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The Best States For Taxes

State by state comparison of taxes

Tax laws vary from state to state, which means that the tax rate in Massachusetts may be very different from the tax rate in Mississippi. As April 15th draws nearer, you may wonder just which states in the union offer the best tax rates, and the least. In fact, if the taxes in your area are bad enough, you might just consider moving!

States with No Income Tax or Sales Tax

Among the 50 states, a handful don't charge income tax or sales tax. Texas, Nevada, Florida, Washington State, Tennessee, and Wyoming don't have state income taxes. Oregon, Montana, and Delaware have no sales tax. New Hampshire and Alaska have neither kinds of sales tax; in fact, Alaskan residents also receive an oil dividend of $1654 per year.

Lowest and Highest States for Property Tax

Since purchasing a home is probably the single largest investment most families will make, it helps to check out the property taxes state by state. Following is a list of the most affordable states for property tax, ranked by the median property taxes paid per state, the percentage of taxes paid against the average value of homes, and the percent that tax is of the median income of that state.

  1. Louisiana

    Percentage of tax per home value: .18%

    Percentage of tax per average income: .45%

    Average home price: $135,400

    Median income of homeowners: $54,216

  2. Alabama

    Percentage of tax per home value: .33%

    Percentage of tax per average income: .45%

    Average home price: $119,600

    Median income of homeowners: $51,014

  3. West Virginia

    Percentage of tax per home value: .49%

    Percentage of tax per average income: 1.03%

    Average home price: $94,500

    Median income of homeowners: $44,940

  4. Mississippi

    Percentage of tax per home value: .52%

    Percentage of tax per average income: 1.11%

    Average home price: $98,000

    Median income of homeowners: $45,925

  5. Arkansas

    Percentage of tax per home value: .52%

    Percentage of tax per average income: 1.1%

    Average home price: $102,000

    Median income of homeowners: $48,177

But before you run out and take out a mortgage loan, consider these states where housing costs are at an all-time high:

  1. New Jersey

    Percentage of tax per home value: 1.89%

    Percentage of tax per average income: .45%

    Average home price: $348,300

    Median income of homeowners: $88,343

  2. Connecticut

    Percentage of tax per home value: 1.63%

    Percentage of tax per average income: 5.51%

    Average home price: $291,200

    Median income of homeowners: $85,993

  3. New Hampshire

    Percentage of tax per home value: 1.86%

    Percentage of tax per average income: 6.34%

    Average home price: $306,000

    Median income of homeowners: $74,777

  4. New York

    Percentage of tax per home value: 1.23%

    Percentage of tax per average income: 5.02%

    Average home price: $306,000

    Median income of homeowners: $74,777

  5. Rhode Island

    Percentage of tax per home value: 1.35%

    Percentage of tax per average income: 4.92%

    Average home price: $267,100

    Median income of homeowners: $73,570

Doing Business on the Cheap: Which States Rule?

Because of the absence of income tax and sales tax in some states, they are more conducive to business than others. The top five states in the union for setting up a business are: South Dakota, Alaska, Wyoming, Nevada, and Florida. But the five states that put the thumbscrews on businesses and really levy a great deal of taxes are New York, California, New Jersey, Connecticut, and Ohio.

Sin Taxes: Who Charges the Most for Fun?

When it comes to “sin” taxes, some states definitely charge more than others. New York leads the way for heaviest cigarette taxes, while Missouri is the lightest. Alaska charges the heaviest taxes for liquor, but Wyoming charges the least. If you win the lottery, Rhode Island only charges 22% on lottery winnings, while West Virginia charges 61%.

All Things Considered: The Best States for Taxes

If we just consider the overall taxes in each state – everything from soup to nuts, so to speak – then you might want to consider moving to these states:

  1. Alaska – 6.4%
  2. Nevada – 6.6%
  3. Wyoming – 7.0%
  4. Florida – 7.4%
  5. New Hampshire – 7.6%
  6. South Dakota – 7.9%
  7. Tennessee – 8.3%
  8. Texas – 8.4%
  9. Louisiana – 8.4%
  10. Arizona – 8.5%