15 States With Lowest Taxes That Means More Money in Your Pocket
When was the last time you heard someone say they enjoyed paying taxes? Exactly. It just doesn’t happen. Paying taxes is a necessity of living in society, but wouldn’t it be nice to have a lower tax bill?
Not all states have the same taxation levels or policies. Some have low property and sales taxes, and others have zero state income taxes, which can amount to substantial savings for individuals and families.
If you’re so inclined, you can move to one of these low-tax states to keep more money in your pocket.
1. Alaska
The Last Frontier is full of natural beauty, from the northern lights in the sky and its snowy mountain ranges to the fantastic sights of sea life. It’s quite far from the lower 48 states and can be isolating.
Alaska also has the lowest overall taxes in the country. It doesn’t tax individual income. Its property tax is 1.07 percent of the value of owner-occupied housing, and the combined local and state sales tax is 1.82 percent.
2. Tennessee
Tennessee has much to offer its residents and visitors, including the kind of friendliness that can only be found in the South. There’s another benefit to being in Tennessee: the low tax rates.
Income, including Social Security and retirement income, isn’t taxed at the state level, and homeowners will love the .62% real estate tax. The only downside is the combined local and state sales tax, which is at 9.55 percent, making it the second highest in the country.
3. New Hampshire
The New England state’s motto is “Live Free or Die.” In New Hampshire, living free is more than just about personal liberty; it can also mean being free from high taxes. Property owners pay 1.61 percent in taxes for owner-occupied housing.
New Hampshire does not charge sales tax and does not levy a state income tax on salaries and wages. However, it does charge a tax on dividends and interest income.
4. Wyoming
Living in the Rocky Mountain region means gorgeous open skies and incredible views of majestic mountains. It also means paying some of the lowest taxes in the country.
Wyoming’s sales tax is only 4 percent, but individual counties can levy an additional sales tax of up to 4 percent. There’s no tax on income, and the property tax rate is less than 1 percent. Wyoming also has a lower cost of living, so the tax savings add up.
5. Florida
Florida’s cost of living is higher than the national average for all of its attributes, like year-round sunshine and numerous entertainment attractions. Certain types of taxation partially offset that. Florida doesn’t tax income, including retirement distributions, pensions, and investment income.
Property taxes vary from county to county, but the average rate is .91 percent. The combined local and state taxes average around 7 percent, and prescription medications, common household remedies, and groceries are among the items that are tax-exempt.
6. Delaware
Delaware has a significant place in history as the first state in America. It’s the home of President Joseph Biden, major chemical companies like DuPont, and major credit card companies like Discover and Chase.
Besides the state’s history and available career opportunities, Delaware is attractive for its low taxes.
It has a graduated tax structure for incomes under and over $60,000 that maxes out at 6.6 percent. Property taxes are at .53 percent, and the state has no sales tax.
7. South Dakota
It may not be the most heavily populated state, but it is tax-friendly for individuals and corporations if you’re looking to relocate to South Dakota. There aren’t any income taxes for individuals or corporations.
The combined local and state sales taxes levied amount to 6.11 percent. Even better, homeowners living in owner-occupied housing enjoy a 1.01 percent tax on their home’s value.
8. Montana
Montana is another Rocky Mountain state offering residents open spaces and amazing views. However, the cost of living there is slightly higher than average, so that’s something to consider before relocating.
Otherwise, Montana is a relatively tax-friendly state. It has a .69 percent tax on owner-occupied properties. There’s no sales tax, and the progressive income tax rate ranges from 4.70 percent to 5.90 percent.
9. Missouri
Some types of taxes in Missouri are lower than others. Depending on what kind of tax savings you prioritize, it may or may not be worth relocating to. The good news is the average property tax in the state is 1.01 percent.
The less-than-good news is that Missouri has a combined local and state tax of 8.38 percent. Some localities don’t add to the tax, leaving it at the state rate of 4.225 percent. Unlike other states, groceries in Missouri are taxed. The income tax is graduated, ranging from 2.00 to 4.95 percent.
10. Alabama
If you want to live in Alabama, be prepared for your sales tax to be higher than other taxes that are levied. Property taxes are the lowest in the state, with residents of owner-occupied housing paying a .36 percent tax on their home’s value.
Alabama’s graduated income tax means individuals pay between 2.00 percent and 5.00 percent, with some localities collecting an additional income tax. The state sales tax is 4.00 percent, but when local taxes are added, it skyrockets to 9.29 percent.
11. Georgia
Georgia has numerous vibrant, thriving communities and draws people from all over the country, and its tax code has its pluses. On the positive side, the average real estate tax is .92 percent. Municipalities set their tax rates, meaning property taxes could be lower or somewhat higher depending on where you live.
As of January 2024, the state moved from a tiered income tax to a flat tax of 5.49 percent. The state sales tax rate is 4 percent, but localities can levied an additional tax of up to 5 percent. On average, the combined local and state sales tax is 7.38 percent.
12. Oklahoma
If you’re thinking of moving to Oklahoma, you’ll find a mostly favorable tax code. As with other states, some taxes are higher than others, but it’s up to the individual to decide what an acceptable amount to pay is.
The state income tax is on a graduated scale, with the lowest rate at .25 percent and the highest at 4.75 percent. Owner-occupied homes are taxed at a relatively low rate of .76 percent. The only outlier is the combined sales tax. The regular state tax is 4.50 percent but localities can impose additional taxes, bringing them up to an average of 8.99 percent.
13. North Dakota
North Dakota is the ticket for a state with an all-around moderate tax code and a lower-than-average cost of living. Its winters may be colder than anything you’ve ever experienced, but you could save a lot of money living there.
Owner-occupied homes are taxed at .97 percent of their value, and the graduated state income tax for individuals falls between 1.95 percent and 2.50 percent. The state sales tax is 5.00 percent, but if a locality levies an additional tax, it averages 7.04 percent.
14. Arizona
This Sunbelt state has a lot of US citizens relocating there for the year-round warm (hot) weather and job opportunities. Except for the combined state and local sales taxes that are charged, Arizona has reasonably low taxes. Starting in 2023, the state adopted a 2.5 percent flat income tax.
On average, homeowners pay a .63 percent property tax, although counties may charge different rates. Arizona’s sales tax is 5.6 percent, with an average combined state and local sales at 8.37 percent. However, some localities add even more sales tax, increasing the total to 12 percent or higher.
15. North Carolina
Anyone considering a move to North Carolina will be impressed by its modest tax code. The state sales tax is 4.75 percent, but it can have a combined average of 7 percent in localities that choose to levy an additional tax of up to 2.75 percent.
Property taxes vary by location, but the average tax is .82 percent of a home’s value, which is a boon for homeowners in the state. North Carolina levies a moderate flat income tax of 4.75 percent.
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