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Least Taxed States

Least Taxed States

Introduction

Taxes are an undeniable part of living in the United States, a facet of fiscal life that bolsters infrastructure, education, healthcare, and a multitude of other pivotal public services. However, the implication of tax rates remains an essential consideration affecting Americans' financial landscape and their choice of residence within the nation. Some states have crafted their tax policies to lighten this burden, offering significantly lower average tax rates compared to others, creating distinctive tiers of taxation across the 50 states.

  • Wyoming tops the list as the least taxed state, with the average tax coming in at $3,438, significantly lower than the national mean. 
  • High tax burdens are predominantly clustered on the Eastern side of the continent, with states like Illinois, Connecticut, New Jersey, New Hampshire, and New York, comprising the top-five most taxed states, all hitting average tax figures exceeding $12,000.
  • Western and Southern states, such as Nevada, Tennessee, Alaska, and Florida, appear in the lower spectrum of average taxes, suggesting a generally more favorable tax environment in these regions.
  • Despite its reputation for high living costs, California secures a mid-tier position at the 13th place, with an average tax of $6,998.
  • Interestingly, North Dakota and South Dakota, despite their geographical proximity, have a stark divergence in their tax figures, with the former maintaining a notably lower average tax bill.

10 Least Taxed States

In the ranking for the least taxed states, Wyoming sits unequivocally at the top. Known for a comprehensive tax-friendly environment, the average tax comes in at a diminutive $3,438 per annum. This figure is lightweight compared to the national average, marking Wyoming as a financial haven for those seeking to minimize their tax obligations.

Neighboring state Nevada lands second on the list, with an average tax of $4,065. Renowned for having no state income tax, it provides residents with substantial savings that they often reinvest into their businesses or households.

Moving to the Eastern side of the United States, we find Tennessee in the third position with an average tax of $4,769. Like Nevada, Tennessee doesn't levy an income tax on salaries and wages which simplifies residents' tax filing and can result in considerable savings.

In the fourth and fifth spots, we have Alaska and Florida which bear average taxes of $4,847 and $4,882 respectively. These states, despite their geographical distance, share common ground in providing their citizens with lower than average tax rates, making them appealing to those looking to stretch their dollars further.

The Pacific Northwest state of Washington, which also doesn't have a state income tax, holds the sixth position with an average tax of $5,723. While North Dakota and Arizona, both states with wide-ranging landscapes, offer residents relatively lower taxation, reporting average annual taxes of $5,885 and $5,965 respectively.

Rounding off the list are South Dakota and Colorado. South Dakota's average tax of $6,321 shows it closely follows its northern neighbor, while Colorado, a state known for its high-quality roads and infrastructure, requires residents to contribute an average tax of $6,469 annually.

Here are the top 10 least taxed states:

  1. Wyoming - $3,438
  2. Nevada - $4,065
  3. Tennessee - $4,769
  4. Alaska - $4,847
  5. Florida - $4,882
  6. Washington - $5,723
  7. North Dakota - $5,885
  8. Arizona - $5,965
  9. South Dakota - $6,321
  10. Colorado - $6,469

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Methodology

State Name

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