6 states with the lowest overall tax burden

Depending on your income in 2021, you may feel the pain of paying your taxes. Maybe it hurts when you look at your paychecks and see all the state and federal taxes withheld. Some of you may feel a little more pain depending on what state you live in, how you earn your income, and whether or not you own a home. The overall tax burden can vary significantly from state to state.

While seven states boast of having no income tax, that doesn’t mean you can live tax-free. These states have to finance their budgets in one way or another. If you were wondering, the seven states with no income tax are Nevada, Washington, South Dakota, Texas, Florida, Wyoming and Alaska. Keep reading to find the five states with the lowest overall tax burden for their residents.

Income taxes are only part of the overall tax burden of living in a state. Your tax burden at the state level can vary greatly depending on your financial situation. Your tax burden is the proportion of your total personal income needed to cover your state and local taxes. The most common types of state and local taxes are personal income taxes, sales taxes and, of course, property taxes.

State tax burdens are not uniform across the country. For example, while Nevada and Washington have no income tax, they have the second and third highest sales and excise taxes and rank 33rd and 30th respectively in overall tax burden. .

To determine which states tax their residents the most and least aggressively, WalletHub compared the 50 states across all three types of state tax burdens — property taxes, personal income taxes, and sales/excise taxes — as as a share of total personal income in the state. Below are the six states with the lowest overall tax burden.

Related: 5 States With The Highest Tax Burdens

Six states with the lowest overall tax burden

6. Florida

Florida has a well-deserved reputation as a low-tax state. However, it can only boast the sixth lowest overall tax burden. While Florida has no income tax, it has high property taxes, ranking 28e. Florida is ideal if you have a high income and rent.

  • Total tax burden: 6.64%
  • Land charge: 2.77% (28)
  • Personal income tax expense: 0.00% (lowest)
  • Total sales and excise tax charge: 3.87% (16)

5.New Hampshire

New Hampshire has the third lowest tax burden with relatively low properties and low land values.

  • Total tax burden: 6.41%
  • Property tax charge: 5.11% (3)
  • Personal income tax expense: 0.14% (42)
  • Total sales and excise tax charge: 1.16% (49)


Like Florida, Wyoming has no income tax. Thanks to its tax rules, Wyoming was recently named one of the most tax-friendly shelters in the world.

  • Total tax burden: 6.32%
  • Land charge: 3.32% (15)
  • Personal income tax expense: 0.00% (lowest)
  • Total charge of sales and excise taxes: 3.00% (35)


Delaware has a graduated personal income tax, with rates ranging from 2.20% to 6.60%.

  • Total tax burden: 6.22%
  • Land charge: 1.77% (46)
  • Personal income tax charge: 3.28% (7)
  • Total sales and excise tax charge: 1.17% (48)

2. Tennessee

Low taxes could be the reason people are flocking to Nashville and other parts of Tennessee.

  • Total tax burden: 5.75%
  • Land charge: 1.71% (49)
  • Personal income tax expense: 0.06% (43)
  • Total sales and excise tax charge: 3.98% (14)

1. Alaska State Tax Burden

Residents of Alaska have a zero percent income tax. However, the cold probably keeps many Americans from traveling to Alaska.

  • Total tax burden: 5.06%
  • Land charge: 3.54% (11)
  • Personal income tax expense: 0.00% (lowest)
  • Total sales and excise tax charge: 1.52% (46)

As a financial planner from Los Angeles, I’d like to point out that California ranks 42 out of 50 in terms of low tax. The state is 30e in terms of property taxes. With the tax savings benefits of Prop 13, relative to property values, California’s property tax burden is much more competitive than its classification would imply. However, California has the highest nominal tax rate in the country at 13.3%; its residents are only affected by the ninth overall tax burden. The number of income taxes is high, but the effective tax rates for median-income households are not as high as in other states.

42. California State and Local Taxes

Total tax burden: 9.72%

Property tax burden: 2.76% (rank: 30)

Personal income tax expense: 3.80% (rank: 4)

Total sales and excise tax burden: 3.16% (rank: 32)

I am often asked to move in retirement to reduce taxes. If you plan to move, you should know how this move will affect your retirement income taxes. On the other hand, I wouldn’t recommend moving to save on taxes in order to have your best retirement. If you hate the cold, I don’t think any tax savings will alleviate winter freezing in Alaska, Wyoming or New Hampshire. That being said, I’m someone who prefers the winter weather in Palm Springs over Chicago.

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