These Are The 10 Most Tax-Friendly States In The US

If you’ve ever considered moving to a different state, you know that state and local taxes are a huge factor in the decision-making process. You probably also know that those taxes can vary drastically by state, and they have the power to make (or break) your budget.

In some states, you could end up paying a lot more than the national average, while in others, you might pay a lot less. Here are 10 of the most tax-friendly states in the U.S., where you might just find the next perfect place to call home…

North Dakota

North Dakota has one of the lowest state income tax rates in the nation. While it might be less than ideal to pay state taxes, their income tax caps out at a meager 2.9%.

Don’t sweat that state income tax rate just yet, though. That percentage is actually the highest marginal rate and only applies to income above $433,000. Most income in the state is taxed at 2.04% or 2.27%. North Dakota does charge sales tax, but at 5%, that lands North Dakota right in the middle of the sales tax pack.

• Average annual household tax bill: $4,241
• Average sales tax rate: 6.9%
• Average property tax rate: 0.7%

South Dakota

Long considered to be a tax haven, South Dakota doesn’t collect taxes on personal or corporate income. Plus, its sales tax—about 4.5% in state taxes and about 1.9% in local taxes, on average—are also on the lower end of the sales-tax spectrum.

South Dakota does charge a slightly higher property tax rate than other states: 1.3%. If you’re trying to cut down on your tax bill, a move to South Dakota could be a great place to start.

• Average annual household tax bill: $5,303
• Average sales tax rate: 6.4%
• Average property tax rate: 1.3%

Wyoming

Wyoming is another state that doesn’t collect income tax. It also keeps other tax rates so low that you could count this state as a tax haven. If you long to live somewhere with lower taxes, buying a home in Wyoming could be just the ticket.

Apart from collecting no corporate or personal income tax, the statewide sales tax rate is a mere 4%—making it the second-lowest state tax in the nation. Wyoming makes a point to avoid small fees, too. They boast the lowest tax on beer, for example, at a scant two cents per gallon. You know, if that’s important to you.

• Average annual household tax bill: $2,954
• Average sales tax rate: 5.3%
• Average property tax rate: 0.6%

Washington State

Home to tech giants like Amazon and Microsoft, Washington has no state income tax. It does, however, levy a higher tax on retail sales.

The average combined state and local sales taxes are a whopping 9.21%, ranking Washington as the fourth-highest in the U.S. Property taxes, though, fall somewhere in the middle at 0.6%.

• Average annual household tax bill: $3,711
• Average sales tax rate: 9.2%
• Average property tax rate: 0.6%

Florida

Having no personal income tax has been a key factor in Florida’s population growth for years—apart from the sweet beach lifestyle, of course. Sales tax, however, is another story. The state sales tax alone is 6%.

Property taxes in Florida can be tricky to navigate. Floridians don’t pay taxes on up to $50,000 of their home’s current value, and the Save Our Homes initiative has set strict limits on the annual increase in property taxes.

• Average annual household tax bill: $4,422
• Average sales tax rate: 7.1%
• Average property tax rate: 0.1%

Delaware

Delaware is one of those rare states that collects no sales tax. It’s property taxes are among the lowest in the nation. It’s also one of the small handful of states where property tax makes up less than 1.8% of personal income.

State income tax, however, is where Delaware doesn’t exactly excel. The max tax rate of 6.6% applies to any personal income above $60,000. All in all, you’d still be looking at some great savings in Delaware.

• Average annual tax bill: $5,461
• Effective income tax rate: 4.9%
• Effective Property Tax Rate: 0.6%

Tennessee

Tennessee has what you might call a “unique” income tax system. They don’t levy taxes on income from wages or salaries, but they do have individual income tax on interest and dividends from stocks and investments. This is expected to be phased out fully by 2021. Afterward, Tennessee will join the growing number of states that don’t tax any individual income.

Tennessee drops the ball a little when it comes to sales tax. At an average of 9.5%, their combined state and local taxes rank the highest in the United States.

• Average annual household tax bill: $5,014
• Average income tax rate (from interest and dividends): 1.0%
• Average property tax rate: 0.7%

Alaska

No personal income tax and no statewide sales tax are just two great reasons to think about moving to Alaska. They have other ways to fund the state government, including a corporate income tax that the Tax Foundation considers to be unduly burdensome.

Property taxes are Alaska’s one real downfall, though. Like a few other states on the list, they don’t offer “bargain-basement” fees for public services, and individual jurisdictions are allowed to levy a local sales tax if they choose.

• Average annual household tax bill: $3,934
• Average local sales tax rate: 1.8%
• Average property tax rate: 1.2%

Arizona

In recent years, Arizona has given its income tax rate a modest haircut from 4.54% to 4.5%. While that might still seem a little pricey, it’s on the low end of the personal income tax spectrum.

With statewide sales tax around 5.6% and the average local rate at 2.79%, their sales taxes are a little higher than the national average. Arizona’s corporate income tax rate, though, is one of the lowest in the country, just in case you want to start a business when you move.

• Average annual household tax bill: $5,330
• Average sales tax: 8.4%
• Average property tax rate: 0.7%

Nevada

Nevada is another state that doesn’t collect any income tax. In fact, it’s because of this that the Battle Born State has been experiencing an increase in population growth in recent years, despite many states seeing a decline.

The Silver State’s shine is dulled a little, though, by a statewide sales tax of 6.85%, making it one of the highest in the nation. If that doesn’t bother you, home might mean the high deserts of Nevada for you, too.

• Average annual household tax bill: $4,780
• Average sales tax: 8.3%
• Average property tax: 1.0%