Top 10 States with Lowest Tax Rate in the United States

A tax is a mandatory monetary amount that is imposed upon any individual by the government. You get nothing in return, but the public services which are run by the government. As a tax is a compulsory payment that you are required to pay, if you fail to do so, you are at liberty to face the consequences imposed by the government.

Taxes are generally levied on income, property, wealth and other commodities and services that you purchase. Since it is a punishable offense to not paying taxes, it is best when the tax rates are reduced. And in the US, the tax rates are different in the different states. So, we make an attempt to make you aware of the 10 most tax-friendly states in the United States so that you can make your plans regarding your future and present judiciously.

TAX in USA

10. Tennessee

This is one of the friendliest states in terms of taxes levied on the consumers. This state does not levy any tax on your personal income, but levies tax on the income you earn from dividends and interests. Also, the tax levied on these earnings is 2% only. But, Tennessee has one of the highest combined sales tax rates and it is about 9.47%. Additionally, the tax imposed on gasoline and properties is also relatively high. But, irrespective of these taxes, this state has managed to bag the 10th position!

9. New Hampshire

Making a choice between this state and the previous one mentioned was a tough choice. This state also levies no tax on your wage-income, but levies around 5% tax on the income you earn from interests and dividends. But, the combined sales tax in this state is 0%. Also, taxes imposed on gasoline in this state is lower than that in Tennessee, but again, property tax in this state is one of the highest in the country. But if compared, this state is a step ahead of the former.

8. Pennsylvania

This state levies a flat tax, that is, a tax levied on you irrespective of the income bracket you belong to, of 3.07%. Moreover, the combined sales tax is 6%. But the property tax in this state is quite low and is around 2.5%. But, the gasoline tax in Pennsylvania is relatively high but enables this state to snatch the 8th position.

7. North Dakota

The peace garden state makes it into the list of the 10 friendliest states in terms of taxes even though this state imposes a tax (the rate depends on the bracket of income you are under) on income. The combined sales tax is almost about 7%. The property tax is higher than the previous states in the list, but again, the gasoline tax is lower. You need to pay a tax of about 23 cents for a gallon of gasoline you purchase.

US Individual Income Tax Return

6. Arizona

Choosing between Arizona and North Dakota was a tough task indeed. The income tax levied depends on the bracket of income you are under. Though income tax and sales tax are higher than that in North Dakota, still we rank this state ahead of it because the property tax you need to pay in Arizona is significantly lower. Moreover, the gasoline tax is also lower which 19 cents per gallon of gasoline you buy.

5. South Dakota

You will be happy to know that this state levies no tax on any form of income you earn, be it from your wage or from interests or dividends. The combined sales tax is also low and is about 6.4%. But one thing you need to keep in mind is that the property tax in this state is high. The tax levied on gasoline, on the other hand, is low and is about 30 cents for a gallon of your purchase. Thus, this state gets the 5th rank.

4. Florida

Since this state is also a place where you pay no form of income tax, it was confusion whether to put this state before or after South Dakota. In Florida, you pay gasoline tax at a higher rate than that you would have paid in the preceding state, but then, the property tax in this state is a bit lower than that in the former. Honestly, it is tough to choose between these two states and it would be easier if we consider it to be a tie!

3. Nevada

Again, this state also levies a 0% tax on the income of any kind. You pay a combined sales tax of about 8.14%, the property tax is also one of the lowest in the country and gasoline tax is also relatively lower than most of the above-mentioned states. Hence, this state has achieved the 3rd rank in the list of the 10 friendliest states in terms of taxes.

2. Alaska

By now you might have worked this out that this state also levies 0% income tax. The combined sales tax is also very low and is about 1.26%. Moreover, the gasoline tax is also very low here. The only rate of tax which is relatively higher than most of the states mentioned above is the property tax. But, the grass is always greener on the other side. So, it is quite justified to say that this state bags the second position among the 10!

1. Wyoming

This is the friendliest state in terms of taxes! Hands down. This state also levies no income tax and levies taxes on gasoline and property at a rate lower than the others. The sales tax is also low when compared. And you will be happy to know that the tax levied on beer in this state is the lowest in the country.

Tax Friendly States USA 2019

It is really difficult to rank the US states in terms of income taxes. Washington and Texas are two other states where the income tax is 0% as well. But, since income tax is not the only form of tax levied, you should also keep in mind the other taxes as well. After enough research, we arrive at the conclusion which we elaborated above.

So, before you take any decision, you should go through this article, and we are sure that it will help you make your choice faster and in a simplified manner in choosing the most tax-friendly states in the United States to live.

Saurabh Saha
Pursuing MCA from the University of Delhi, Saurabh Saha is an experienced blogger and internet marketer. Through his popular technology blogs: TechGYD.COM & sguru.net, he is helping several brands to gain exposure in front of high-quality web visitors.