States With Lowest Taxes

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Introduction

The United States is a diverse country, not just in terms of its landscapes and cultures, but also in terms of its tax policies. Taxes play a significant role in shaping the financial landscape of each state, affecting the economic opportunities and quality of life for its residents. Some states have chosen to adopt a lower tax burden, attracting individuals and businesses seeking to maximize their earnings and retain more of their income.

At the top of the list of states with the lowest tax burden is Alaska, with a state-local tax burden of only 4.60%. Alaska stands out for its unique revenue system, as it relies heavily on oil and gas revenues rather than imposing income or sales taxes on its residents. The lack of a personal income tax and the absence of state sales taxes contribute to Alaska’s position as the most tax-friendly state in the nation.

Wyoming and Tennessee follow closely behind with tax burdens of 7.50% and 7.60%, respectively. Wyoming benefits from its abundant mineral resources, particularly coal, oil, and natural gas, which provide substantial revenue for the state. Tennessee, on the other hand, imposes no state income tax, relying primarily on sales tax and taxes on investment income. These states demonstrate that alternative revenue streams can enable a lower tax burden.

Other states among the lowest tax burdens include South Dakota, Michigan, Texas, and North Dakota, each with tax burdens ranging from 8.40% to 8.80%. These states generally have either no personal income tax or low income tax rates, fostering an environment conducive to business growth and personal financial prosperity.

Interestingly, there is a cluster of states with tax burdens around the 9% mark, including Georgia, South Carolina, Oklahoma, Florida, and Louisiana. These states have also adopted relatively low tax rates, particularly in terms of income and sales taxes. Their tax-friendly policies aim to attract individuals and businesses, fueling economic growth and development.

Overall, the states with the lowest tax burdens tend to prioritize economic competitiveness and individual financial freedom. By adopting lower tax rates or alternative revenue models, these states create an environment conducive to business investment, job creation, and personal prosperity.

Lowest Tax States

#StateState-Local Tax BurdenAverage Annual TaxesIncome Tax RateCapital Gains Tax Rate
1Alaska4.6%$4,8530%0%
2Wyoming7.5%$4,4250%0%
3Tennessee7.6%$4,4830%0%
4South Dakota8.4%$4,3100%0%
5Michigan8.6%$6,1934.25%4.25%
6Texas8.6%$4,7610%0%
7North Dakota8.8%$4,8121.1%2.9%
8Georgia8.9%$7,2271%5.75%
9South Carolina8.9%$7,6130%7%
10Oklahoma9%$6,2060.25%4.75%
11Florida9.1%$5,0020%0%
12Louisiana9.1%$6,0291.85%4.25%
13Indiana9.3%$5,6433.23%3.23%
14Missouri9.3%$6,5581.5%5.4%
15Arizona9.5%$6,2682.59%4.5%
16Kentucky9.6%$6,0925%5%
17Nevada9.6%$4,7130%0%
18New Hampshire9.6%$5,0255%0%
19Colorado9.7%$7,3724.55%4.55%
20Alabama9.8%$6,2712%5%
21Mississippi9.8%$6,1724%5%
22West Virginia9.8%$5,9313%6.5%
23North Carolina9.9%$6,8464.99%4.99%
24Ohio10%$5,4262.77%4.8%
25Arkansas10.2%$6,4192%5.5%
26New Mexico10.2%$6,3701.7%5.9%
27Montana10.5%$7,0781%4.9%
28Pennsylvania10.6%$5,9033.07%3.07%
29Idaho10.7%$6,8721%6.93%
30Washington10.7%$5,3817%7%
31Oregon10.8%$9,2134.75%9.9%
32Wisconsin10.9%$6,5683.54%7.65%
33Iowa11.2%$6,7990.33%8.53%
34Kansas11.2%$6,6953.1%5.7%
35Maryland11.3%$7,6772%5.75%
36Rhode Island11.4%$6,5523.75%5.99%
37Massachusetts11.5%$8,6265%5%
38Nebraska11.5%$7,1772.46%6.84%
39District of Columbia12%$9,8394%5.75%
40Minnesota12.1%$7,6565.35%9.85%
41Utah12.1%$6,6744.95%4.95%
42Delaware12.4%$7,1952.2%6.6%
43Maine12.4%$7,6975.8%7.15%
44Virginia12.5%$7,9512%5.75%
45Illinois12.9%$7,1414.95%4.95%
46New Jersey13.2%$8,3301.4%10.75%
47California13.5%$9,0541%13.3%
48Vermont13.6%$6,4093.35%8.75%
49Hawaii14.1%$9,9961.4%7.25%
50Connecticut15.4%$7,4903%6.99%
51New York15.9%$9,1114%8.82%

