Everyone wants a less tax-friendly bill. One way to do this would be to live in a state with no income tax. As of 2019, seven states; Florida, Alaska, Nevada, Texas, South Dakota, Washington, and Wyoming do not levy an income tax. Two others, Tennessee and New Hampshire, do not tax wages. Currently, they (Tennessee and New Hampshire) tax both income and interest on investments, but both are ready to eliminate these taxes quickly. This will bring the number of states without an income tax to nine by 2025.
Key Points
• States without income tax generally compensates for the loss of income with other reduced taxes or services.
• A state's overall tax weight, which measures the percentage of income, paid in local taxes, maybe a more accurate measure of its convenience than the rate of income tax.
• Other factors, such as health care, cost of living, and job opportunities, are also crucial in determining the costs of a state.
However, before pulling up stakes and hiring a moving company for one of these highlighted states, there are other factors to note, such as sales, excise duties, and property taxes; accessibility; and the impact of lower friendly taxes on a state's ability to invest in education, infrastructure, health care, and other vital services.
Let us consider living and life in each of the states
Wyoming, Alaska, and South Dakota are the three states with lower taxes, according to a new analysis of the underlying tax rates by Yahoo! Finance infographic. The "State-to-State Tax Guide" is from Kiplinger, a service that provides news and advice on personal finance and shows how many taxes vary from state to state.
The types of taxes considered were income, property, sales, fuel, "sin" (alcohol, steam and tobacco products), inheritance and gifts, wireless services, and travel. When creating the classification, Kiplinger used a large amount of data from the Tax Foundation, the United States Census Community Survey, The United States, American Institute of Petroleum, and several other sources.
In addition to the three western/intermediate states mentioned above, three southern states have also done well in tax matters: Florida is the fourth tax-exempt state. At the same time, Louisiana and Mississippi come in at Ninth and Tenth, respectively.
If you want to reduce your financial burden by moving to a location with less aggressive tax rates, avoid the Northeast. New York, Maryland, New Jersey, Maine, Vermont, and Connecticut were among the top 10 places with the highest taxes.
In addition to Yahoo! The infographic, which divides the ten most favorable and least taxable states, also has an interactive map on its site, which allows you to click on the profile of a single state to get more information about at different rates. The site also lists states without an income tax; there are seven, two more than just dividends and investment income, and states without sales tax (five in total).
Continue to scroll to see the ten most favorable and least favorable tax states.
Most friendly tax states in America:
• Arizona
• Florida
• Alaska
• Wyoming
• North Dakota
• South Dakota
• Mississippi
• Nevada
• Delaware
• Louisiana
Least tax-friendly states in America:
• New Jersey
• California
• New York
• Vermont
• Minnesota
• Hawaii
• Maryland
• Illinois
• Maine
• Connecticut
The Bottom Line
Despite the challenges faced by tax-exempt states, some of them appear to balance low taxes, easy access, and provide a great place to live in. Others are trying to catch up. One thing is clear: single friendly taxes do not give a complete picture of the cost of living.
Elliot Kravitz, ATP