These Are the Most Tax Friendly States

Banking, finance, and taxes

Published: May 13, 2024 2:50 pm

It is no secret that some states have a much friendlier tax climate than others. Several states levy no income tax, for example, and manage to attract Americans who prefer to pay less in taxes (you still need to pay federal income tax). Other states don’t have corporate income tax in order to attract businesses.

Ans these are but a two of the taxes states levy. Others include sales tax, inheritance or estate tax, capital gains tax, and more. Localities, too, often have their own sales taxes. Which states, then, have the best taxes?

To answer that, Greenback Expat Tax Services gathered information from several sources on income tax, sales tax, inheritance tax, corporate tax, and capital gains tax rates to arrive at an overall tax score out of 100, with 100 being the most friendly. The study, Countries and States With the Best Tax Rates, notes that the data was updated in February 2024. 24/7 Wall St. added data on personal income per capita from the Bureau of Economic Analysis and state total tax collections (including property taxes, sales and gross receipts taxes, license taxes, income taxes, and other taxes) from the Census Bureau. We used population data to calculate per capita collection.

Based on Greenback’s study, Wyoming, South Dakota, Alaska, New Hampshire, and Texas have the most favorable tax rates, “making them attractive destinations for both individuals and businesses seeking tax efficiency,” according to the study. The tax burden in these states is reduced, aiming to encourage economic growth.

While eight states — Alaska, Wyoming, South Dakota, Florida, Texas, Washington, Nevada, and Tennessee — levy no income tax, five — Alaska, Delaware, Montana, New Hampshire, and Oregon — impose no sales tax. When it comes to corporate income tax, six states — Nevada, Wyoming, South Dakota, Texas, Ohio, and Washington state — do not impose such a tax.

Why This Matters

Tax burden in the U.S. varies greatly depending on the state. Lower taxes often help attract investors, individuals, and businesses, therefore contributing to economic growth and to shaping the financial environment of a state. For example, a lower sales tax can encourage spending of both businesses and individuals, while a lower income tax can attract residents and/or corporations. If you’re looking for a better tax climate, this list can help narrow the search.

50. California

Overall tax score: 29.64 out of 100
Maximum personal income tax rate: 13.30% — the highest
State sales tax rate: 7.25% — the highest
Maximum corporate income tax rate: 8.84% — 7th highest
Personal income per capita, 2023: $80,423 — 4th highest
State tax collection per capita, 2023: $5,661 — 11th highest
Total population, 2023: 38,965,193

49. New Jersey

Overall tax score: 30.42 out of 100
Maximum personal income tax rate: 10.75% — 4th highest
State sales tax rate: 6.63% — 8th highest
Maximum corporate income tax rate: 11.50% — the highest
Personal income per capita, 2023: $80,724 — 3rd highest
State tax collection per capita, 2023: $5,562 — 12th highest
Total population, 2023: 9,290,841

48. New York

Walkway Over The Hudson by Paul VanDerWerf

Walkway Over The Hudson (CC BY 2.0) by Paul VanDerWerf

Overall tax score: 31.99 out of 100
Maximum personal income tax rate: 10.90% — 3rd highest
State sales tax rate: 4% — 7th lowest (tied)
Maximum corporate income tax rate: 7.25% — 19th highest
Personal income per capita, 2023: $79,581 — 6th highest
State tax collection per capita, 2023: $6,397 — 5th highest
Total population, 2023: 19,571,216

47. Minnesota

Overall tax score: 32.77 out of 100
Maximum personal income tax rate: 9.85% — 6th highest
State sales tax rate: 6.88% — 6th highest
Maximum corporate income tax rate: 9.80% — 2nd highest
Personal income per capita, 2023: $71,866 — 13th highest
State tax collection per capita, 2023: $6,008 — 8th highest
Total population, 2023: 5,737,915

46. Vermont

Overall tax score: 40.48 out of 100
Maximum personal income tax rate: 8.75% — 8th highest
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 8.50% — 9th highest
Personal income per capita, 2023: $66,463 — 21st highest
State tax collection per capita, 2023: $6,948 — 3rd highest
Total population, 2023: 647,464

