Cheapest States to Live by Tax Burden: Complete Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Cheapest States to Live by Tax Burden: Complete Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
When evaluating the cost of living across states, taxes play a significant role. Income taxes, sales taxes, property taxes, and other levies combine to create your total state and local tax burden. Some states with no income tax compensate with high sales or property taxes, while others maintain moderate rates across the board. This guide ranks the cheapest states to live from a tax perspective, examining all major tax categories.
Overall Tax Burden by State: Top 15 Lowest
The following table ranks the ~15 states with the lowest combined state and local tax burden as a percentage of income:
| Rank | State | Overall Tax Burden (% of Income) | Income Tax | Sales Tax | Property Tax |
|---|---|---|---|---|---|
| ~1 | Alaska | ~4.6% | None | None (local only) | ~1.07% |
| ~2 | Wyoming | ~6.1% | None | ~5.44% | ~0.55% |
| ~3 | Tennessee | ~6.3% | None | ~9.55% | ~0.56% |
| ~4 | South Dakota | ~6.5% | None | ~6.1% | ~1.08% |
| ~5 | Florida | ~6.6% | None | ~7.01% | ~0.80% |
| ~6 | New Hampshire | ~6.7% | ~3% (interest/dividends only) | None | ~1.86% |
| ~7 | Nevada | ~6.8% | None | ~8.23% | ~0.53% |
| ~8 | Texas | ~7.0% | None | ~8.20% | ~1.60% |
| ~9 | Montana | ~7.1% | ~5.9% | None | ~0.74% |
| ~10 | Arizona | ~7.2% | ~2.5% | ~8.37% | ~0.51% |
| ~11 | Delaware | ~7.3% | ~6.6% | None | ~0.59% |
| ~12 | Idaho | ~7.4% | ~5.695% | ~6.02% | ~0.58% |
| ~13 | Colorado | ~7.5% | ~4.4% | ~7.77% | ~0.49% |
| ~14 | North Dakota | ~7.5% | ~1.95% | ~6.96% | ~0.94% |
| ~15 | Oklahoma | ~7.6% | ~4.75% | ~8.98% | ~0.88% |
These rankings reflect estimates for 2026 and can vary based on income level, home value, and spending patterns.
How Tax Burden Is Calculated
Three Major Components
Your total state and local tax burden is determined by three primary tax types:
| Tax Type | What It Taxes | Biggest Impact On |
|---|---|---|
| Income tax | Wages, investment income, retirement income | Higher earners |
| Sales tax | Purchases of goods and services | Higher spenders |
| Property tax | Real estate value | Homeowners |
A state’s overall ranking depends heavily on your personal situation. A high-income renter in Texas pays no income or property tax but faces high sales tax. A moderate-income homeowner in New Hampshire pays no income or sales tax but faces steep property taxes.
No-Income-Tax States: The Full Picture
The ~9 states with no broad-based income tax are often considered the cheapest, but the full picture is more nuanced:
| State | Income Tax | Avg. Combined Sales Tax | Avg. Property Tax Rate | Other Notable Taxes |
|---|---|---|---|---|
| Alaska | None | ~1.76% (local only) | ~1.07% | Oil revenue funds services |
| Florida | None | ~7.01% | ~0.80% | Doc stamps on real estate |
| Nevada | None | ~8.23% | ~0.53% | Gaming taxes fund services |
| South Dakota | None | ~6.1% | ~1.08% | Grocery tax at full rate |
| Tennessee | None | ~9.55% | ~0.56% | Highest combined sales tax |
| Texas | None | ~8.20% | ~1.60% | Among highest property taxes |
| Washington | None (+~7% cap gains) | ~9.23% | ~0.87% | B&O tax on businesses |
| Wyoming | None | ~5.44% | ~0.55% | Mineral severance taxes |
| New Hampshire | Div/Int only (~3%) | None | ~1.86% | Highest property tax in NE |
For a detailed analysis, see our state income tax rates comparison.
Cheapest States by Income Level
Your income level significantly affects which state is cheapest for you:
Household Income Under ~$50,000
| Rank | State | Why |
|---|---|---|
| ~1 | Alaska | No income or state sales tax, PFD payments |
| ~2 | Wyoming | No income tax, low sales tax |
| ~3 | Montana | No sales tax, low income tax at this level |
| ~4 | Nevada | No income tax, moderate sales tax |
| ~5 | Florida | No income tax, moderate overall burden |
Household Income ~$100,000 - ~$200,000
| Rank | State | Why |
|---|---|---|
| ~1 | Wyoming | No income tax, lowest overall burden |
| ~2 | Florida | No income tax, moderate property/sales |
| ~3 | Tennessee | No income tax, low property tax |
| ~4 | Nevada | No income tax, low property tax |
| ~5 | Arizona | Very low ~2.5% flat income tax |
Household Income Over ~$500,000
| Rank | State | Why |
|---|---|---|
| ~1 | Wyoming | No income tax of any kind |
| ~2 | Florida | No income tax, reasonable other taxes |
| ~3 | Tennessee | No income tax, low property rates |
| ~4 | Nevada | No income tax or capital gains tax |
| ~5 | Texas | No income tax (offset by property tax) |
Tips for Evaluating State Tax Costs
-
Calculate your total burden, not just income tax. A state with no income tax may cost you more overall if property and sales taxes are high. Use our tax bracket calculator to model your specific situation.
-
Factor in your housing plans. Renters are not affected by property taxes directly (though landlords pass them through). Homeowners in states like Texas and New Hampshire face property taxes that can exceed ~$10,000 annually on median-priced homes.
-
Consider retirement income treatment. If you are planning for retirement, prioritize states that exempt retirement income from taxation. Most no-income-tax states automatically qualify, but some income-tax states like Illinois, Mississippi, and Pennsylvania also exempt most retirement income.
-
Account for sales tax on groceries. States that tax groceries (like South Dakota and Tennessee) impose a hidden cost that disproportionately affects families. See our federal income tax guide for how to optimize your overall tax picture.
-
Look beyond taxes. Cost of living includes housing, healthcare, transportation, and food prices. A low-tax state with high housing costs may not be cheaper overall.
-
Plan your move timing. If relocating to a lower-tax state, establish residency before year-end to benefit from the new state’s rates for the full following tax year. Consult our self-employment tax guide if you are self-employed and relocating.
-
Beware of state tax clawbacks. Some states pursue former residents for taxes on income earned while they were residents. Document your move carefully and sever ties to your former state.
Key Takeaways
- Alaska, Wyoming, Tennessee, South Dakota, and Florida consistently rank as the states with the lowest overall tax burdens.
- No-income-tax states often compensate with higher sales or property taxes, making the total picture more nuanced than headlines suggest.
- Your personal tax burden depends heavily on your income level, homeownership status, and spending patterns.
- Texas has no income tax but has among the highest property taxes in the nation, which can offset the income tax savings for homeowners.
- For high-income earners, Wyoming, Florida, Tennessee, and Nevada offer the most favorable overall tax environments.
- Always calculate total state and local tax burden, not just the income tax rate, when evaluating where to live.
Next Steps
- State Income Tax Rates Comparison 2026 — Compare income tax rates across all 50 states.
- Federal Income Tax Guide 2026 — Optimize your federal taxes regardless of where you live.
- Tax Bracket Calculator — Model your total tax burden by state.
- Find a CPA Near You — Get personalized advice on tax-efficient relocation.