20 States With the Lowest Income Taxes
Income tax rates can greatly affect your finances, so moving to a state with lower taxes can be very helpful. Many states have low or no income taxes, making them appealing places to live or move to.
- Tricia Quitales
- 6 min read
It can be very helpful to live in a state with little or no income tax, since you can keep more of your hard-earned money. Many states depend on income taxes to pay for their public services, but some have found other ways to make money without charging their residents a lot of tax. This article discusses 20 states with low income tax rates that are great for people who want to get the most money out of their paychecks.
1. Wyoming
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Wyoming doesn’t have a state income tax, which makes it a great place to live and retire. The state’s government is paid for by money from natural resources, tourism, and other businesses. People who live in areas without income taxes have higher take-home pay and pay less in taxes overall.
2. Alaska
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The Permanent Fund Dividend is a special benefit that only Alaskans can get. The state does not have a state income tax. This dividend gives people in the state a piece of the money made from oil, which is good for their finances yearly. Alaska is a great place to live if you want to make the most money because there is no state income tax.
3. South Dakota
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You can keep your money because South Dakota doesn’t have a state income tax. The state’s budget is mostly paid for by property and sales taxes, but people who live in the state don’t have to pay state income taxes. Because of this, it’s a good choice for businesses and people.
4. Texas
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Texas is another state without a state income tax, making it a popular choice for people and families. People don’t have to pay income taxes to the state since properties and products are taxed. People living in Texas can save a lot on taxes compared to those living in states with higher income tax rates.
5. Florida
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Many people move to Florida because it doesn’t have a state income tax, which is the state’s main draw. Residents can enjoy a better quality of life without paying more state taxes because there is no income tax. Florida’s services are paid for by other taxes, such as sales and tourism taxes.
6. Nevada
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Nevada doesn’t have a state income tax, so many people who want to save money on taxes go there. The state makes money from tourism and the gaming industry, but people who live there don’t have to pay income taxes. Because of this, Nevada is a good state for people who want to pay less in taxes.
7. Tennessee
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The Hall Income Tax treats interest and dividends as income, not wages, making Tennessee unique. This tax, on the other hand, is being phased out and will be gone completely by 2021. Tennessee, one of the least tax-heavy states in the country, will no longer have this tax.
8. Washington
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Washington State does not have an income tax, which is a big draw for both businesses and residents. Instead, sales and business taxes pay for the state budget. Washington is a great place to live if you want to keep more earnings because it doesn’t tax income.
9. New Hampshire
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People who make money through work like living in New Hampshire because it doesn’t tax wages. The state taxes interest and dividends, but for most people, this is not a big problem. New Hampshire is a great place for people who want to lower their taxes because it doesn’t have a wage tax.
10. Montana
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Montana’s income tax rates are between 1% and 6.9%, which is not too high. This state does have an income tax, but it is not as high as many other states. Montana’s low taxes and beautiful scenery make it a good place to live.
11. North Dakota
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North Dakota has a progressive income tax system, but its top rate is not very high compared to many other states. With a top income tax rate of 2.9%, the state is one of the least expensive places to live. This is a great place to live and work because it has low taxes and a strong economy.
12. Indiana
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Indiana’s flat state income tax rate is 3.23%, which is not too high compared to other states. You can also get deductions and credits from the state that can lower your taxable income even more. The tax rates in Indiana are low, making it a great state for people who want to save money on taxes.
13. Missouri
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Missouri’s income tax is progressive, but the rates aren’t too high. The highest income tax rate in the state is 5.4%, and there are several ways to lower taxable income. Missouri is a good place to live because it has low overall taxes.
14. Kentucky
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Kentucky’s flat income tax rate is 5%, which is pretty low for a state with an income tax. The state also gives its residents tax breaks and deductions to lower their tax bills. Kentucky is a great place for people and families because it is tax-friendly and has a low cost of living.
15. Georgia
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Georgia’s income tax rate increases over time, from 1% to 5.75 %. Although Georgia’s highest tax rate isn’t as low as some other states’, the state still has a low tax burden. Many tax credits and deductions are available in the state that can help you pay less in taxes.
16. Ohio
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There are different rates for Ohio’s income tax, going from 0.5% to 4.797%. Tax credits and exemptions are available from the state for certain types of income, which can help you pay less in taxes overall. Ohio is a good choice for many people because its tax rates are low to moderate.
17. Michigan
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Michigan’s flat income tax rate is 4.25%, one of the lowest rates in the country. The state also lets people deduct certain amounts of their income, like retirement income, which can help lower their taxable income. Michigan is a good place to live if you want to save money on income taxes because its tax rates aren’t too high.
18. Arizona
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Arizona’s income tax rates increase from 2.59 percent to 4.5 percent over time. Arizona does have a tax, but it is not as high as many other Western states. Phoenix, Arizona is a popular place for people to retire or start a new life because it has a warm climate and low taxes.
19. Oklahoma
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Oklahoma’s income tax increases over time, ranging from 0.5% to 5%. Even though the top rate might seem a bit high, Oklahoma still has lower overall taxes than many other states. The state has low taxes and a low living cost, making it a good choice for people who want to move.
20. Arkansas
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Arkansas has an income tax system where rates increase from 0.9% to 6.6% over time. However, its rates are still pretty low compared to other states in the area. Arkansas is a good choice for many people because it has lower tax rates and many different tax deductions and credits.