The Top 5 Low Taxes States (Strictly for Saving Taxes)
- Marc Lowe
- Jan 20
- 3 min read
Updated: May 16
The Best Low-Tax States in America: A Comprehensive Analysis
When considering the overall tax burden of different states, several factors come into play: income tax, sales tax, property tax, and other special taxes or fees. This analysis examines which states offer the most tax-friendly environment for residents in 2024.
States with No Income Tax
The most notable tax advantage comes from states that collect no income tax. These states include:
Wyoming, Florida, Texas, Nevada, South Dakota, Tennessee, and Alaska. Washington state rounds out this group, though it does have a capital gains tax on high earners.
States with Low Overall Tax Burdens
Wyoming
Wyoming consistently ranks as one of the most tax-friendly states. Besides having no income tax, it offers:
Low sales tax (4% state rate)
Low property taxes (average effective rate of 0.61%)
No estate or inheritance tax
Relatively low gas taxes
Alaska
Alaska stands out for several reasons:
No state income tax
No state sales tax
Residents receive an annual dividend from the state's oil wealth fund
Low property taxes in many areas
No estate or inheritance tax
Florida
Florida attracts many residents with its tax structure:
No state income tax
Reasonable sales tax (6% state rate)
Homestead exemption that can significantly lower property taxes
No estate or inheritance tax
South Dakota
South Dakota offers an attractive tax environment:
No state income tax
Moderate sales tax (4.5% state rate)
Relatively low property taxes
Business-friendly tax structure
Important Considerations
While low taxes are appealing, several factors should influence your decision:
Cost of Living: Some low-tax states may have higher living costs in other areas.
Public Services: States with lower taxes might offer fewer public services or have different quality levels of education and infrastructure.
Local Taxes: County and city taxes can significantly impact your overall tax burden, even in states with low state taxes.
Special Circumstances: Some states offer special tax benefits for retirees or veterans, which might make them more attractive despite higher general tax rates.
Hidden Tax Costs
When evaluating low-tax states, consider these often-overlooked factors:
Local tax variations within states
Special assessments and fees
Tourism taxes that residents also pay
Vehicle registration fees and road tolls
Conclusion
While Wyoming, Alaska, and Florida consistently rank among the most tax-friendly states, the "best" low-tax state depends on your personal circumstances, including:
Your primary source of income
Whether you're working or retired
Your property ownership plans
Your lifestyle and spending habits
Consider all these factors, not just the headline tax rates, when making decisions about where to live or relocate.
About The Author
Marc Lowe is the Founder & President of In The Money Retirement Planning. He is a Certified Financial Planner and member of NAPFA National Association of Personal Financial Advisors, XY Planning Network & Fee-Only Network. He works with retirees and those approaching retirement. He has over a decade of experience helping these folks grow their net worth, organize their finances and build better lives for themselves and their families.
The information presented in this Presentation is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services offered through In The Money Retirement, an investment adviser registered with the state of Connecticut. The information linked to on third-party sites is being provided strictly as a courtesy and convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites. When you access these websites, you are leaving our website and assume any and all responsibility and risk for use of the web sites you are visiting. The tax and estate planning information offered by the advisor is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
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