Top 10 U.S. States with the Lowest Tax Burdens for Residents in 2024

Hello friends, in this article we are going to discover the top 10 US states with the lowest tax burden on residents. Taxes are rarely a voluntary topic of conversation, acting more as a barrier between travelers and their next escape than anything else.

However, even taxes can be helpful when it comes to determining the best place for a permanent retreat. Whether choosing between the best small towns to retire to in the US or just hoping for a long-term change of scenery, considering the tax implications of relocation can be an important step.

There are numerous categories of taxes, all of which combine to create the total tax burden. Some states have a fairly even balance of each type of tax, while other states lean more heavily into one category or another.

While it may be hard to get excited about researching the various individual taxes of states, pausing to consider the numbers can be the difference of thousands of dollars a year.

These 10 US states with the lowest taxes for residents may just be the perfect escape when looking to move, purchase a vacation home, retire, or even just enjoy an extended getaway.

Now, let’s dig deeper into each of the top 10 US states with the lowest tax burden on residents.

For this article, data has been pulled from US News, USAA, and the US Census Bureau to determine which states have the lowest tax burden based on individual tax, property tax, sales tax, and license SL miscellaneous taxes.

#10: Alabama

Percent of income going to taxes: 7.51%

Alabama tends to fly under the radar, losing out with tourists to neighboring Georgia and Florida. Despite its underrated status, there are plenty of reasons to consider relocating to Alabama. In addition to having some of the cleanest lakes in the South, Alabama is also home to some of the lowest tax percentages in the country.

Alabama ranks fairly in the lower half for both individual and property taxes, opting to make up the difference with higher sales taxes. Despite sacrificing an average of 4% of their income to sales taxes annually, Alabama residents can still enjoy the finer things in life, keeping 1-5% more of their income than their neighbors.

Alabama tax burden breakdown:

• Individual income tax: 1.9%
• Property tax: 1.37%
• Sales tax: 3.97%
• License SL miscellaneous taxes: 0.26%

#9: Missouri

Percent of income going to taxes: 7.38%

Missouri is a unique addition to the list because none of its three major categories of taxes are amazingly low when compared to other states. Instead, Missouri manages to make the list by evenly distributing the tax burden among individual, property, and sales taxes. By keeping each category a tad below the national average, Missouri manages to have one of the lowest tax burdens in the country. With this in mind, residents can keep busy enjoying the many awesome things to do in Missouri without having to worry about saving for a large tax payment waiting in the wings.

Missouri tax burden breakdown:

• Individual income tax: 1.97%
• Property tax: 2.14%
• Sales tax: 2.93%
• License SL miscellaneous taxes: 0.34%

#8: Montana

Percent of income going to taxes: 7.33%

Glacier National Park and its wide variety of things to do may get people to visit the northern state of Montana, but the exceptionally low tax burden may be what convinces them to stay. Montana splits its tax burden across each of the three major categories fairly evenly, with each one coming in below the national average. It is Montana’s very low sales tax percentage, however, that really bumps it up the list. With no state sales tax, those shopping in Montana won’t have to worry about sticker shock when they get to the register.

Montana tax burden breakdown:

• Individual income tax: 0%
• Property tax: 2.66%
• Sales tax: 3.94%
• License SL miscellaneous taxes: 0.43%

#7: South Dakota

Percent of income going to taxes: 7.03%

South Dakota has a number of adventurous activities to enjoy while also taking great care to preserve the history of the region. Whether drawn in by the excitement or the more low-key activities available in the state, there are plenty of reasons to love South Dakota. One more reason to set down roots in this Great Plain state: South Dakota is one of the best states to live in for low taxes. While the state has fairly average percentages of property and sales taxes, South Dakota has zero income taxes. By skipping this tax category altogether, South Dakota quickly goes from being an average state to a truly tax-friendly escape.

South Dakota tax burden breakdown:

• Individual income tax: 0%
• Property tax: 2.66%
• Sales tax: 3.99%
• License SL miscellaneous taxes: 0.43%

#6: Delaware

Percent of income going to taxes: 6.77%

Much of the northeastern region of the US ranks fairly poorly when it comes to tax burdens. The states in this region have some of the highest property tax percentages in the country, and these numbers are not always offset by lower taxes in other categories. Thankfully for residents, Delaware, the first state in the US, does not feel the need to follow the trends of its neighbors. Delaware has some of the lowest property taxes in the US, particularly when compared to the surrounding states. Instead, the state has slightly higher than average personal income taxes. These numbers are further balanced by a low sales tax rate, leading Delaware to put some of the lowest tax burdens on its residents overall.