States With Best Taxes

The ten states with the best taxes, offering the lowest tax burdens in the United States, are Alaska, Wyoming, Tennessee, South Dakota, Michigan, Texas, North Dakota, Georgia, South Carolina, and Oklahoma. Alaska ranks first for states with the lowest taxes, with a tax burden of 4.60%, Wyoming follows closely behind at 7.50%, Tennessee at 7.60%, South Dakota at 8.40%, Michigan and Texas tie at 8.60%, North Dakota at 8.80%, Georgia and South Carolina tie at 8.90%, and Oklahoma rounds out the top ten states with the best taxes, with a tax burden of 9%.

The ten best tax states are :

1. Alaska – 4.60%
2. Wyoming – 7.50%
3. Tennessee – 7.60%
4. South Dakota – 8.40%
5. Michigan – 8.60%
6. Texas – 8.60%
7. North Dakota – 8.80%
8. Georgia – 8.90%
9. South Carolina – 8.90%
10. Oklahoma – 9%

Best State for Taxes

Alaska is widely regarded as the best state for taxes in the United States. With a remarkably low tax burden of 4.60%, Alaska tops the list as the state with the lowest overall tax burden. What sets Alaska apart is its unique revenue system, which relies heavily on oil and gas revenues rather than imposing income or sales taxes on its residents. The absence of a personal income tax and state sales tax translates to significant savings for individuals and businesses alike. This tax-friendly environment allows Alaskans to retain more of their hard-earned income and enjoy a higher standard of living. Furthermore, the state’s robust oil and gas industry contributes to the provision of public services without relying on individual income tax contributions.

States With the Lowest Taxes

Alabama

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Ranked in the US

#20

Average Annual Taxes

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$6,271

Ranked in the US

#21

Ranked in the US

#21

Ranked in the US

#22

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Alaska

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Ranked in the US

#1

Average Annual Taxes

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$4,853

Ranked in the US

#7

Ranked in the US

#1

Ranked in the US

#1

Alaska is renowned for having the lowest tax burden among all states. With no state income tax or state sales tax, Alaskans enjoy the advantage of keeping more of their earnings. The state relies on oil and gas revenues to fund public services, allowing residents to benefit from a high standard of living without bearing a heavy tax burden. The absence of these major taxes makes Alaska an attractive destination for individuals and businesses looking to optimize their financial resources.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Arizona

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Ranked in the US

#15

Average Annual Taxes

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$6,268

Ranked in the US

#20

Ranked in the US

#27

Ranked in the US

#14

Arizona holds the fifteenth spot among the states with the lowest taxes, with a tax burden of 9.50%. The state offers a favorable tax environment for individuals and businesses alike. Arizona has a relatively low income tax rate, which is applied progressively based on income brackets. The state's sales tax rate is also reasonable, providing some relief for consumers. Moreover, Arizona offers various tax credits and incentives to encourage economic development and investment.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Arkansas

