1. Gift income. The US tax law stipulates that the recipient does not have to pay any gift tax, instead, tax is paid by the giving parties.
2. Inheritance income. The 2018 federal estate tax threshold is $11.2 million. If the amount is less than this threshold, you do not have to pay the estate tax. The heirs are exempt from any taxes.
3. Municipal bond interest income. Interest income from the purchase of municipal bonds is exempt from interest tax, and there is no federal income tax and state income tax.
4. Life insurance payout. You pay no tax on any life insurance payout. If a foreigner purchases a life insurance policy, the beneficiary pays no income tax when receiving the death benefits.
5. Disability insurance payout. Any benefit paid by the disability insurance policy is tax exempt.
6. Capital gain from primary residency. If you have lived there at least 2 years in the past 5 years, any capital gains less than $500,000 for married couple is tax exempt.
7. Capital gain from investment properties under 1031 exchange. You need to lock the new property within 45 days, and settle within 6 months.
8. Capital loss offset income. If you have a capital loss from investment, you can use it to offset $3,000 income per year.
9. Income from Roth IRA account. No tax on income from your Roth IRA investment.
10. Money from HSA account. If you use funds from HSA account for medical related expenses, there is no tax.
11. Scholarship income. If funds from scholarship is used to pay for education expenses, books, etc. there is no tax.
12. For low income families in the 10%-15% tax bracket, any long term capital gain tax is exempt.