A few years ago, I was struck by how much income an individual could amass when that income wasn’t subject to income taxes. Non-taxable income is something to consider when you visit the Biltmore Estate in Ashville, NC. That family accumulated a massive fortune through shipping and railroads after starting a ferry service on Staten Island. Their fortune would be worth around $200 billion in today’s dollars … and none of it was subject to income tax! (read TurboTax vs H&R Block Online: Which One Is Better? ^[2])

Andrew Carnegie, who’s net worth would be approximately $310 billion in today’s dollars, paid very little in taxes as did John D. Rockefeller (net worth today of $340 billion). Taxes are the largest drain on any individual’s earnings today and even the most ardent supporter of income taxes (which were not legal in the original U.S. Constitution) take every tax deduction possible.

You and I, however, are not so fortunate to be able to start a business and avoid paying taxes, but there are still some sources of non-taxable income.

Sources of Non-Taxable Income

1. Life insurance payouts

The proceeds from a life insurance ^[3] claim are generally not taxed. In some highly complex estates, that can change but for the vast majority of people, life insurance ^[3] isn’t subject to income tax.