For whatever reason you are trying to move away from your current location, be it work, family, health, or other reasons and you are seeking how to pay less in taxes by living in the right state with no taxes?
Moreover, everyone wants to lower his/her tax bill to reduce expenses. An interesting way to do this is to live in a state that does not tax you.
There are some states with no income tax, no property tax, and no sales tax. Extensive research has been conducted to help you decide on the best states to live in with little or no taxes.
While some are retiring and seeking a better life, others are offered fresh or better jobs and may have to move across states to secure appointments.
However, everyone wants to lower his/her tax bill to reduce expenses.
An interesting way to do this is to live in a state that does not tax you. There are some states with no income tax, no property tax, and no sales tax. Extensive research has been conducted to help you decide on the best states to live in with little or no taxes.
Only two categories of taxes are considered: state tax and local tax. State and local taxes are comprised of income tax, property tax, sales tax, and other taxes. However, this article focuses on income, property, and sales taxes.
States with no income tax
There are currently nine states in the US with no income tax for all citizens.
However, Tennessee and New Hampshire are looking to phase out all taxes on investment income and interest by 2025.
So, if you are to retire and would like to establish your own business, you may want to consider Tennessee or New Hampshire.
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More so, there are 11 states with no income tax for retires, and retired veterans are exempted from tax in 20 states.
In the order of the total tax burden, the nine states with no income tax are as follows:
Alaska
Since 1980, Alaska has had no income tax or sales tax and boasts of the lowest total state and local tax burden of 5.1% of personal income only due to the drop in oil prices to cover for the budget deficit.
On the other hand, Alaska has a high cost of living as a result of its large remote location.
Annually, its citizens receive payment from the Alaska Permanent Fund Corp, which is revenue and investment earnings from royalties, mineral lease, and rentals.
Although Alaska is not a place many people think to retire, it does know how to treat its senior citizens. For those with a 401(k) income living in Alaska, IRA or pension is tax-exempt.
Tennessee
Since the bill to lower taxes on investment income was passed in 2016 and will take full effect in 2021, Tennessee looks to attract retirees who are interested in investing with tax charged only on interest and dividends for all residents.
Tennessee totals a tax burden of 6.28%, the country’s second-lowest. Lost income revenue is gotten from high sales tax with beer tax the highest in Tennessee.
Florida
Florida is the third-lowest total tax burdened state at 6.56% with no income tax. Known as a home for retirees because of its warm weather, but the state also offers zero tax on retirement income.
New Hampshire
New Hampshire is the only state with no income tax in New England but does have tax on dividends and interest. However, the dividends and interest tax is to be phased out by 2025 following a recently passed legislation bill.
New Hampshire’s total tax burden is 6.86%, ranked fourth in the country. All retire in the state with a 401(k) plan, and IRA or pension is exempted from state taxes.
South Dakota
Its property tax is above average while its sales tax is below average. With no tax on retirement income, South Dakota is a retiree-friendly state.
It is also home to several credit card companies who all help to keep the state’s residents income-tax free.
The total tax burden of South Dakota is 7.28%.
Wyoming
Wyoming residents don’t pay personal or corporate state income taxes, no retirement income tax, and have a low property and sales tax. Wyoming’s total tax burden is 7.51%.
As the country’s second least populated state, Wyoming is an interesting place to live in to reduce expenses.
Texas
It is forbidden to pay personal income tax in Texas according to the state’s constitution. Texas relies on sales and excise taxes to run its operations.
Although property and sales taxes are high in Texas, its total tax burden is 8.18%.
Washington
Washington has never had a corporate income tax. Home of major employers, taxes are levied on excise and sales. Business and occupation tax is paid by businesses.
With a total tax burden of 8.20%, the evergreen state is a beautiful state to live in considering you have a good job and retirees enjoy a no income tax on a 401(k), IRA, or pension.
Nevada
Even though Nevada has a no income tax for its residents, the total tax burden is at 8.26%. Most of Nevada’s revenue is received from a high sales tax.
Nevada is not just a hub for gambling; it treats its retirees right with no income tax.
States with no sales tax
Each state in the US has control over its base sales tax. Certain services and retails are levied a tax by each state. However, five states in the US have no sales tax policy.
No sales tax policy affects certain goods and services majorly. Whereas in some states, a 0% sales tax policy is observed in certain locations in the state.
While some states exempt goods such as clothing, groceries, prescriptions, and non-prescription drugs from state sales tax, these goods may be subjected to local sales tax.
