Sam SmithTaxes play a central role in shaping where people choose to live, work, and retire. While some states impose heavy burdens through income, property, and sales taxes, others keep rates low, offering residents more financial freedom and flexibility. States with lighter tax loads often attract businesses, retirees, and families seeking affordability without sacrificing quality of life. In this article, we’ll explore the 30 states with the lowest overall tax burdens in 2025, highlighting where residents keep more of their income.
Top 30 States With the Lowest Tax Burdens (Fresh Insights)
1. Alaska
Alaska consistently ranks as the state with the lowest tax burden, with residents paying less than 6% of their personal income in state and local taxes. The state has no personal income tax and no statewide sales tax, relying instead on oil and energy revenues to fund government services. Property taxes are relatively modest, and residents benefit from the Permanent Fund Dividend. Alaska’s unique fiscal structure makes it one of the most tax‑friendly states in America.
2. South Dakota
South Dakota offers one of the lowest tax burdens in the nation, with no personal income tax and modest sales and property taxes. Its economy is supported by agriculture, tourism, and financial services, allowing the state to keep taxes low while maintaining essential services. Residents enjoy affordable living and business‑friendly policies, making South Dakota attractive for entrepreneurs and retirees alike. The absence of income tax is a major draw, ensuring residents keep more of their earnings.
3. Wyoming
Wyoming’s tax burden is among the lowest in the country, thanks to its reliance on mineral and energy revenues. The state has no personal income tax, and property taxes are relatively low compared to national averages. Sales taxes are modest, and residents benefit from a strong fiscal balance supported by natural resource industries. Wyoming’s wide‑open spaces, affordable living, and tax‑friendly environment make it appealing for families, retirees, and businesses seeking financial relief and stability.
4. Florida
Florida is famous for having no state income tax, making it a popular destination for retirees and professionals. Its tax burden is kept low by relying heavily on sales and tourism taxes. Property taxes are moderate, and the overall tax load is below the national average. Florida’s combination of warm climate, economic opportunities, and tax advantages makes it one of the most attractive states for relocation. Residents enjoy financial flexibility while benefiting from a diverse economy.
5. Nevada
Nevada’s tax burden is among the lowest in the nation, with no state income tax and moderate property taxes. The state relies heavily on tourism, gaming, and hospitality revenues to fund government services. Sales taxes are higher than average, but the absence of income tax offsets this for most residents. Nevada’s tax structure, combined with its entertainment industry and growing economy, makes it appealing for individuals and businesses seeking financial relief and lifestyle opportunities.
6. Tennessee
Tennessee offers one of the lowest tax burdens in the U.S., with no tax on wages and salaries. The state eliminated its tax on investment income in 2021, further reducing residents’ obligations. Property taxes are modest, while sales taxes are higher but manageable. Tennessee’s affordability, combined with its vibrant cities like Nashville and Memphis, makes it attractive for families and retirees. The state’s tax‑friendly policies ensure residents keep more of their income while enjoying cultural richness.
7. New Hampshire
New Hampshire stands out for having no general sales tax and no tax on wages. It does levy taxes on interest and dividends, but overall, its tax burden remains among the lowest in the nation. Property taxes are higher than average, but the absence of sales and broad income taxes offsets this. Residents enjoy financial flexibility, strong community ties, and scenic New England living. New Hampshire’s unique tax structure makes it appealing for those seeking fiscal relief.
8. Montana
Montana’s tax burden is low, thanks to the absence of a statewide sales tax. Residents pay modest property taxes and a progressive income tax, but overall obligations remain below national averages. The state’s reliance on resource industries and tourism helps balance revenue needs. Montana’s affordability, combined with its breathtaking landscapes and outdoor recreation, makes it attractive for families and retirees. The lack of sales tax is a major advantage, ensuring residents keep more of their earnings.
9. North Dakota
North Dakota maintains a low tax burden, supported by revenues from its energy sector. The state levies modest property and income taxes, while sales taxes remain manageable. Oil and natural gas production help offset government costs, allowing residents to enjoy lower overall obligations. Communities benefit from affordable living and strong fiscal stability. North Dakota’s combination of low taxes, economic resilience, and rural charm makes it appealing for individuals seeking financial relief and a slower lifestyle.
10. Indiana
Indiana offers one of the lowest tax burdens in the Midwest, with a flat state income tax and moderate property taxes. Sales taxes are average, but overall obligations remain below national levels. The state’s affordability, combined with a strong manufacturing base, ensures residents enjoy financial stability. Indiana’s tax‑friendly policies make it attractive for families, retirees, and businesses. With low costs and balanced fiscal policies, Indiana provides residents with both economic opportunity and manageable tax responsibilities.
| Rank | State | Tax Burden (% of personal income) | Notes |
|---|---|---|---|
| 1 | Alaska | ~5.8% | No state income tax; low property taxes |
| 2 | South Dakota | ~6.2% | No state income tax; low sales taxes |
| 3 | Wyoming | ~6.5% | No state income tax; energy revenues offset costs |
| 4 | Florida | ~6.8% | No state income tax; relies on sales taxes |
| 5 | Nevada | ~7.0% | No state income tax; tourism revenues help |
| 6 | Tennessee | ~7.1% | No tax on wages; moderate sales taxes |
| 7 | New Hampshire | ~7.3% | No general sales tax; limited income tax |
| 8 | Montana | ~7.5% | No sales tax; moderate property taxes |
| 9 | North Dakota | ~7.6% | Low property taxes; energy revenues |
| 10 | Indiana | ~7.8% | Flat income tax; moderate property taxes |
| 11 | Arizona | ~7.9% | Low property taxes; moderate sales taxes |
| 12 | Missouri | ~8.0% | Moderate income and property taxes |
| 13 | Oklahoma | ~8.1% | Low property taxes; moderate income tax |
| 14 | Texas | ~8.2% | No state income tax; higher property taxes |
| 15 | Colorado | ~8.3% | Flat income tax; moderate property taxes |
| 16 | Kentucky | ~8.4% | Moderate income tax; low property taxes |
| 17 | Pennsylvania | ~8.5% | Flat income tax; moderate property taxes |
| 18 | Michigan | ~8.6% | Flat income tax; moderate property taxes |
| 19 | Georgia | ~8.7% | Moderate income tax; low property taxes |
| 20 | Wisconsin | ~8.8% | Moderate income tax; higher property taxes |
| 21 | Utah | ~8.9% | Flat income tax; moderate property taxes |
| 22 | Idaho | ~9.0% | Moderate income tax; low property taxes |
| 23 | Arkansas | ~9.1% | Moderate income tax; low property taxes |
| 24 | Louisiana | ~9.2% | Moderate income tax; low property taxes |
| 25 | Alabama | ~9.3% | Low property taxes; moderate income tax |
| 26 | Mississippi | ~9.4% | Low property taxes; moderate income tax |
| 27 | West Virginia | ~9.5% | Moderate income tax; low property taxes |
| 28 | Kansas | ~9.6% | Moderate income tax; low property taxes |
| 29 | Maine | ~9.7% | Moderate income tax; higher property taxes |
| 30 | Oregon | ~9.8% | No sales tax; higher income tax |
Closing
The states with the lowest tax burdens demonstrate that fiscal policy can significantly influence lifestyle and opportunity. From Alaska’s reliance on energy revenues to Florida’s tourism‑driven economy, each state balances its budget differently while keeping taxes manageable for residents. Whether through no income tax, reduced property taxes, or limited sales taxes, these states provide financial relief and long‑term stability. Understanding where taxes are lowest helps individuals and businesses make smarter choices about relocation, investment, and future planning.