Tax is the bane of our adult lives, with some of us losing much of our hard-earned cash to the government every year. But not all states were created equal (as we know), and some states have a much more favorable tax regime than others.
Look at the nine states with no (or negligible) income tax below. But be warned – they will tax you in other sneaky ways!
Alaska
Alaska is the state known as the last frontier. It’s a great place to live thanks to its wide-open spaces, small population, and abundance of amazing outdoor activities. It also ranks first for the lowest overall tax burden, which is highly attractive to outsiders.
Alaska Tax
While Alaska has 0% income tax, the state does tax individuals in other ways, with property tax being the most significant contributor at 3.63%. The state also taxes individuals on sales (1.48%) and licenses (0.25%) for a total tax burden of 5.36%.
Tennessee
Tennessee is famous for its rich music culture, natural beauty, and, of course, its iconic whiskey. Aside from this, Tennessee has one of the lowest overall tax burdens, meaning more disposable income for that delicious bottle of Jack Daniels.
Tennessee Tax
Tennessee has a negligible amount of income tax, sitting at 0.2%, a small amount of property tax at 1.61%, and license and other taxes at 0.21% and 0.09%, respectively. Where the state gains is with sales tax – they have one of the highest sales tax burdens, sitting at 4.41%, with an overall tax burden of 6.33%.
New Hampshire
New Hampshire, referred to as the “Switzerland of America,” ranks as the 2nd best state to live in thanks to its excellent quality of life, incredible wilderness, and robust economy. The state also has some of the most attractive taxation regimes in the country.
New Hampshire Tax
Although New Hampshire has a negligible amount of income tax (0.13%), the state has other taxation streams that it utilizes. Property tax is some of the highest at 4.79%, while sales, license, and other taxes contribute 1.04%, 0.25%, and 0.17%, respectively. The total tax burden, therefore, sits at 6.37%.
Wyoming
Wyoming is home to at least seven national parks, including the famous Yellowstone. It’s easy to see why the state attracts millions of tourists yearly! It’s also attractive to locals thanks to its low tax burden.
Wyoming Tax
Wyoming has an overall tax burden of 6.63%, which is made up predominantly of property tax and sales tax, contributing 3.29% and 2.80%, respectively. License and other taxes contribute 0.48% and 0.06%, respectively.
Florida
Florida is known for its major attractions, with Disney World, Miami Beach, and The Kennedy Space Center all being found in the state. It’s also a great place to live (and retire) thanks to its low tax burden.
Florida Tax
Although Florida has 0% income tax, it has an overall tax burden of 6.73%, predominantly property tax (2.69%) and sales tax (3.51%). The remaining amount is made up of license and other tax, contributing 0.25% and 0.29%, respectively.
South Dakota
South Dakota is considered to be one of the happiest states in the US. Besides being home to Mount Rushmore, it boasts a strong economy, an abundance of national parks, excellent hunting and fishing, and an attractive tax regime.
South Dakota Tax
South Dakota has a 0% income tax burden, although it has a total tax burden of 7.03%. This is made up largely of property tax (2.66%) and sales tax (3.94%), with minor contributions coming from license and other tax (0.40% and 0.03% respectively).
Texas
Texas, home to cowboy culture, delicious southern cuisine, and friendly locals, is an attractive state to call home. Aside from affordable housing, year-round sunshine, and access to nature, the state also has an attractive tax regime.
Texas Tax
Texas has 0% income tax, although the overall tax burden sits at 8.21% largely due to high property (3.99%) and sales tax (4%). There is also a tiny license tax that contributes 0.22% towards the total figure.
Nevada
Nevada is a hub for outdoor activities, with Death Valley, Hoover Dam, and the pristine Lake Tahoe all found in the state. The infamous Area 51, the source of much conspiracy, is also found in the state of Nevada.
Nevada Tax
Although Nevada has 0% income tax, the state makes up for it through other avenues of taxation, the highest being sales tax at 5.43%. Property tax is the second largest contributor at 2.08%, followed by license and other tax at 0.38% and 0.44% respectively. The total tax burden sits at 8.33%.
Washington
The state of Washington in the Pacific Northwest, home to tech giants Amazon and Microsoft, offers residents excellent access to nature, boasts a diverse culture, and also has an attractive tax regime. With plenty on offer, it’s easy to see why many call it home.
Washington Tax
Washington is the final US state with 0% income tax, although it has an overall tax burden of 8.86%. This is made up mostly of property (2.53%) and sales tax (5.54%). There are also small contributions from license and other tax (0.34% and 0.45%) to make up the 8.86% tax burden total.
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Andrew Herrig is a finance expert and money nerd and the founder of Wealthy Nickel, where he writes about personal finance, side hustles, and entrepreneurship. As an avid real estate investor and owner of multiple businesses, he has a passion for helping others build wealth and shares his own family’s journey on his blog.
Andrew holds a Masters of Science in Economics from the University of Texas at Dallas and a Bachelors of Science in Electrical Engineering from Texas A&M University. He has worked as a financial analyst and accountant in many aspects of the financial world.
Andrew’s expert financial advice has been featured on CNBC, Entrepreneur, Fox News, GOBankingRates, MSN, and more.