States with no sales tax are as follows:
Alaska
While there is no state tax in Alaska, the local government is not restricted from placing a sales tax on goods. Areas like Anchorage and Fairbanks have a 0% sales tax on goods and services. Whereas, Juneau has a sales tax of 5%.
The gas tax is lowest in Alaska at 8.95% per gallon. Distributors and wholesalers of alcoholic beverages are levied a flat rate.
Delaware
Because of the high state income tax, the state has a 0% property tax and sales tax. The state’s 0% sales tax has made it a hub for art dealers and collectors of paintings and related pieces.
However, a tax of $2.10 is levied on a pack of cigarettes. Excise duties are levied on motor fuel and alcohol.
Montana
In Montana, local authorities are not permitted to collect sales tax.
Although the state boasts of no sales tax, resorts and tourist areas have a low sales tax up to 3% called resort and local option tax. Places with this tax are West Yellowstone, Whitefish, Big Sky, and Red Lodge.
Car companies and lodging facilities charge sales tax.
New Hampshire
New Hampshire has a 0% state sales tax, and the local government is not permitted to collect sales tax.
However, a sales tax of 9% is accrued to car rentals, short-term room service, and restaurants. Real estate sales are levied a 0.75% tax, and phone service is levied a 7% tax.
Oregon
Although there is a 0% sales tax in Oregon, the local government can impose sales tax on goods and services.
There are taxes on tobacco and excise tax on alcoholic beverages. There is also a 5% local sales tax on prepared foods in Ashland.
Nevertheless, Oregon has a lower cost of living compared to the national average by 0.8%.
The other 45 out of 50 states impose sales tax on goods and services.
Five states with the lowest combined state and local sales tax are Alaska (1.76%), Hawaii (4.44%), Wyoming (5.34%), Wisconsin (5.46%), and Maine (5.5%).
In most states, foods are exempted from sales tax while some tax either bottled water or soda and candy.
States with no property tax
Unfortunately, there is no state without a property tax. However, some states charge a low rate while some exempt vehicles. To make up for the no income or sales tax levies by some states, revenues are collected by increasing other taxes.
Twenty-six states, however, have property tax below 1.0%. A few of these states are as follows:
Hawaii
Hawaii has the lowest property tax rate of 0.27% in the US. However, the median value of housing in Hawaii is high compared to the median house value in the country. A property tax of $1,529 is expected to be paid by homeowners.
Alabama
Unlike Hawaii, Alabama has not only a low property tax rate of 0.42% but also one of the lowest median home cost of $130,500 compared to the average home cost of $225,300 in the US.
The median annual property tax in Alabama is $548.1.
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Louisiana
Rated third lowest property tax at a rate of 0.52%, Louisiana has a homestead exemption, which is the reason for the low property tax. The homestead exemption reduces the taxable value of an owner-occupied property by $7,500 in assessed value.
Colorado
Although Colorado has the fourth lowest property tax of 0.55%, its median home value is the fifth highest in the country.
Delaware
The low property tax rate of 0.56% in Delaware compensates for the high-income tax rate.
Low property taxes are attractive to residents, especially retirees from other states. Below is a list of other states with low property tax in ascending order.
| State | Property Tax Rate |
| South Carolina | 0.57% |
| West Virginia | 0.59% |
| Wyoming | 0.61% |
| Arkansas | 0.63% |
| Utah | 0.66% |
| Nevada | 0.69% |
| Arizona | 0.72% |
| Tennessee | 0.74% |
| Idaho | 0.75% |
| California | 0.77% |
| New Mexico | 0.78% |
| Mississippi | 0.80% |
| Virginia | 0.80% |
| Montana | 0.84% |
| Kentucky | 0.86% |
| North Carolina | 0.86% |
| Indiana | 0.87% |
| Oklahoma | 0.90% |
| Georgia | 0.91% |
| Florida | 0.98% |
| Missouri | 0.99% |
No matter your job status, states with no property tax, states with no income tax, and states with no sales tax are factors to be considered when determining how to pay less in tax by living in the right states with no taxes.
An employed person may consider states that meet at least two of the three factors of income tax, sales tax, and property tax.
The best place to live and pay less tax for an unemployed person may be a place with low property tax and low sales tax.
Most states put retirees first in terms of taxes. Retirees may consider states with no property taxes and states with no sales taxes because most states have a no income tax rate for retirees.