Almost everyone hates paying taxes, but what can you do, as the old adage says, “there are only two certainties in life: death and taxes.” Well, you can avoid some legally by moving to a state with no or a very low state income tax rate.
For this list, we ranked the States based on their state income tax rate, state-based sales tax rate, corporate income tax rate, average (or median) home value, average annual household income, and cost of living.
The ranking is based on the average annual household income equalized based on the cost of living in that state—less personal taxes. We also accounted for annual property taxes by subtracting from the equalized household income the effective property tax based on the median home value.
1. Texas
At the top of our list is The Lone Star State, Texas. Moving to Texas will help you to save a lot of money with a low median home value in most cities and a cost of living at 91.5% of the national average.
Citizens of Texas pay no state income tax on their relatively large average annual incomes of $98,362.04. With all that extra money in their pockets, they have a lot of extra funds for everything there is to do there.
Austin, Dallas, Houston, Corpus Christi and San Antonio are all popular choices for cities to live in, but there are also a number of quaint towns where you can stretch your dollar even further. Texas is a great choice if you’re looking for the best of all worlds!
Income Tax Rate: 0%
Median Home Value: $213,036
Affordability: 91.5% of the national Average
Average Annual Household Income: $98,362.04
2. Wyoming
The next state that will help you save the most is Wyoming. Home to seven National Parks, Wyoming is the most affordable state on our list with a cost of living index at 89.3, meaning that prices here are 10.7% cheaper than the national average.
With no state income tax, low cost of living, and a median home value of $254,753, The Equality State may be the home for you.
Income Tax Rate: 0%
Median Home Value: $254,753
Affordability: 89.3% of the National Average
Average Annual Household Income: $84,500.23
3. Washington
Third on our list of states that can save you the most money is Washington. The Evergreen State has absolutely no income taxes for its citizens and has the third-largest average annual income of any state on this list at $110,680.
While prices are 10.7% higher than the national average, the higher annual income rates and the zero percent income taxes allow you to save more money overall.
Income Tax Rate: 0%
Median Home Value: $431, 487
Affordability: 110.7% of the national average
Average Annual Household Income: $110,680.46
4. Florida
Home to Walt Disney World, Florida is another state with no income tax and a low cost of living. With a median home value of $254,607 and an average annual income of $85,581, Floridians can save money on both taxes and purchases all while saving lots of money. Plus with all the excitement that Florida has to offer, it’s a great state to call home.
Income Tax Rate: 0%
Median Home Value: $254,607
Affordability: 97.9% of the national average.
Average Annual Household Income: $85,581.31
5. Nevada
Nevada’s cost of living is only 8.5% above the national average, but with a zero percent income tax and a relatively high annual household income ($92,457.31), Nevada can help you save thousands of extra dollars per year. And while the Las Vegas Strip may be too much excitement for everyday living, there are many other quieter communities that you can call home.
Income Tax Rate: 0%
Median Home Value: $311,018
Affordability: 108.5% of the national average
Average Annual Household Income: $92,457.31
6. South Dakota
At 99.7%, South Dakota’s cost of living is most in line with the national average. Home values are relatively low and with a 0% state income tax and a small 6.4% state-imposed sales tax, the Mount Rushmore State can help you to put away quite the rainy day fund.
Income Tax Rate: 0%
Median Home Value: $217,215
Affordability: 99.8% of the national average
Average Annual Household Income: $83,457.96
7. Alaska
Median home values for Alaska are $297,111 and the cost of living is nearly 30% above the national average. However, with absolutely no state-imposed income taxes, a very small, 1.76%, state sales tax, and a high average annual household income, Alaska just might be the place for your next big move.
Income Tax Rate: 0%
Median Home Value: $297,111
Affordability: 129.9% of the national average
Average Annual Household Income: $100,086.45
8. Tennessee
While Tennessee has no general state income tax, it does impose a one percent tax on interest and dividends income. The state can be a great place to live if you’re looking to save money, as prices there tend to be 11.3% below the national average. With a median home value of $192,275, you can put a lot of money into your savings account.
Income Tax Rate: 0% with a 1% tax on interest and dividends income
Median Home Value: $192,275
Affordability: 88.7% of the national average
Average Annual Household Income: $81,911.63
9. New Hampshire
If you’re looking for a reason to move to the Northeast United States, New Hampshire has a few reasons for you. First of all, the state has a zero percent income tax but does tax interest and dividends income at five percent.
New Hampshire also has no state-imposed sales tax meaning you can buy whatever you want without paying a dime to the state. With a low tax burden and the highest annual household income on this list ($114,680.66), this state will do more than help you save money.
