Best and Worst States for Taxes: Complete 2026 Ranking
Your state of residence can change your total tax bill by $10,000 or more per year. Some states levy no income tax but compensate with high property or sales taxes. Others have high income taxes but lower property costs. This guide ranks all 50 states by their combined tax burden across income tax, sales tax, and property tax, with data-driven comparisons for different income levels.
The Three Pillars of State Taxation
Every state funds its government through some combination of three major tax types. No state relies on just one, and the balance between them determines who pays the most:
- Income tax: 41 states and Washington, D.C. levy a personal income tax. Rates range from a flat 2.5% (Arizona) to a progressive top rate of 13.3% (California). Nine states have no income tax at all.
- Sales tax: 45 states and D.C. levy a state sales tax. Rates range from 2.9% (Colorado) to 7.25% (California). Five states have no state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Local sales taxes can add 1-5% on top.
- Property tax: All 50 states levy property tax, but rates vary dramatically. The national median effective rate is about 1.1% of home value, but ranges from 0.31% (Hawaii) to 2.23% (New Jersey). Use our Property Tax Calculator to estimate your property tax in any state.
The key insight is that states with no income tax typically have higher sales or property taxes to make up the revenue. Whether a no-income-tax state actually saves you money depends on your income level, spending habits, and home value. Use our Income Tax Calculator to model your federal tax, then add state taxes for a complete picture.
The 9 States With No Income Tax
These nine states levy no personal income tax on wages and salary:
| State | Sales Tax Rate | Avg Property Tax Rate | Notes |
|---|---|---|---|
| Alaska | 0% (local up to 7.5%) | 1.04% | No state income or sales tax; PFD dividend |
| Florida | 6.0% | 0.89% | Popular for retirees; homestead exemption |
| Nevada | 6.85% | 0.53% | Higher sales tax; low property tax |
| New Hampshire | 0% | 1.86% | No income or sales tax; very high property tax |
| South Dakota | 4.5% | 1.22% | Low overall tax burden |
| Tennessee | 7.0% | 0.64% | Highest combined sales tax with local additions |
| Texas | 6.25% | 1.68% | No income tax but very high property tax |
| Washington | 6.5% | 0.94% | 7% tax on long-term capital gains over $270K |
| Wyoming | 4.0% | 0.55% | Lowest overall tax burden |
Note that Washington state enacted a 7% capital gains tax on long-term gains exceeding $270,000 starting in 2022. While technically not an income tax (the state classifies it as an excise tax), it functions similarly for high-net-worth investors. This is an important consideration for anyone with significant investment income considering a move to Washington.
Top 10 Lowest Tax Burden States
Based on the combined effective tax rate across income tax, sales tax, and property tax for a median household earning $75,000 with a $350,000 home:
| Rank | State | Income Tax | Sales Tax | Property Tax | Est. Total Burden |
|---|---|---|---|---|---|
| 1 | Wyoming | 0% | 4.0% | 0.55% | ~5.5% |
| 2 | Alaska | 0% | 1.8% avg | 1.04% | ~5.7% |
| 3 | Nevada | 0% | 8.2% avg | 0.53% | ~6.0% |
| 4 | Florida | 0% | 7.0% avg | 0.89% | ~6.2% |
| 5 | South Dakota | 0% | 6.4% avg | 1.22% | ~6.5% |
| 6 | Tennessee | 0% | 9.5% avg | 0.64% | ~6.6% |
| 7 | Montana | 4.7% top | 0% | 0.74% | ~6.7% |
| 8 | Delaware | 6.6% top | 0% | 0.57% | ~7.0% |
| 9 | North Dakota | 1.95% top | 5.0% | 0.98% | ~7.1% |
| 10 | Arizona | 2.5% flat | 5.6% | 0.62% | ~7.2% |
Top 10 Highest Tax Burden States
These states impose the heaviest combined tax burden on a household earning $75,000 with a $350,000 home:
| Rank | State | Income Tax | Sales Tax | Property Tax | Est. Total Burden |
|---|---|---|---|---|---|
| 50 | New York | 10.9% top | 8.0% | 1.62% | ~14.5% |
| 49 | New Jersey | 10.75% top | 6.6% | 2.23% | ~14.2% |
| 48 | Connecticut | 6.99% top | 6.35% | 2.15% | ~13.8% |
| 47 | Illinois | 4.95% flat | 8.8% | 2.08% | ~13.5% |
| 46 | California | 13.3% top | 7.25% | 0.71% | ~13.2% |
| 45 | Vermont | 8.75% top | 6.0% | 1.83% | ~12.8% |
| 44 | Minnesota | 9.85% top | 6.88% | 1.05% | ~12.5% |
| 43 | Massachusetts | 9.0% (5% + 4% surcharge) | 6.25% | 1.17% | ~12.3% |
| 42 | Oregon | 9.9% top | 0% | 0.93% | ~12.0% |
| 41 | Maryland | 5.75% + local | 6.0% | 1.05% | ~11.8% |
New York City residents face an especially high burden because they pay both state and city income taxes, with a combined top rate of 14.8%. New Jersey has the highest property taxes in the nation, with a median bill of over $8,800 per year. Illinois combines a flat income tax with some of the highest property taxes in the country, particularly in the Chicago metro area.
