Living in a state that doesn’t levy an income tax may allow you to save more of your hard-earned money. As of now, there are eight states – Florida, Alaska, Nevada, Tennessee, South Dakota, Texas, Wyoming, and Washington – that don’t charge a state income tax. Here’s a quick analysis of how these states match up against each other in terms of living costs and other taxes.
Florida
This southern state is a retreat for retirees and vacationers alike. Florida generates pretty much all of its revenue through the sales tax and tuition via state universities. The cost of living is also pretty affordable. However, Floridians still have to contend with a booming housing market.
Alaska
Not only is Alaska the largest state in the country, but it also has the lowest state and local tax burden. That said, Alaska, being very remote, is expensive in other ways. Most residents, however, receive an annual stipend from the Alaska Permanent Fund Dividend, which helps offset some expenses.
Nevada
Nevada levies a sales and excise tax but no personal income tax. There are also taxes on groceries, alcohol, gaming, and hotel accommodations. It’s usually ranked pretty low on the scale when it comes to actual affordability. Although the housing costs are high, the property tax rate is surprisingly low.
Tennessee
Although Tennessee imposes a pretty high sales tax and charges tax on things like beer, fuel, alcohol, and fantasy sports contests, the overall tax burden of the state is very low. What’s more, it also has a low cost of living, and the property tax is relatively low, as well.
South Dakota
South Dakota, home to the Badlands National Park and Mount Rushmore, is a popular destination among retirees. The state’s overall sales as well as local tax burden stands at 9.1%. The property tax is also pretty high. However, like the other states on this list, it doesn’t impose an individual income tax.
Texas
Texas has an overall tax burden of 8%, which is one of the lowest in the country. But the property tax is the sixth-highest right now in the U.S. However, the state is relatively inexpensive.
Wyoming
One of the least populated states in the United States, Wyoming has a low tax burden of just 7%. Because there is no income tax, the state relies on sales, oil, excise, and property taxes to generate income.
Washington
The evergreen state does not impose an individual income tax or a corporate income tax. However, high housing costs are something to consider if you are looking to move to this state.
