Taxes are a significant expense that can eat away at your hard-earned income. If you’re looking to move to a more tax-friendly state, certain states are more appealing due to lower tax burdens for residents. We take a look at 12 states that rank among the lowest in tax rates in the U.S:
Alaska
Alaskan residents enjoy the benefits of no state income tax, making it a haven for those wanting to keep more of their earnings. The state relies heavily on tax revenue from natural resources like oil. There’s also property tax to be paid in certain areas, and some localities implement their own sales taxes.
Wyoming
Wyoming is another state with no income tax and a low cost of living. With its stunning natural landscapes to add to the financial draw, this state is appealing to those who want to retire early with good savings behind them. Sales taxes do tend to be slightly higher in some areas to compensate for the lack of income tax, but generally, citizens are better off financially in Wyoming than in many other states.
South Dakota
South Dakota also has no income tax, making it an attractive option for retirees and those seeking a simpler tax environment. Other taxes, such as sales and property taxes, vary by location but generally fall within the national average.
Tennessee
While Tennessee has a Hall income tax and a flat tax on investment, it doesn’t enforce state income tax on wages and salaries. This and a relatively low sales tax make it a tax-friendly state overall.
Texas
With no state income tax and a moderate sales tax, Texas is a popular destination for businesses and individuals looking to lower the amount of taxes they pay. Property taxes can be higher in some areas, which is something to factor into your move, but sales tax is lower at a rate of 6.25%.
Nevada
Nevada is famous for the party city of Las Vegas and its booming entertainment industry. Residents often feel like partying themselves, as the state has no income tax and primarily relies on sales taxes and casino revenue for funding. Some areas, such as Clark County, have a higher sales tax rate than most other areas of the state, which could impact some residents.
Florida
Sunshine states are popular for retirees and those seeking sun when their home state is experiencing cold spells. Florida is also attractive as it has no state income tax. Sales taxes are average, and there’s a tax on tourist accommodation, but other than that, you should expect to save more of your earnings when living in the state.
Washington
Washington residents benefit from no state income tax on earned wages, but there are significant taxes to consider. The state has a tax on capital gains income, which applies to profits earned from the sale of investments like stocks, bonds, and real estate. The rate is 7% for most taxpayers, but it can be higher for top earners.
Delaware
Delaware is a small state, but it wins favor from businesses because of its tax-friendly laws. Delaware is one of the few states with no statewide sales tax. This can be an advantage for shoppers, as you generally won’t pay sales tax on most goods unless a locality enacts its own sales tax. However, some counties and towns have local sales taxes, so be sure to research the specific tax rate in the area you’re interested in. While there’s also no sales tax on most goods, a corporate income tax and a gross receipts tax can apply to some businesses.
New Hampshire
Another state with no sales tax is New Hampshire. The state recently eliminated its tax on interest and dividends, making it even more attractive for some. One matter to consider is that New Hampshire relies heavily on property taxes for revenue. These property tax rates vary by location and can be higher than the national average in some areas.
Montana
Montana’s lack of state income tax and generally lower property taxes than the national average contribute to its reputation as a low-tax state. However, the potential for additional local sales taxes can affect your overall tax burden, which is something people looking to move or retire to Montana should consider.
South Carolina
South Carolina has no state income tax, and its sales tax falls slightly below the national average, making it doubly attractive to those looking to move away from high-tax states such as New York and Los Angeles. The state does, however, have a high gas tax, which is something to consider if you drive a lot for your job and want a large home to heat.
Harvi Sadhra is the CEO of Revir Media. He has over 10 years of experience in digital media and has been featured in many of the largest media brands on topics related to finance, stocks, money, technology, and more.