The Best States to Live in if You Hate Taxes

If you're tired of watching a significant chunk of your paycheck disappear to taxes, you're not alone. The good news? Some states offer dramatically lower tax burdens than others, and moving to a tax-friendly state could save you thousands of dollars annually. Whether you're planning retirement, starting a business, or simply looking to keep more of what you earn, understanding which states have the lowest taxes can help you make a smarter financial decision.

The Nine States with No Income Tax

The most straightforward way to reduce your tax burden is to move to one of the nine states that don't impose a state income tax at all^[1]. These states are:

• Alaska
• Florida
• Nevada
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

However, it's important to understand that having no state income tax doesn't automatically mean you'll pay the lowest overall taxes. States compensate for lost income tax revenue through other means, such as sales taxes, property taxes, and excise taxes on specific items.

The Best Low-Tax States for Middle-Class Families

If you're earning a middle-class income, certain states stand out as particularly tax-friendly when you factor in all taxes combined—income, sales, property, and more.

Nevada: The Top Choice

Nevada ranks as the #1 low-tax state for middle-class families^[2]. With no state income tax, Nevada residents enjoy an average income tax of $0. The median annual property taxes are $2,143, and the average sales tax on essentials is $111.43, bringing the total annual tax burden to approximately $2,254.43^[2]. This combination makes Nevada exceptionally attractive for those looking to minimize their overall tax liability.

Wyoming: Second Place with Reasonable Taxes

Wyoming comes in second for middle-class families, with residents spending only 2.81% of their income on taxes^[2]. Like Nevada, Wyoming has no state income tax. While the state does tax some essentials like diapers, it compensates with reasonable property taxes and some of the lowest gas taxes in the nation^[2].

Alaska: No Income Tax, But Higher Property Taxes

Alaska offers another income tax-free option, though it ranks toward the middle of the list for middle-class families due to higher property taxes. The median annual property taxes in Alaska are $3,976, compared to Nevada's $2,143^[2].

Arizona: A Balanced Approach

Arizona ranks seventh among low-tax states for middle-income households, with residents spending 4.45% of their income on taxes^[2]. While Arizona does have a state income tax (currently 2.5% flat rate^[1]), it compensates with no tax on groceries, relatively low property taxes, and low gas taxes^[2].

South Dakota: Another No-Income-Tax Option

South Dakota ranks eighth for tax-friendly states for middle-income families, primarily because it has no state income tax^[2]. While property taxes aren't exceptionally low compared to other states, the absence of income tax makes it competitive overall.

States with the Lowest Income Tax Rates

If you're specifically concerned about income tax, several states offer exceptionally low rates. Not counting the nine states with no income tax, the lowest-rate states are Arizona, Indiana, Louisiana, and North Dakota^[1][4].

For the 2025 tax year, here are the states with the lowest income tax rates on high earners^[1]:

• Arizona and North Dakota: 2.5% flat rate
• Louisiana: 3% flat rate
• Pennsylvania: 3.07% flat rate
• Ohio: 3.125% on taxable income over $100,000
• Iowa: 3.8% flat rate
• Arkansas: 3.9% on taxable income over $4,600
• Kentucky: 4% flat rate
• Michigan and North Carolina: 4.25% flat rate

Important Tax Changes for 2026

Several states have made recent changes to their tax rates that could affect your decision:

• North Carolina: The flat tax rate decreased from 4.25% to 3.99% in 2026^[4]
• Ohio: Moved to a flat 2.75% tax rate on income above $26,050^[4]
• Nebraska: The top rate reduced from 5.2% to 4.55%, with plans to reach 3.99% by 2027^[4]
• Oklahoma: The top rate reduced from 4.75% to 4.5%^[4]

Sales Tax Considerations

While income tax gets most of the attention, sales tax significantly impacts your overall tax burden. Four states have no state or local sales taxes at all^[3]: Delaware, Montana, New Hampshire, and Oregon. Alaska has no state sales tax, though some local governments impose their own^[3].

