These 10 Untaxed Incomes Will Leave You Feeling Like You Hit the Jackpot!

Whether you’re new to filing taxes or a seasoned pro, understanding what income the IRS doesn’t tax can help boost your savings. Knowing the ins and outs of tax-free income will not only keep more money in your pocket but also help you be smarter with your finances all year round. The more prepared you are, the better your tax return could be.

Here’s a list of ten types of income that the IRS will not tax in 2024, which means you can enjoy the extra cash without worrying about Uncle Sam.

1. Child Support and Some Alimony Payments

If you’re divorced and paying or receiving child support, there’s good news. These payments are not considered taxable income. This means parents receiving child support don’t have to report it on their tax returns. It’s the same for alimony payments, as long as your divorce was finalized after January 1, 2019. If your divorce settlement was made before then, you may still be taxed on alimony payments, so check your decree to be sure.

2. Credit Card Rebates and Cashback Rewards

If you love earning rewards from your credit card, here’s a perk you can celebrate—those rebates and cashback rewards won’t be taxed! Whether you earn points, miles, or cash for your spending, the IRS treats these as discounts, not income. That means your rewards can be used freely without triggering any taxes.

3. Inheritance

Receiving an inheritance can be overwhelming, but at least you don’t have to worry about taxes in most states. In 2024, inheritances remain tax-free in the U.S., except in six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania). If you’re in one of these states, check local laws, but for everyone else, it’s a financial break during a difficult time.

4. Life Insurance Payouts

Another piece of good news: life insurance payouts won’t be taxed in 2024. If you are the beneficiary of a policy, the money comes to you tax-free. This can be a big relief, especially when dealing with the emotional and financial burdens of losing a loved one. Just remember, if there’s interest earned on the payout, that part is taxable.

5. Olympic and Paralympic Winnings

For elite athletes competing on the world stage, all that hard work is worth it. If you win a medal or prize money from the U.S. Olympic Committee in 2024, it’s tax-free. So, those gold, silver, and bronze medals, along with any bonus cash, won’t add to your tax bill. Celebrate your victory without any extra worries.

6. Adoption Expense Credits

Adopting a child is an incredible journey, but it can be costly. The IRS offers tax credits for qualified adoption expenses, covering legal fees, travel, and even some medical costs. While the rules can be complex, this credit helps reduce the financial strain on families. Be sure to consult a tax expert to make sure you’re claiming everything you can.

7. Health Care Benefits

Health insurance premiums, long-term care, vision, dental, and even mental health services are all tax-free. Whether you’re part of an employer-sponsored plan, Medicare, or Medicaid, these benefits won’t be taxed. Plus, if you have a Health Savings Account (HSA) or Flexible Spending Account (FSA), you can use those funds tax-free on approved medical expenses, adding another layer of savings.

8. Retail Rebates

When you score a rebate on a big purchase, it feels like getting money back in your pocket. The best part? The IRS agrees—it’s not taxable. Rebates are treated as a discount on the purchase price, so you don’t need to report them as income. Whether you get a gift card or a rebate check, you’re in the clear.

9. Scholarships for Education

If you’re lucky enough to receive a scholarship for your education, you don’t have to worry about the IRS taking a slice. As long as you use the scholarship for qualifying expenses like tuition, books, and fees, it’s tax-free. This allows students to focus on their studies rather than potential tax burdens.

10. Gifts

Got a generous family member or friend? In 2024, you can receive up to $18,000 in gifts without paying taxes on it. The IRS allows gifts to be tax-free as long as there’s no expectation of something in return. This means parents, friends, or even distant relatives can give you money without worrying about the taxman knocking on your door.

The Bottom Line

Knowing what income isn’t taxable can make a big difference when planning your finances. Whether it’s scholarships, life insurance payouts, or child support, these tax-free incomes can keep more money in your pocket in 2024. Just be sure to double-check with a tax professional to ensure everything is squared away come tax time.