from your W-2 job and $15,000 from side hustle income (net of expenses) in Nevada:
- Federal SE Tax: ~$2,124
- Federal Income Tax on side income: ~$3,300
- Nevada State Tax: $0
- **Total Tax on Side Hustle: ~$5,424** (36.2% effective rate)
Nevada's economy is heavily tied to gaming and tourism, concentrated in Las Vegas and Reno. The tech sector is smaller but growing.
Arizona Analysis
**Arizona Tax Analysis for Side Hustlers**
Arizona has a flat 2.5% income tax—low by national standards, but not zero like Nevada.
**Key Arizona Tax Facts (2025):**
- **State Income Tax**: 2.5% flat rate
- **Tax Type**: Flat (simplified filing)
- **Filing Requirement**: Yes, but simple with flat rate
- **No Local Income Tax**: Arizona cities don't add income tax
**Example**: Same scenario—$55,000 W-2 job and $15,000 from side hustle income (net of expenses) in Arizona:
- Federal SE Tax: ~$2,124
- Federal Income Tax on side income: ~$3,300
- Arizona State Tax: ~$375
- **Total Tax on Side Hustle: ~$5,799** (38.7% effective rate)
**Nevada saves you: ~$375/year** on $15,000 of side hustle income.
Arizona's economy is more diversified, with significant tech, healthcare, and manufacturing sectors centered in Phoenix.
Calculate Your Side Hustle Taxes
Use our calculator to see exactly what you'd owe in each state. Try entering your numbers, then switch between Nevada and Arizona to compare.
Which State Is Right for Your Side Hustle?
**Nevada May Be Better If You:**
- Want absolutely zero state income tax
- Work in gaming, entertainment, or hospitality
- Prefer Las Vegas's energy and nightlife
- Want Reno's proximity to Lake Tahoe and skiing
- Don't need a large local tech ecosystem
**Arizona May Be Better If You:**
- Value a more diversified economy (tech, healthcare, finance)
- Want Phoenix's larger job market and startup scene
- Don't mind paying 2.5% for better state services/schools
- Prefer Phoenix's more suburban, family-friendly environment
- Are drawn to ASU's tech talent pipeline
**Important Considerations:**
1. **The difference is modest**: 2.5% on $15,000 is only $375/year. On $30,000, it's $750. This shouldn't be the primary factor in your decision.
2. **Economy matters more**: Phoenix has a significantly larger and more diversified economy than Las Vegas. If your freelance work benefits from local clients/networking, Arizona may offer more opportunity.
3. **Both are extremely hot**: Las Vegas and Phoenix both regularly exceed 110°F in summer. Neither offers an escape from desert heat.
4. **Water concerns**: Both states face long-term water supply challenges. Arizona's situation is particularly acute around Phoenix.
5. **California exit**: Both states offer a clean break from CA taxes. California will audit you regardless of which state you move to—establish genuine residency in whichever you choose.
Frequently Asked Questions
Is it worth choosing Nevada over Arizona just for the 2.5% tax savings?
For most side hustlers, probably not. The savings are real but modest: $375/year on $15,000 of income, or $750 on $30,000. If Arizona offers better career opportunities, a more suitable lifestyle, or other benefits for your situation, those likely outweigh a few hundred dollars in annual tax savings.
Which state has a better economy for freelancers?
Arizona (Phoenix specifically) has a more diversified economy with growing tech, healthcare, and finance sectors. Nevada's economy is heavily concentrated in gaming and tourism. For most freelance niches, Phoenix likely offers more local opportunity, though remote workers can access any market from either state.
Do both states have extreme summer heat?
Yes. Las Vegas and Phoenix both regularly reach 110-115°F in summer. If escaping extreme heat is a priority, neither state is the answer. However, both have mild winters, making them popular with snowbirds and those fleeing cold weather states.
Related Comparisons
Sources
- • Nevada Department of Taxation
- • Arizona Department of Revenue - 2025 Tax Rates
- • IRS Publication 334 - Tax Guide for Small Business
- • Tax Foundation - State Tax Data 2025