The 9 Best Tax Friendly States For Individuals
If you're currently seeking a new place to hang your hat, you might have explored various locales based on climate, housing prices, cost of living, crime rates and sports teams.
But what about taxes? Because each state sets its own rates for state income and sales taxes, there are some states – and even cities within those states – that offer a cheaper cost of living than others. For example, Chicago is home of the nation's largest sales tax, currently at 9.5 percent. Conversely, there are five states with no sales tax.
Besides income and sales tax, other taxes such as property tax and gas tax can pack a big punch to your wallet over the course of a year. Here's a roundup of states that give their residents the biggest break on their annual tax bills. Perhaps you'll find your next home in one of these places.
This state boasts no income tax, no sales tax and no inheritance tax, though residents may be charged a local sales tax depending on local rules. Additionally, only 25 of Alaska's municipalities charge a property tax. According to Kiplinger, "The Last Frontier State actually gives residents money for living there, distributed from its Permanent Fund, an oil wealth savings account administered by the state." Finally, the state's added gas tax is the lowest in the nation, at just 8 cents per gallon atop the federal tax.
With no personal or corporate income tax, the Silver State doesn't charge a pretty penny for its residents to live there. The state sales tax is 6.85 percent and property taxes are assessed based on 35 percent of the property's fair market value. Of course, if you're a visitor to Las Vegas, you'll help boost the state's revenue by forking over an 8.1 percent sales tax and up to 13 percent tax on hotel rooms.
An article from 247wallst.com found that, in 2009, South Dakota residents coughed up only 7.6 percent of their income toward taxes. This makes it the third least-burdened state by taxes, behind Alaska and Nevada. South Dakota assesses no corporate or individual income tax, and there is a low 4 percent sales tax statewide. You should note that municipalities have the power to tack on additional tax. However, property taxes can be high, with 85 percent of market value used in those calculations.
This state does not charge an individual income tax and keeps the state sales tax at a low 4 percent. Most property in Wyoming is subject to tax on just 9.5 percent of the market value, according to Kiplinger. The state is able to keep these taxes low because it receives profits from oil and mineral revenues. They also pass the savings down to residents in the form of a low gas tax which is just 14 cents per gallon.
No income tax, no sales tax and no inheritance tax combine to make this New England state appealing for prospective residents. In addition, the state's added gas tax at 19.6 cents per gallon is the tenth lowest gas tax in the country. New Hampshire does, however, levy a tax on dividends and interest earned by savings and investments. And property taxes, determined by municipalities, tend to be on the higher side of the spectrum.
The Evergreen State makes sure its resident keep a little extra green in their pockets. Washington does not assess its residents an income tax, joining eight other states: Tennessee, Florida, Texas, Alaska, Nevada, South Dakota, Wyoming and New Hampshire. The state sales tax is 6.5 percent and property taxes are based on 100 percent of a property's fair market value. If that sounds high, it's because property taxes add up to 30 percent of the state's total tax revenue.
Vermont, Delaware And Montana
If you're an avid shopper, you'll like these states – along with Alaska and New Hampshire – for their lack of sales tax. Get those credit cards ready and run for the border!
With tax season just around the corner, you might be less than impressed by the total bill you see on your state tax return. If those numbers have you mad enough to start packing, these nine states would be proud to add their names to your license plate.