17 States with the Lowest Income Taxes You Should Know About
Income tax is a significant source of revenue for the government. In 2022, the latest year where this data is available, 38 percent of tax collections in each state are from individual income taxes.
We know that governments impose a tax on the income individuals and businesses earn, but that doesn’t mean we like to pay it. It does fund public services such as healthcare, education, infrastructure, etc, which we all use and love.
However, income tax systems vary from state to state. A few states have no state income tax, some impose flat income tax rates, while others have tax rates that vary depending on how much money you earn. Here are the states with the lowest income taxes.
1. Alaska
In Alaska, there is no state income tax. The state has the lowest total tax burden in the U.S., with a rate of 4.9 percent.
Alaska has the third highest health spending per capita at $13,642. It also has the seventh-highest public spending per K-12 student at $18,392. What’s more, the infrastructure bill spending is $5.029 billion.
2. New Hampshire
Aside from having no state income tax, New Hampshire also has the second-lowest total tax burden at 5.6 percent. Be aware that they do ask for a 3% tax on the interest and dividends that you earn when you earn more than $2,400 annually, which will be repealed at the end of 2024.
The Granite State has the 12th highest health spending per capita at $11,793. It also has the ninth-highest public spending per K-12 student at $17,456. Here, the total infrastructure bill spending is $2.048 billion.
3. Wyoming
There is also no state income tax in Wyoming. The total tax burden here is 5.7 percent, the third lowest in the U.S.
Wyoming ranks 12th in public spending per K-12 student ($18,392) and 16th in health spending per capita ($10,989). In addition, the state spends a total of $2.584 billion on infrastructure.
4. Florida
Florida has no state income tax and the fourth lowest total tax burden in the country at 6.1 percent.
It has a health spending per capita of $9,865 and public spending per K-12 student of $9,983. Furthermore, the Sunshine State has a total infrastructure bill spending of $18.998 billion.
5. Tennessee
In Tennessee, there is no state income tax, either. It has the fourth lowest total tax burden in the U.S., with a rate of 6.1 percent.
Health spending per capita here is $9,336, while public spending per K-12 student is $9,942. What’s more, Tennessee’s total infrastructure bill spending is $7.995 billion.
6. South Dakota
South Dakota, the 12th happiest state in the U.S., does not charge income tax. Residents have a total tax burden of 6.4 percent, the seventh lowest in the country.
South Dakotans have the eighth highest health spending per capita ($12,495). Public spending per K-12 student amounts to $10,326, and total infrastructure bill spending costs $2.846 billion.
7. Nevada
There is also no state income tax in Nevada. The place has a total tax burden of 7.4 percent, making it the tenth lowest in the U.S. That’s mainly because of its high sales tax, which varies by county and is the second highest of all American states.
The Silver State has $8,348 worth of health spending per capita. Moreover, it has $9,124 worth of public spending per K-12 student. The total infrastructure bill spending here is $4.038 billion.
8. Texas
Texans pay no state income tax. They pay a total tax rate of 7.6 percent, which mainly comes from the sales tax and property taxes that you pay when you live in Texas.
Moreover, the Lone Star State spends $8,406 in health expenses per capita. Meanwhile, it spends $9,871 in education per K-12 student. Texas, being the big state that it is, spends a total of $35.440 billion on infrastructure.
9. Washington
Washington is another state without state income tax. Together with the sales and property taxes, the tax burden is an average of 8 percent. Washington has the highest sales and excise tax burden in the country, which affects their placement heavily.
At $14,348, the Evergreen State has the 17th highest public spending per K-12 student. Furthermore, its health spending per capita is $9,265, and total infrastructure bill spending is $8.590 billion.
10. North Dakota
North Dakota has income tax rates from 1.95 to 2.5 percent. It’s still in the top 10 lowest total tax burden at 6.8 percent, lower than states like Nevada and Texas that don’t have any state income taxes.
The Flickertail State has the 15th highest health spending per capita at $11,301. It also has the 18th highest public spending per K-12 student at $14,037. Meanwhile, infrastructure bill spending has a total of $2.641 billion.
11. New Mexico
New Mexico has income tax rates from 1.7 to 5.9 percent. In the U.S., it has the 14th lowest total tax burden at 8 percent.
The Land of Enchantment has a health spending per capita of $8,902. It also has a public spending per K-12 student of $10,469. Meanwhile, infrastructure bill spending has a total of $3.725 billion.
12. Louisiana
Income tax rates in Louisiana range from 1.85 to 4.25 percent. With a total tax burden of 8.3 percent, it’s not even that much higher than Washington state, which doesn’t have any state income taxes.
The Pelican State is the top 20 state in terms of health spending per capita ($10,515). Louisiana has a total infrastructure bill spending of $7.252 billion.
13. Arizona
In Arizona, income taxes have a flat rate of 2.5 percent. Residents have a total tax burden of 7.8 percent.
The Grand Canyon State has a health spending per capita of $8,756. Plus, its public spending per K-12 student is $8,770, and infrastructure bill spending is $77.552 billion.
14. Oklahoma
Individuals in Oklahoma pay income tax rates that vary from 0.25 to 4.75 percent. In addition, at a rate of 7 percent, they have the seventh-lowest total tax burden in the U.S.
The Sooner State has a public spending per K-12 student of $9,200. Also, it has a health spending per capita of $9,444. Total infrastructure bill spending here is $5.771 billion.
15. Mississippi
Mississippi has a flat rate of 4.7 percent for income taxes, and the income taxes will go down until 2026. In total, it has the 19th lowest tax burden among all states in the U.S. at 8.8 percent.
The Magnolia State spends $9,255 per K-12 student. Moreover, it spends $9,394 in healthcare per capita. Meanwhile, it spends $4.462 billion in total on infrastructure.
16. South Carolina
At 0 to 6.3 percent, South Carolina has relatively lower income tax rates than other states. Their total tax burden is 7.5%. From here, its total spending on infrastructure is at $6.114 billion.
Not only that — the Palmetto State spends $10,991 in education per K-12 student. Also, it spends $8,766 in healthcare per capita.
16. Alabama
In the U.S., Alabama has the 9th lowest total tax burden at 7.5 percent. Residents have income tax rates of 2 to 5 percent.
Health spending per capita in the Cotton State is $9,280. Public spending per K-12 student is $10,108, and total infrastructure bill spending is $6.968 billion.
17. Michigan
Michigan is the state with the 14th lowest total tax burden in the U.S. (8 percent). In terms of income taxes, it has a flat rate of 4.25 percent.
The Wolverine State spends $9,987 on healthcare costs per capita. Meanwhile, it spends $12,053 on education per K-12 student and $10.783 billion in total on infrastructure.
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