Lowest Tax States in America
Quick Answer
The lowest tax states in America combine no or low income tax with moderate sales and property taxes. For most workers, Wyoming, Alaska, Nevada, Florida, and South Dakota offer the lightest overall tax burden. However, the best state for you depends on your income, whether you own or rent, and your spending patterns. Income tax is not the only factor — property tax and sales tax matter too.
Lowest Tax States by Overall Burden
| Rank | State | Income Tax | Sales Tax | Avg Property Tax | Why It's Low |
|---|---|---|---|---|---|
| 1 | Wyoming | 0% | 4.0% | 0.55% | No income tax, low sales + property |
| 2 | Alaska | 0% | 0% state | 1.04% | No income or sales tax |
| 3 | Nevada | 0% | 6.85% | 0.53% | No income tax, very low property |
| 4 | Florida | 0% | 6.0% | 0.80% | No income tax, moderate other taxes |
| 5 | South Dakota | 0% | 4.5% | 1.08% | No income tax, low sales |
| 6 | New Hampshire | 0%* | 0% | 1.57% | No income or sales tax |
| 7 | Tennessee | 0% | 7.0% | 0.56% | No income tax but high sales |
| 8 | Texas | 0% | 6.25% | 1.60% | No income tax but high property |
| 9 | Indiana | 3.05% | 7.0% | 0.75% | Low flat income tax |
| 10 | North Dakota | 1.95% | 5.0% | 0.94% | Very low income tax |
*New Hampshire no longer taxes interest and dividends as of 2025.
Real Example With Actual Numbers
Michael earns $85,000 and is comparing states. Here is his estimated annual state and local tax burden (renter, single):
| State | Income Tax | Est. Sales Tax Paid | Total State Tax |
|---|---|---|---|
| Wyoming | $0 | $1,600 | $1,600 |
| Florida | $0 | $2,400 | $2,400 |
| Texas | $0 | $2,500 | $2,500 |
| Indiana | $2,593 | $2,800 | $5,393 |
| California | $3,800 | $2,300 | $6,100 |
| New York | $4,200 | $1,800 | $6,000 |
Michael saves roughly $3,500-$4,500 per year by living in Wyoming, Florida, or Texas instead of California or New York. Compare states for your salary at the relocation tool.
Lowest Tax States for Different Situations
For Renters
No-income-tax states with moderate sales tax are the best deal. Wyoming, Nevada, and Florida stand out because you avoid income tax and do not pay property tax directly.
For Homeowners
Property tax matters enormously. Nevada (0.53%) and Wyoming (0.55%) combine no income tax with low property tax. Texas has no income tax but high property tax (1.6%), which can cost $5,000-$8,000/year on a typical home.
For Retirees
Florida and Tennessee are popular because they have no income tax on retirement distributions, Social Security, or pensions, plus relatively low property taxes. See how taxes change in retirement.
For High Earners
The no-income-tax states save the most at high incomes. Someone earning $300,000 in California pays over $20,000 in state income tax alone. Moving to Florida eliminates that entirely.
The Trade-Offs of Low-Tax States
Low taxes often mean:
- Fewer public services: Smaller state budgets may mean less funding for public schools, parks, and infrastructure
- Higher out-of-pocket costs: You may pay more for services that are tax-funded in other states
- Limited job markets: Wyoming and South Dakota have smaller economies and fewer career options
- Weather and lifestyle: Tax savings are only one factor in quality of life
Finding Your Optimal State
The "best" state is a personal calculation. Use the relocation tool to compare any two states for your salary and family situation. The SalaryHog calculator shows state-specific take-home pay for all 50 states, so you can quickly scan for the highest net pay at your income level.