Income Tax Rate: 0% with a 5% tax on interest and dividends income
Median Home Value: $303,875
Affordability: 109.7% of the national average
Average Annual Household Income: $114,680.66
10. North Dakota
Number 10 on our list is North Dakota. This state does impose a small tax on incomes (2.9 percent); however, with a cost of living index of 98.8, it can be an affordable state to call home. The average value of a home in the Roughrider State is $236,405 which is in the lower middle pricing for our list. If you’re looking for a beautiful place with a low tax burden to call home, North Dakota is the state for you.
Income Tax Rate: 2.90%
Median Home Value: $236,405
Affordability: 98.8% of the national average
Average Annual Household Income: $90,647.13
11. Pennsylvania
The Quaker State, Pennsylvania, might be the right place for you if you’re looking for a place with not only a low tax burden but also a low median home value. With a 3.07 percent state income tax and prices close to the national average, Pennsylvania might be your next new home state.
Income Tax Rate: 3.07%
Median Home Value: $200,367
Affordability: 101.7% of the national average
Average Annual Household Income: $99,681.52
12. Indiana
If you’ve been looking for an affordable home, low state income taxes, and pricing below the national average, you should choose Indiana. State-based income taxes are only 3.23 percent and home prices trend low (the second-lowest on this list). Indiana has a lot to do and you’d be smart to make it your next new home state.
Income Tax Rate: 3.23%
Median Home Value: $161,106
Affordability: 90.0% of the national average
Average Annual Household Income: $87,139.09
13. Michigan
Close to the Great Lakes, Michigan will help you to save a lot of money. The state has a small, 4.25 percent, state income tax and is amongst the most affordable states with an 88.9 cost of living index and median home values at $108,404. With so much to do and so much money to save, why not pack up and make Michigan home.
Income Tax Rate: 4.25%
Median Home Value: $108,404
Affordability: 88.9% of the national average
Average Annual Household Income: $92,073.46
14. Arizona
Have you been thinking about moving to the great state of Arizona? If so, you’ll be delighted to know that it will only impose a 4.5 percent state tax on income. While temperatures in Arizona may be hot, home prices are temperate. With a $283,623 average home value, maybe it’s time you called Arizona home.
Income Tax Rate: 4.5%
Median Home Value: $283,623
Affordability: 97.0% of the national average
Average Annual Household Income: $96,364.72
15. Colorado
Last, but certainly not least, Colorado is the final tax-friendly state on this list. The state may have the second-highest median home value but it certainly makes up for it with a low state income tax. If you’re looking to move to a growing state, Colorado may be just the spot for you.
Income Tax Rate: 4.63%
Median Home Value: $412,819
Affordability: 105.6% of the national average
Average Annual Household Income: $107,936.13
Should I Move to a State With No Income Tax?
States with no income tax are just about the same as states with an income tax. Many of these states collect revenue to continue providing their citizens with state-based services through other means, like state-imposed sales taxes. While some of the states on this list will require you to pay more in property taxes, the states are comparable with their tax-levying neighbors.
Moving to a state with no income tax can help free you from a costly burden, especially if you’re in a higher tax bracket. It can help you to save more money for retirement or your children’s college funds.
What Are the Most Tax-Friendly States?
We have based the states on this list based on how many state-imposed taxes are being levied. We used state income tax, corporate income tax, sales tax, and state-based property taxes to make our decision.
Wyoming
The number one most tax-friendly state on our list is Wyoming. Why Wyoming? While it does have a 5.34 percent state-imposed sales tax, it does not tax either personal or corporate income. With a 0.61 percent property tax, your money is safe for you to do other things.
South Dakota
South Dakota is the second most tax-friendly state on our list because not only do they have low personal taxes on income, sales, and property. They also have no corporate income taxes. According to our research, the total tax burden for South Dakota for an individual is 7.72 percent of total income.
Nevada
The total tax burden for citizens of Nevada is only 8.96 percent. With a relatively small state-imposed property effective property tax rate of 0.64 percent, zero percent personal and corporate income taxes. Nevada citizens can rest easy knowing their money is safe from the tax collectors.
Texas
Fourth on our list of the most tax-friendly states is Texas. Texas was not only the state that could save you the most money but is also very tax-friendly. While Texas does have a high effective property tax rate at 1.81 percent, its overall total tax burden is only 10 percent.
Washington
Last, but not least is the State of Washington. The total personal tax burden for Washingtonians is only 10.22 percent meaning that citizens of this state can keep more of their hard-earned money to help better their lives.
We hope this article has helped you to find your next new home. If you’re considering moving to Texas to save money, you can search for homes today!