Delaware tax burden breakdown:

• Individual income tax: 3.12%
• Property tax: 1.86%
• Sales tax: 1.08%
• License SL miscellaneous taxes: 0.7%

#5: Florida

Percent of income going to taxes: 6.73%

Florida has long had a reputation for being one of the most popular states to retire to in the US. The mild weather, fine beaches, and many family attractions perfect for the grandkids are a major draw, but there is one more reason to consider Florida for a comfortable retirement: Florida puts one of the lowest tax burdens on its residents of any state in the US. Florida has zero income tax and also has lower than average property taxes on residents. These lower taxes are partially made up for by higher sales taxes, but since this burden is shared with the large number of tourists that sweep through Florida each year, the overall tax burden on Florida residents stays relatively low.

Florida tax burden breakdown:

• Individual income tax: 0%
• Property tax: 2.69%
• Sales tax: 3.51%
• License SL miscellaneous taxes: 0.54%

#4: Wyoming

Percent of income going to taxes: 6.63%

Wyoming may be best known as the home of Yellowstone National Park, with its stunning geysers and hydrothermal attractions, magnificent wildlife, and exceptional hiking trails. But there are more reasons to love this midwest state. Permanent residents of Wyoming can enjoy regular trips to the oldest national park in the world, all while knowing they are enjoying some of the lowest taxes in the country. Wyoming is one of seven states with zero income taxes and very mid-range property tax and sales tax levels as well. Put together, those living in Wyoming lose 2% less of their income to taxes than the average US citizen.

Wyoming tax burden breakdown:

• Individual income tax: 0%
• Property tax: 3.29%
• Sales tax: 2.8%
• License SL miscellaneous taxes: 0.54%

#3: New Hampshire

Percent of income going to taxes: 6.37%

New Hampshire is a bit of a surprise addition to the list of US states with the lowest taxes on residents, considering it has some of the highest property taxes in the country. Despite spending 4.8% of their income on property taxes (the US average is 3%), New Hampshire residents enjoy tax benefits in a number of other ways. Income taxes sit at a mere 0.13%, and sales taxes come in at just 1.04%, closing the gap on the tax burden for Granite State residents and adding even more appeal to some of the coziest towns to retire to in New Hampshire.

New Hampshire tax burden breakdown:

• Individual income tax: 0.13%
• Property tax: 4.79%
• Sales tax: 1.04%
• License SL miscellaneous taxes: 0.42%

#2: Tennessee

Percent of income going to taxes: 6.33%

While many states have either high individual income tax or high property taxes to offset the costs of the state, Tennessee manages to keep its tax burden low on all fronts. With virtually no income tax and the lowest property tax percentage of any state in 2020, Tennessee undoubtedly has some of the lowest tax rates in the US. A majority of the state’s tax revenue comes from sales tax, which is a full percent over the average. Despite this, Tennessee is still one of the most tax-friendly states in the US, leaving more room for a comfortable long-term stay.

Tennessee tax burden breakdown:

• Individual income tax: 0.02%
• Property tax: 1.61%
• Sales tax: 4.41%
• License SL miscellaneous taxes: 0.3%

#1: Alaska

Percent of income going to taxes: 5.36%

Considering the state has an incentive program that will pay residents to live there, it’s perhaps no surprise that Alaska imposes the lowest tax burdens on its residents. Vacationing here is already fairly cost-effective, with Alaska offering many things to do even on a backpacker’s budget. With zero income taxes and only 1.48% of income going to sales taxes, there are plenty of ways to save money while living in Alaska as well. Alaska does recoup some of its costs with a higher than average property tax percentage (3.63%). Even then, Alaska residents pay the least amount of taxes in the US, getting to enjoy a full 3.5% more of their income than the average American.

Alaska tax burden breakdown:

• Individual income tax: 0%
• Property tax: 3.63%
• Sales tax: 1.48%
• License SL miscellaneous taxes: 0.25%

So, which are your favorite states among the top 10 US states with the lowest tax burden on residents? Well, that’s all we have for you today. Thanks for liking this post. Share your favorite states among the top 10 US states with the lowest tax burden on residents in the comments below. I’d love to read them, and I’m sure others would too.

US States With The Lowest Tax Burdens On Residents

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