The Best Tax Friendly States in the Nation

Many families move from one state to another throughout the year. There are a lot of reasons why they move and relocate to other states. Some of those reasons may be because of a new job, closer to family, climate, or to escape a COVID-19 hotspot.

But no matter what the reason is that you have decided to move, do your homework first. You will want to know the cost of living in your destination state. This will include cost of housing and local taxes. Knowing about the local taxes can save you thousands of dollars a year.

In this list of Best Tax-friendly cities for middle-class families we have considered the overall income, property, and sales tax. This is based on a married couple with two children.

10. Delaware

State Income Tax Range: 2.2% to 6.6%

Average State and Local Tax Rate: No state or Local Taxes

Median Property Tax: $560 per $100,000 of home value

Delaware is comparatively high for a middle-class who make about $60,000. If you make over the $60,000 range, you will be charge 6.6% income tax rate.

One of the benefits is that you will have no local or state sales tax. Therefore, Delaware fits into our tax-friendly for middle-class families. Shop till you drop and you will never have to pay a single penny in sales tax.

Delaware has the seventh lowest property tax rate in the country. The average home in Delaware can range between $250,000 to $300,000, which means you are looking to spend $1,686 per year.

9. Alaska

State Income Tax Range: none

Average State and Local Tax Rate: 1.76%

Median Property Tax: $1,185 per $100,000 of home value

You are ultimately going to save a lot of money, due to not having the burden of a state income tax. Alaska is 1 out of 6 states on this list that do not have a state income tax.

There is more to benefit from as well! Alaska also has no state sales tax but remember you will want to look up the local sales tax rate, which can be as high as 7.5%. But according to the tax foundation, the average local sales tax is 1.76%.

Alaska’s property tax is a little above the national average. For our hypothetical couple, if you were to purchase a $300,000 home, you are looking to spend just over $3,500 per year on property taxes.

There is one more big benefit about living in Alaska, each resident that has lived there for one full year will receive a “Permanent Fund Dividend.” This means you will receive a check from the state for $992, according to information in 2020.

8. North Dakota

State Income Tax Range: 1.1% up to 2.9%

Average State and Local Tax Rate: 6.96%

Median Property Tax: $986 per $100,000 of home value

North Dakota’s income tax is almost non-existent, you will only receive the higher tax rate if your income is over $440,600. So, this is a blessing for any mid-level earners. North Dakota is the lowest income tax on our list of cities.

Sales tax is well below the average throughout the country. The state applies a 5% sales tax where are local communities can impose up to a 3.5% sales tax.

The property taxes are not dirt cheap, but they are quite reasonable for this state. It is slightly above the national average.

7. Arizona

State Income Tax Range: 2.6% up to 4.5%

Average State and Local Tax Rate: 8.4%

Median Property Tax: $617 per $100,000 of home value

The Grand Canyon State with its low-income taxes is what puts them on the list. Our hypothetical taxpayers do not pay the lowest rate, but at 3.34% the really are not paying much more.

Residents of Arizona benefit from the low property taxes as well. You are looking to spend under $2,000 per year, which is below the national average, for a home at a price point of $300,000.

On the other hand, the state’s sales tax rate is above the national average. The state starts at 5.6%. Counties and cities levy additional taxes. Arizona falls in eleventh for the highest sales tax rates in the country.

6. California

State Income Tax Range: 1% up to 13.3%

Average State and Local Tax Rate: 8.68%

Median Property Tax: $729 per $100,000 of home value

You are probably asking yourself, did I just read that correctly, California is a tax-friendly state? And the answer to that is a Yes… for the middle-class. Now if you are a wealthy person then the answer is a Hell No.

Our hypothetical family has the third lowest income tax bill among all states that impose an income tax. California’s tax rate for the wealthy is the highest in the nation, but unless you are making over $1.2 million a year, you will not see this tax hike. Our family stays within the 6% tax bracket.

Overall, the property taxes are below average in most of California, there are some areas like Silicon Valley where they are high. Statewide, California is the 16th lowest property tax in the nation.

Sales tax is going to be one area that you are going to spend more. The average is still low but can get as high as 9.75% depending on the area in which to reside.

5. Washington

State Income Tax Range: none

Average State and Local Tax Rate: 9.25%

Median Property Tax: $929 per $100,000 of home value

Ok, so the only reason Washington state has made this list is due to the no income tax. Without this break, Washington would be considered one of the most expensive states to live in.

Sales tax is relatively high and is the 4th highest in the nation. Just the state is going to charge you 6.5% in sales tax and then municipalities will fill in the rest.

Property taxes are middle of the road and falls into the average of the nation.

4. Tennessee

State Income Tax Range: 1% on interest and dividends

Average State and Local Tax Rate: 9.55

Median Property Tax: $636 per $100,000 of home value

As of 2020 tax season, it will be the final year for the Income tax rate.

Property taxes in Tennessee are very reasonable. Our family would pay just under $2,000 a year for their $300,000 home.

They due impose a heft sales tax on your shopping though. The state starts at 7%, and then the local governments will impose up to 2.75%. With the local and state sales taxes, this makes Tennessee the highest in the nation.

3. Florida

State Income Tax Range: none

Average State and Local Tax Rate: 7.08%

Median Property Tax: $830 per $100,000 of home value

Florida is another state that has no income tax. Therefore, Florida is such a great retirement state. Retirees do not have to worry about their pensions or social security being taxed. The Sunshine State is average when it comes to the other tax rates.

The property taxes are basically the exact national average. Our hypothetical family will be looking to spend just about $2,500 a year on their property tax.

Sales tax again is middle-of-the-road.

2. Nevada

State Income Tax Range: none

Average State and Local Tax Rate: 8.23%

Median Property Tax: $533 per $100,000 of home value

Middle-class families just love Nevada, there is no income tax. But that is not the only tax perk for Nevada.

Nevada also has the 4th lowest property taxes in the country. Our family would be looking to spend about $1,600 a year. Which is way below the national average.

You may have gotten breaks from your property and income tax, where Nevada makes it up is in its sales tax. Nevada is the 13th highest sales tax in the nation.

1. Wyoming

State Income Tax Range: none

Average State and Local Tax Rate: 5.3%

Median Property Tax: $575 per $100,000 of home value

Well Wyoming, you have won the title for Best Tax-Friendly State in the Country. One reason why Wyoming earns this distinction is because generous revenues from mineral and energy extraction continue to flow into the state. That allows the Equality State to keep taxes on residents down.

There is no income tax. This makes Wyoming unique because of the low-income tax and low property taxes. This was one of the driving forces to put Wyoming at the top of the list.

The state sales tax rate is only 4%, and the municipalities can impose up to a 2% tax. Wyoming is the 8th lowest sales tax rate in the country.

People who move to these parts and have a lot of land, will be thankful for the property taxes. The Equality State is the 10th lowest in the nation.