Looking to move? Here are the best choices when it comes to saving on taxes
If you’re looking to move to another state, it’s important to consider the cost of living — and taxes are one of the most important considerations. Living in a low-tax state has a number of benefits for individuals and families.
One of the most obvious advantages of lower taxes is that you’ll have more disposable income.
You can use this extra cash to save, invest, or simply enjoy a higher standard of living. Plus, low-tax states typically have more affordable housing, which is appealing to those on a tight budget.
These are the eight states that we’ve found to have the lowest taxes:
The reason Arizona comes in at number eight is its low income taxes: it boasts a 2.5% state income tax for middle-class individuals and families.
Arizona also has a low property tax rate compared with other states. The flipside of low income and property taxes is a higher than average sales tax in the Grand Canyon State.
Arizona does have a higher sales tax, which means that you’ll be paying a bit more for products.
Washington is high on this list because of its lack of state income tax. This puts Washington over the other states and is a big reason why many people look to move to the Evergreen State.
Like Arizona, Washington has a higher than average sales tax compared to other states, coming in at a rate of 6.5%.
Hot Tip: Living in these states can be beneficial for tax purposes, but be sure to do your research before packing your bags!
Just like Washington, Alaska is state income tax free. Additionally, Alaska is one of five states without any state sales tax! This makes it an appealing destination if you are okay with moving to a cold and largely rural state!
Property taxes in Alaska are on the higher end, so take that into consideration if you’re planning a move north to Alaska. of that if you are going to be moving north to Alaska.
5. North Dakota
North Dakota has state income tax, but it’s relatively small compared with the average rate in the United States. North Dakota ranks so high on this list because its sales tax is very low; when combining state sales tax, income tax rates, and reasonable property taxes, it helps middle-class families save and have more disposable income.
Tennessee comes in at number four because it has no state income tax — it was eliminated in 2020. Like other states with low or no income tax, it’s balanced with a tiered sales tax. Sales tax in Tennessee starts at 7% and increases for more expensive products.
All in all, Tennessee has the second-highest sales tax rate in the nation. But if you’re living frugally, not making many large purchases and want to save on income tax, the Volunteer State might be right for you.
Florida lands in the top three low tax states because it has no state income tax along with relatively low property and sales taxes. With sunny weather, abundant affordable housing, and low taxes, the Sunshine State is a great choice for middle-class families.
While housing is affordable, Florida’s property tax rate is middle of the pack.
No state income tax and a low property tax rate is why Nevada earns the second spot on this list. It has the third lowest property tax rate in the country, but a relatively high sales tax rate. If you can tolerate (or even love) the extreme summer heat, Nevada is a popular choice for relocation.
Wyoming is our winner! This western state lands at the top of our list because it has no state income taxes coupled with modest sales and property taxes.
The state is sparsely populated with big open spaces, so it’s no surprise residents typically own a lot of land. Low property tax rates make land ownership appealing in Wyoming.
If you’re interested in moving to another state, it’s vital that you check out the tax implications. Highly populated urban areas and states usually have higher taxes, so research the rates before making a major move.