How Income Level Changes the Ranking
The best and worst states depend heavily on your income level. No-income-tax states are relatively better for high earners, while high-income-tax states can be comparable or even better for low earners due to progressive rate structures and credits:
| Income Level | Best States | Worst States | Key Factor |
|---|---|---|---|
| Under $50K | Wyoming, Alaska, Montana | Washington, Tennessee, Illinois | Sales tax hits hardest (regressive) |
| $75K - $150K | Wyoming, Florida, Nevada | New York, New Jersey, Connecticut | Income tax + property tax combined |
| $200K - $500K | Wyoming, Texas, Florida | California, New York, New Jersey | Income tax dominates at high rates |
| $500K+ | Wyoming, Florida, Nevada | California, New York, Oregon | Top marginal rates: 10-13%+ state |
| Retirees | Florida, Wyoming, Nevada | Vermont, Minnesota, Connecticut | Social Security and pension taxation |
For high earners, the difference between California (13.3% top state rate) and Florida (0%) on $500,000 of income is approximately $50,000 per year in state income tax alone. This is why high-income professionals and entrepreneurs frequently relocate to no-income-tax states. However, a comprehensive comparison should account for differences in cost of living, housing prices, and quality of public services.
Sales Tax Deep Dive: State + Local Combined
State sales tax rates tell only part of the story. Local jurisdictions (cities, counties, transit districts) add their own sales taxes on top, sometimes dramatically increasing the rate. Use our Sales Tax Calculator to find the exact combined rate for any location.
| Highest Combined Sales Tax | State Rate | Avg Local | Combined Avg |
|---|---|---|---|
| Tennessee | 7.0% | 2.55% | 9.55% |
| Louisiana | 4.45% | 5.10% | 9.55% |
| Arkansas | 6.5% | 2.97% | 9.47% |
| Washington | 6.5% | 2.81% | 9.31% |
| Alabama | 4.0% | 5.27% | 9.27% |
Sales taxes are regressive, meaning they take a larger percentage of income from lower earners who spend a higher portion of their income on taxable goods. States like Tennessee and Washington, which rely heavily on sales tax instead of income tax, are effectively shifting the tax burden toward lower-income residents.
Property Tax Across States
Property tax is the primary funding source for local schools and services. Rates vary not just by state but by county and municipality. The effective rate is what you actually pay as a percentage of your home's market value:
| Highest Property Tax States | Effective Rate | Tax on $350K Home |
|---|---|---|
| New Jersey | 2.23% | $7,805 |
| Connecticut | 2.15% | $7,525 |
| Illinois | 2.08% | $7,280 |
| New Hampshire | 1.86% | $6,510 |
| Vermont | 1.83% | $6,405 |
| Lowest Property Tax States | Effective Rate | Tax on $350K Home |
|---|---|---|
| Hawaii | 0.31% | $1,085 |
| Alabama | 0.40% | $1,400 |
| Colorado | 0.49% | $1,715 |
| Nevada | 0.53% | $1,855 |
| Wyoming | 0.55% | $1,925 |
The gap between highest and lowest is enormous. A $350,000 home in New Jersey generates $7,805 in annual property tax versus just $1,085 in Hawaii, a difference of $6,720 per year. If you are considering a move, our Property Tax Calculator lets you compare costs across states. You might also want to explore strategies to appeal your property tax assessment if your current taxes seem too high.
Special Considerations for Remote Workers
Remote work has made state tax planning more complex. Key considerations include:
- Convenience rule: States like New York, Connecticut, and Nebraska tax non-resident remote workers who work for employers in their state unless the remote arrangement is for the employer's necessity.
- Reciprocity agreements: Some neighboring states have agreements where residents only pay income tax in their home state, not the state where they commute to work.
- Part-year residency: If you move mid-year, you may owe taxes in both states based on income earned while resident in each.
Read our remote work tax rules guide for the full details on multi-state taxation. For understanding your take-home pay with different state taxes, try Salario's paycheck calculator.
Tax-Friendly States for Retirees
Retirees should evaluate states not just on general tax burden but on how they tax retirement income specifically:
- Social Security exemption: 41 states either have no income tax or exempt Social Security benefits from state tax. The nine states that still tax Social Security (at least partially) are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, New Mexico, Rhode Island, and Vermont.
- Pension exemption: Some states fully exempt pension income, military retirement, or government retirement from state tax. Illinois, Mississippi, and Pennsylvania are particularly pension-friendly.
- Estate and inheritance tax: 12 states and D.C. have an estate tax, and 6 states have an inheritance tax. Maryland and New Jersey have both. See our estate tax planning guide for strategies to minimize these taxes.
Frequently Asked Questions
Should I move to a no-income-tax state to save on taxes?
It depends on your complete financial picture. A high earner making $300,000+ can save $15,000-$40,000 per year by moving from California or New York to Florida or Texas. But you must account for higher property taxes (Texas), higher sales taxes, differences in cost of living, loss of state services, and quality-of-life factors. For moderate incomes under $100,000, the savings may be minimal after accounting for other tax types.
Can I deduct state taxes on my federal return?
Yes, but with limitations. The State and Local Tax (SALT) deduction allows you to deduct up to $10,000 ($5,000 if married filing separately) of state and local income, sales, and property taxes combined on your federal return if you itemize. This cap, implemented by the 2017 Tax Cuts and Jobs Act, significantly limits the benefit for residents of high-tax states. Before the cap, there was no limit.
How do I establish residency in a new state for tax purposes?
Each state has its own rules, but generally you must demonstrate domicile in the new state by obtaining a driver's license, registering to vote, changing your bank accounts, spending more than 183 days physically present, and listing the new address on tax returns. High-income taxpayers moving from New York or California should be especially careful, as these states aggressively audit residency changes to prevent tax avoidance.
Calculate Your State Tax Impact
Use our free calculators to estimate income tax, property tax, and sales tax for any state in the U.S.