On the flip side, Louisiana and Tennessee have some of the highest combined sales tax rates in the nation, reaching 10.17% and 9.619% respectively^[3].

Property Tax and Other Considerations

Property taxes vary dramatically by state. Hawaii, Alabama, Louisiana, Colorado, and Delaware are among the states with the lowest property tax rates^[5]. If you're planning to own a home, researching your target state's property tax rates is essential, as they can add thousands to your annual tax bill.

Additionally, consider other taxes specific to your situation:

• Retirement income taxes: Eight states tax Social Security benefits (Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont), though most provide deductions to offset costs^[3]
• Excise taxes: Some states tax specific items like gasoline, cigarettes, and alcohol at higher rates
• Estate and inheritance taxes: Some states impose these taxes, which can affect wealth transfer planning

Tax Filing Deadlines by State

While most states follow the federal tax filing deadline of April 15, a few have different deadlines^[4]:

• Oklahoma: April 20
• Hawaii: April 21
• Delaware, Iowa, and New Mexico: April 30
• South Carolina and Virginia: May 1
• Louisiana: May 15

Frequently Asked Questions

Can I move to a low-tax state just to avoid taxes?

While you can certainly move to a different state, the IRS requires that your move be for a legitimate reason (such as a job or retirement). Simply moving to avoid taxes without establishing genuine residency could trigger an audit. However, if you're already considering a move for other reasons, choosing a tax-friendly state makes financial sense.

Do I need to establish residency to benefit from a state's low taxes?

Yes. You'll need to establish legal residency in your new state, which typically involves obtaining a state ID, registering your vehicle, and demonstrating that you've made a genuine move. Keep documentation of your move, such as lease agreements, utility bills, and voter registration.

Which state is best for retirees specifically?

For retirees, states that don't tax Social Security income are particularly valuable^[3]. Florida, Texas, and South Dakota are excellent choices because they have no income tax and don't tax Social Security. Additionally, states like Delaware, Montana, New Hampshire, and Oregon offer no sales tax, which can significantly reduce living expenses in retirement.

How much can I actually save by moving to a low-tax state?

The savings depend on your income and lifestyle. A middle-class family moving from a high-tax state like California or New York to Nevada could save $3,000–$8,000 annually or more, depending on their income level. Higher earners could save substantially more.

Are there any downsides to moving to a low-tax state?

While low taxes are attractive, consider other factors: cost of living, job opportunities, climate, quality of schools, and access to healthcare. Some low-tax states may have higher costs of living in other areas, offsetting tax savings. Research thoroughly before making your decision.

What if I work remotely—can I move to a low-tax state?

Yes, but be careful. If you work for a company in another state, you may still owe taxes to your home state depending on where you earned the income. However, if you're self-employed or work for a company in your new state of residence, moving to a low-tax state can provide significant benefits. Consult a tax professional before making the move.

Making Your Decision

Choosing where to live based on taxes is a smart financial move, but it shouldn't be your only consideration. The best low-tax state for you depends on your personal situation, income level, retirement status, and lifestyle preferences.

Start by calculating your potential tax savings in your target states. Use online tax calculators and research property taxes, sales taxes, and any other relevant fees. Then, consider non-tax factors: job market, cost of living, climate, and quality of life.

If you're seriously considering a move, consult with a tax professional or CPA who specializes in relocation. They can help you understand your specific tax obligations and ensure you're maximizing your savings while staying compliant with all state and federal requirements.

Ready to take action? Start by researching the top candidates on this list, calculate your potential savings, and reach out to a tax advisor to discuss your specific situation. The difference between living in a high-tax and low-tax state could mean tens of thousands of dollars in your pocket over your lifetime.

Sources & References

1. Income Tax by State: Which has the Highest and Lowest Taxes — TurboTax
2. Best Low-Tax States for Middle-Class Families in 2026 — Kiplinger
3. Best States to Retire for Taxes (2026) - Tax-Friendly States for Retirees — SmartAsset
4. 2026 State Income Tax Rates by State — Paycor
5. Least Taxed States 2026 — World Population Review