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Ranked in the US

#25

Average Annual Taxes

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$6,419

Ranked in the US

#24

Ranked in the US

#22

Ranked in the US

#27

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

California

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Ranked in the US

#47

Average Annual Taxes

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$9,054

Ranked in the US

#47

Ranked in the US

#11

Ranked in the US

#51

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Colorado

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Ranked in the US

#19

Average Annual Taxes

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$7,372

Ranked in the US

#38

Ranked in the US

#41

Ranked in the US

#15

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Connecticut

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Ranked in the US

#50

Average Annual Taxes

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$7,490

Ranked in the US

#39

Ranked in the US

#29

Ranked in the US

#39

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Delaware

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Ranked in the US

#42

Average Annual Taxes

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$7,195

Ranked in the US

#36

Ranked in the US

#25

Ranked in the US

#36

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

District of Columbia

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Ranked in the US

#39

Average Annual Taxes

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$9,839

Ranked in the US

#50

Ranked in the US

#37

Ranked in the US

#29

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Florida

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Ranked in the US

#11

Average Annual Taxes

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$5,002

Ranked in the US

#8

Ranked in the US

#2

Ranked in the US

#2

Eleventh on the list of low tax states is Florida. With a tax burden of 9.10%, Florida offers an attractive tax environment for individuals and businesses. One of the main reasons for Florida's low tax burden is the absence of a personal income tax, allowing residents to retain more of their earnings. The state primarily relies on sales tax revenue, which helps support public services and infrastructure development. In addition to its favorable tax policies, Florida's warm climate, vibrant economy, and diverse recreational opportunities make it an appealing destination for individuals seeking a lower tax burden without compromising their quality of life.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Georgia

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Ranked in the US

#8

Average Annual Taxes

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$7,227

Ranked in the US

#37

Ranked in the US

#12

Ranked in the US

#30

The eighth state with the least taxes is Georgia, boasting a tax burden of 8.90%. Georgia maintains a favorable tax climate by having a relatively low income tax rate and no taxes on Social Security income. This, combined with a moderate sales tax rate, contributes to the state's appeal as a tax-friendly destination.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Hawaii

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Ranked in the US

#49

Average Annual Taxes

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$9,996

Ranked in the US

#51

Ranked in the US

#16

Ranked in the US

#43

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Idaho

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Ranked in the US

#29

Average Annual Taxes

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$6,872

Ranked in the US

#32

Ranked in the US

#13

Ranked in the US

#38

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Illinois

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Ranked in the US

#45

Average Annual Taxes

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$7,141

Ranked in the US

#34

Ranked in the US

#43

Ranked in the US

#19

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Indiana

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Ranked in the US

#13

Average Annual Taxes

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$5,643

Ranked in the US

#12

Ranked in the US

#33

Ranked in the US

#11

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Iowa

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Ranked in the US

#33

Average Annual Taxes

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$6,799

Ranked in the US

#30

Ranked in the US

#10

Ranked in the US

#45

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Kansas

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Ranked in the US

#34

Average Annual Taxes

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$6,695

Ranked in the US

#29

Ranked in the US

#32

Ranked in the US

#28

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Kentucky

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Ranked in the US

#16

Average Annual Taxes

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$6,092

Ranked in the US

#16

Ranked in the US

#46

Ranked in the US

#23

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Louisiana

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Ranked in the US

#12

Average Annual Taxes

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$6,029

Ranked in the US

#15

Ranked in the US

#20

Ranked in the US

#12

Moving on to the twelfth low tax state, Louisiana stands out with a tax burden of 9.10%. Louisiana's tax policies contribute to its relatively favorable tax environment. The state has a progressive income tax system, meaning that higher-income earners face higher tax rates, while lower-income individuals benefit from lower rates. Louisiana also relies on sales tax revenue to fund public services, but exemptions and credits help alleviate the tax burden on certain essential goods and services.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Maine

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Ranked in the US

#43

Average Annual Taxes

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$7,697

Ranked in the US

#43

Ranked in the US

#50

Ranked in the US

#42

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

Maryland

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Ranked in the US

#35

Average Annual Taxes

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$7,677

Ranked in the US

#42

Ranked in the US

#23

Ranked in the US

#31

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Massachusetts

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Ranked in the US

#37

Average Annual Taxes

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$8,626

Ranked in the US

#46

Ranked in the US

#47

Ranked in the US

#24

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Michigan

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Ranked in the US

#5

Average Annual Taxes

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$6,193

Ranked in the US

#18

Ranked in the US

#40

Ranked in the US

#13

Michigan rounds out the top five least taxed states in the nation. While Michigan does levy a personal income tax, it has a relatively low flat tax rate, making it more affordable compared to states with progressive income tax systems. The state's sales tax rate is also moderate, contributing to the overall favorable tax environment. Michigan's commitment to maintaining a competitive tax structure fosters economic growth and provides residents with greater financial flexibility.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Minnesota

