Choosing where to live can have a massive impact on your financial health. State taxes vary dramatically, with some states having no income tax while others take over 13% of your earnings.
States with No Income Tax
Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. However, they often make up for it with higher sales or property taxes.
Lowest Overall Tax Burden States
1. Alaska
Total tax burden: 5.06%. No income tax, no sales tax, and low property taxes. Alaska even pays residents an annual dividend from oil revenues.
2. Wyoming
Total tax burden: 6.32%. No income tax, low sales tax (5.36%), and reasonable property taxes make Wyoming very tax-friendly.
3. Tennessee
Total tax burden: 6.33%. No income tax on wages, moderate sales tax, and low property taxes create an attractive tax environment.
4. South Dakota
Total tax burden: 6.69%. No income tax, moderate sales tax, and low property taxes make it ideal for retirees and entrepreneurs.
5. Florida
Total tax burden: 6.97%. No income tax, moderate sales tax (6.5%), and no estate tax make it popular with retirees and high earners.
Highest Tax Burden States to Avoid
New York (12.47%), Hawaii (12.31%), and California (11.53%) have the highest overall tax burdens. While they offer great amenities, you'll pay significantly more in taxes.
Beyond Income Tax: The Full Picture
Sales Tax
Ranges from 0% (Alaska, Delaware, Montana, New Hampshire, Oregon) to over 9% in some states. Consider your spending habits when evaluating sales tax impact.
Property Tax
New Jersey (2.47%), Illinois (2.23%), and New Hampshire (2.18%) have the highest property tax rates. Hawaii (0.28%), Alabama (0.41%), and Louisiana (0.55%) have the lowest.
Other Taxes to Consider
- Estate and inheritance taxes
- Gas taxes
- Vehicle registration fees
- Business taxes if you're self-employed
Making the Right Choice
The best state for you depends on your income level, spending habits, and lifestyle preferences. Use our tax calculator to compare your specific situation across different states.