It's no surprise that many people don't like paying income taxes. That's why some might consider moving to one of the nine states that don't have income tax. No income taxes means less money taken out of your hard-earned paycheck. And if you are retired, no income tax also means no tax on your Social Security benefits, withdrawals from your IRA or 401(k) plan, or payouts from your pension.
But, no state is perfect. States without an income tax still need money to pay for roads, schools, and other infrastructure, so residents have to pay other taxes (e.g., sales, property, and estate taxes). And sometimes those other state taxes can be on the high end. For example, states with no income tax often have median property tax rates that are among the ten highest rates in the country. So, if you are thinking of moving to a state without an income tax, take note of some of the other taxes you will have to pay there. Maybe the grass isn't greener on the other side.
Disclaimer
Average combined state and local sales tax values are accurate as of January 2023 and were compiled by the Tax Foundation. Property tax data is from 2021 and is based on information from the U.S. Census Bureau. Overall tax ratings are from the State-by-State Guide to Taxes on Middle-Class Families.
Alaska
Overall Rating for Taxes: Most Tax-Friendly
State Income Taxes: None.
Sales Tax: Alaska is one of five states with no state sales tax. However, localities can levy sales taxes, which can reach 7.5%. Higher rates are found in locations that lack a property tax. But, according to the Tax Foundation, the statewide average is only 1.76%.
Property Taxes: In Alaska, the median property tax bill is $3,464. That's well above the national average.
Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For more information, see the Alaska State Tax Guide.
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Florida
Overall Rating for Taxes: Most Tax-Friendly
State Income Taxes: None.
Sales Tax: 6% state levy. Localities can add as much as 2%, and the average combined rate is 7.02%, according to the Tax Foundation. The combined rate is middle-of-the-road when compared to other states.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable (additional county tax on first $5,000 of purchase price may apply)
- Prescription Drugs: Exempt
Property Taxes: In Florida, the median property tax bill is $2,143. That's also pretty average when compared nationally.
Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For more information, see the Florida State Tax Guide.
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Nevada
Overall Rating for Taxes: Most Tax-Friendly
State Income Taxes: None.
Sales Tax: 6.85% state levy. Localities can add as much as 1.53%, and the average combined rate is 8.23%, according to the Tax Foundation. That's a pretty high combined rate.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Property Taxes: Nevada's median property tax bill is $1,736, which is one of the lowest rates in the U.S.
Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For more information, see the Nevada State Tax Guide.
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New Hampshire
Overall Rating for Taxes: Tax-Friendly
State Income Taxes: New Hampshire doesn't tax earned income, but currently there's a 5% tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers). The tax on dividends and interest is being phased out, though. The rate will be 4% for 2023, 3% for 2024, 2% for 2025, and 1% for 2026. The tax will then be repealed on January 1, 2027.
Sales Tax: New Hampshire has no state or local sales tax.
Property Taxes: The median property tax bill in New Hampshire is $6,036. That is higher than most states in the country.
Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For more information, see the New Hampshire State Tax Guide.
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South Dakota
Overall Rating for Taxes: Tax-Friendly
State Income Taxes: None.
Sales Tax: 4.5% state levy. Localities can add as much as 4.5%, and the average combined rate is 6.4%, according to the Tax Foundation. That's a below average combined rate.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4% excise tax
- Prescription Drugs: Exempt
Property Taxes: The median property tax bill in South Dakota is $2,331. That's slightly below the national average.
Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For more information, see the South Dakota State Tax Guide.
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Tennessee
Overall Rating for Taxes: Most Tax-Friendly
State Income Taxes: None.
Sales Tax: 7% state levy. There's also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.75%, with an average combined state and local rate of 9.55%, according to the Tax Foundation. That's the second-highest combined rate in the nation. Local taxes are limited, though: Only the first $1,600 of any single item is taxable.
- Groceries: Taxable (4% state rate; additional local taxes may apply)
- Clothing: Taxable
- Motor Vehicles: Taxable (7% basic rate, plus 2.75% state tax on sales price between $1,600 and $3,200; additional local taxes may also apply)
- Prescription Drugs: Exempt
Property Taxes: The median property tax bill for Tennessee homeowners is $1,270, which is well below the national average.
Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For more information, see the Tennessee State Tax Guide.
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Texas
Overall Rating for Taxes: Mixed Tax Picture
State Income Taxes: None.
Sales Tax: 6.25% state levy. Localities can add up to 2%, with an average combined rate of 8.2%, according to the Tax Foundation. Texas' combined rate is well above the U.S. average.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Property Taxes: The median property tax bill in Texas is $3,520, which is much higher compared to the rest of country.
Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For more information, see the Texas State Tax Guide.
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Washington
Overall Rating for Taxes: Most Tax-Friendly
State Income Taxes: None. However, the state has imposed a 7% tax on the sale or exchange of certain long-term capital assets if the annual profits exceed $250,000.
Sales Tax: 6.5% state levy. Municipalities can add up to 4.1% to that, with the average combined rate at 8.86%, according to the Tax Foundation. Washington's combined rate is the sixth-highest in the nation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable (6.5% ordinary rate, plus additional 0.3% tax)
- Prescription Drugs: Exempt
Property Taxes: The Washington median property tax bill is $3,752, which is higher than average.
Inheritance and Estate Taxes: An estate tax is imposed by Washington on estates with a value exceeding $2.193 million (the exemption threshold is subject to adjustment each year for inflation). Tax rates range from 10% to 20%. The state offers an additional $2.5 million deduction for family-owned businesses valued at $6 million or less.
For more information, see the Washington State Tax Guide.
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Wyoming
Overall Rating for Taxes: Most Tax-Friendly
State Income Taxes: None.
Sales Tax: 4% state levy. Municipalities can add up to 2% to that, with a combined rate of 5.36%, according to the Tax Foundation. The combined rate is the seventh-lowest in the U.S.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Property Taxes: In Wyoming, the median property tax bill is $1,442 , which is the far below the national average.
Inheritance and Estate Taxes: There is no inheritance tax or estate tax.
For more information, see the Wyoming State Tax Guide.
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