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Ranked in the US

#40

Average Annual Taxes

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$7,656

Ranked in the US

#41

Ranked in the US

#49

Ranked in the US

#48

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Mississippi

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Ranked in the US

#21

Average Annual Taxes

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$6,172

Ranked in the US

#17

Ranked in the US

#38

Ranked in the US

#25

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Missouri

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Ranked in the US

#14

Average Annual Taxes

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$6,558

Ranked in the US

#26

Ranked in the US

#18

Ranked in the US

#26

Missouri secures the fourteenth position on the list of states with the lowest taxes, boasting a tax burden of 9.30%. Missouri's income tax rates are relatively low, and the state offers several deductions and exemptions that help reduce the tax burden for its residents. Additionally, Missouri has a moderate sales tax rate and provides tax incentives for businesses, further contributing to its overall tax-friendliness. With its balanced tax structure, Missouri offers individuals and businesses the opportunity to thrive while keeping their tax burden manageable.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Montana

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Ranked in the US

#27

Average Annual Taxes

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$7,078

Ranked in the US

#33

Ranked in the US

#14

Ranked in the US

#18

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

Nebraska

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Ranked in the US

#38

Average Annual Taxes

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$7,177

Ranked in the US

#35

Ranked in the US

#26

Ranked in the US

#37

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Nevada

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Ranked in the US

#17

Average Annual Taxes

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$4,713

Ranked in the US

#4

Ranked in the US

#3

Ranked in the US

#3

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

New Hampshire

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Ranked in the US

#18

Average Annual Taxes

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$5,025

Ranked in the US

#9

Ranked in the US

#48

Ranked in the US

#4

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

New Jersey

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Ranked in the US

#46

Average Annual Taxes

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$8,330

Ranked in the US

#45

Ranked in the US

#17

Ranked in the US

#50

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

New Mexico

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Ranked in the US

#26

Average Annual Taxes

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$6,370

Ranked in the US

#22

Ranked in the US

#19

Ranked in the US

#33

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

New York

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Ranked in the US

#51

Average Annual Taxes

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$9,111

Ranked in the US

#48

Ranked in the US

#39

Ranked in the US

#47

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

North Carolina

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Ranked in the US

#23

Average Annual Taxes

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$6,846

Ranked in the US

#31

Ranked in the US

#45

Ranked in the US

#21

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

North Dakota

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Ranked in the US

#7

Average Annual Taxes

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$4,812

Ranked in the US

#6

Ranked in the US

#15

Ranked in the US

#9

Coming in at the seventh position for best states to live in for taxes is North Dakota, with a tax burden of 8.80%. North Dakota also does not levy a personal income tax, easing the tax burden on its residents. The state relies primarily on sales taxes and energy-related revenues to fund public services. This tax structure, along with its strong energy sector, has helped North Dakota maintain a relatively low tax burden. The state's economic stability and favorable tax policies make it an appealing choice for those seeking to live in a state with advantageous tax conditions.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Ohio

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Ranked in the US

#24

Average Annual Taxes

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$5,426

Ranked in the US

#11

Ranked in the US

#28

Ranked in the US

#17

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Oklahoma

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Ranked in the US

#10

Average Annual Taxes

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$6,206

Ranked in the US

#19

Ranked in the US

#9

Ranked in the US

#16

Oklahoma secures the tenth spot on the list for least taxed states, with a tax burden of 9%. The state offers a relatively low income tax rate, along with various deductions and exemptions to reduce the tax burden for its residents. Additionally, Oklahoma has a moderate sales tax rate and provides tax incentives for businesses, contributing to its overall tax-friendly environment.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Oregon

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Ranked in the US

#31

Average Annual Taxes

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$9,213

Ranked in the US

#49

Ranked in the US

#42

Ranked in the US

#49

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Pennsylvania

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Ranked in the US

#28

Average Annual Taxes

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$5,903

Ranked in the US

#13

Ranked in the US

#31

Ranked in the US

#10

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Rhode Island

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Ranked in the US

#36

Average Annual Taxes

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$6,552

Ranked in the US

#25

Ranked in the US

#36

Ranked in the US

#34

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

South Carolina

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Ranked in the US

#9

Average Annual Taxes

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$7,613

Ranked in the US

#40

Ranked in the US

#4

Ranked in the US

#40

South Carolina ranks ninth among states with the least taxes, also with a tax burden of 8.90%. South Carolina is known for its low income tax rates and offers exemptions for military retirement income and a portion of retirement income for individuals aged 65 and older. The state also imposes a moderate sales tax, contributing to its overall low tax burden.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

South Dakota

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Ranked in the US

#4

Average Annual Taxes

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$4,310

Ranked in the US

#1

Ranked in the US

#5

Ranked in the US

#5

South Dakota is another state known for its low tax burden. It does not impose a personal income tax, providing individuals with the opportunity to retain more of their income. In addition, South Dakota maintains a modest sales tax rate, ensuring that the overall tax burden remains relatively low. The state's business-friendly environment, combined with its favorable tax policies, attracts entrepreneurs and companies looking to maximize their profitability.

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

Tennessee

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Ranked in the US

#3

Average Annual Taxes

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$4,483

Ranked in the US

#3

Ranked in the US

#6

Ranked in the US

#6

Tennessee stands out as one of the least taxed states in the country. It does not impose a personal income tax, relieving individuals of a significant financial burden. Instead, Tennessee generates revenue through sales taxes, which are generally lower compared to income tax rates in other states. The absence of income tax, coupled with a relatively low sales tax rate, contributes to Tennessee's appeal as a state with a favorable tax environment.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Texas

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Ranked in the US

#6

Average Annual Taxes

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$4,761

Ranked in the US

#5

Ranked in the US

#7

Ranked in the US

#7

The sixth best state to live in for taxes is Texas. With a tax burden of 8.60%, Texas offers a favorable tax environment for its residents. The state boasts no personal income tax, providing individuals with the opportunity to retain more of their earnings. Additionally, Texas does not impose state-level taxes on retirement income, further enhancing its appeal for retirees seeking tax-friendly locations. The absence of certain taxes, coupled with a business-friendly climate, contributes to Texas' reputation as an attractive destination for individuals and businesses looking to minimize their tax obligations.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

Utah

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Ranked in the US

#41

Average Annual Taxes

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$6,674

Ranked in the US

#28

Ranked in the US

#44

Ranked in the US

#20

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

Vermont

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Ranked in the US

#48

Average Annual Taxes

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$6,409

Ranked in the US

#23

Ranked in the US

#34

Ranked in the US

#46

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

Virginia

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Ranked in the US

#44

Average Annual Taxes

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$7,951

Ranked in the US

#44

Ranked in the US

#24

Ranked in the US

#32

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

Washington

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Ranked in the US

#30

Average Annual Taxes

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$5,381

Ranked in the US

#10

Ranked in the US

#51

Ranked in the US

#41

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

West Virginia

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Ranked in the US

#22

Average Annual Taxes

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$5,931

Ranked in the US

#14

Ranked in the US

#30

Ranked in the US

#35

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

Wisconsin

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Ranked in the US

#32

Average Annual Taxes

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$6,568

Ranked in the US

#27

Ranked in the US

#35

Ranked in the US

#44

State-Local Tax Burden

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Income Tax Rate

Capital Gains Tax Rate

Wyoming

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Ranked in the US

#2

Average Annual Taxes

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$4,425

Ranked in the US

#2

Ranked in the US

#8

Ranked in the US

#8

Wyoming ranks second among the cheapest tax states. This state also boasts no personal income tax, providing residents with increased financial freedom. Additionally, Wyoming levies low sales and property taxes, contributing to its reputation as a tax-friendly state. The combination of favorable tax policies and abundant natural resources, including coal, oil, and natural gas, makes Wyoming an appealing choice for those seeking to minimize their tax obligations.

State-Local Tax Burden

Average Annual Taxes

Income Tax Rate

Capital Gains Tax Rate

FAQs

What state has the lowest taxes ?

The state with the lowest tax rate in the US is Alaska. Alaska has consistently ranked at the top in terms of having the lowest overall tax burden. It stands out from other states by not imposing a personal income tax or a state sales tax on its residents. Instead, the state relies heavily on oil and gas revenues to fund public services and government operations. This unique revenue system allows Alaskans to enjoy the benefits of a significantly lower tax burden, making it the state with the lowest taxes in the country.

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