45. Massachusetts

Overall tax score: 40.64 out of 100
Maximum personal income tax rate: 9% — 7th highest
State sales tax rate: 6.25% — 15th highest (tied)
Maximum corporate income tax rate: 8% — 12th highest
Personal income per capita, 2023: $87,812 — the highest
State tax collection per capita, 2023: $5,942 — 9th highest
Total population, 2023: 7,001,399

44. Illinois

Overall tax score: 43.15 out of 100
Maximum personal income tax rate: 4.95% — 23rd lowest (tied)
State sales tax rate: 6.25% — 15th highest (tied)
Maximum corporate income tax rate: 9.50% — 3rd highest
Personal income per capita, 2023: $70,953 — 15th highest
State tax collection per capita, 2023: $5,019 — 13th highest
Total population, 2023: 12,549,689

43. Hawaii

Overall tax score: 43.43 out of 100
Maximum personal income tax rate: 11% — 2nd highest
State sales tax rate: 4% — 7th lowest (tied)
Maximum corporate income tax rate: 6.40% — 25th lowest
Personal income per capita, 2023: $65,151 — 25th lowest
State tax collection per capita, 2023: $7,099 — 2nd highest
Total population, 2023: 1,435,138

42. Nebraska

Overall tax score: 46.88 out of 100
Maximum personal income tax rate: 6.64% — 13th highest
State sales tax rate: 5.50% — 21st lowest (tied)
Maximum corporate income tax rate: 7.25% — 19th highest
Personal income per capita, 2023: $67,800 — 19th highest
State tax collection per capita, 2023: $3,703 — 18th lowest
Total population, 2023: 1,978,379

41. Rhode Island

Overall tax score: 47.80 out of 100
Maximum personal income tax rate: 5.99% — 18th highest
State sales tax rate: 7% — 5th highest (tied)
Maximum corporate income tax rate: 7% — 21st highest
Personal income per capita, 2023: $66,480 — 20th highest
State tax collection per capita, 2023: $4,324 — 22nd highest
Total population, 2023: 1,095,962

40. Connecticut

Overall tax score: 48.31 out of 100
Maximum personal income tax rate: 6.99% — 11th highest
State sales tax rate: 6.35% — 12th highest
Maximum corporate income tax rate: 7.50% — 17th highest
Personal income per capita, 2023: $87,447 — 2nd highest
State tax collection per capita, 2023: $6,053 — 7th highest
Total population, 2023: 3,617,176

39. Maine

Overall tax score: 48.36 out of 100
Maximum personal income tax rate: 7.15% — 10th highest
State sales tax rate: 5.50% — 21st lowest (tied)
Maximum corporate income tax rate: 8.93% — 6th highest
Personal income per capita, 2023: $63,117 — 21st lowest
State tax collection per capita, 2023: $4,614 — 17th highest
Total population, 2023: 1,395,722

38. Maryland

Overall tax score: 49.56 out of 100
Maximum personal income tax rate: 5.75% — 23rd highest (tied)
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 8.25% — 11th highest
Personal income per capita, 2023: $73,849 — 10th highest
State tax collection per capita, 2023: $4,805 — 16th highest
Total population, 2023: 6,180,253

37. Missouri

Overall tax score: 50.11 out of 100
Maximum personal income tax rate: 4.95% — 23rd lowest (tied)
State sales tax rate: 4.22% — 13th lowest
Maximum corporate income tax rate: 4% — 8th lowest
Personal income per capita, 2023: $61,302 — 17th lowest
State tax collection per capita, 2023: $2,801 — 3rd lowest
Total population, 2023: 6,196,156

36. Iowa

Overall tax score: 51.47 out of 100
Maximum personal income tax rate: 6% — 17th highest
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 8.40% — 10th highest
Personal income per capita, 2023: $62,351 — 19th lowest
State tax collection per capita, 2023: $4,043 — 23rd lowest
Total population, 2023: 3,207,004

35. Kansas

Overall tax score: 52.56 out of 100
Maximum personal income tax rate: 5.70% — 24th highest
State sales tax rate: 6.50% — 11th highest (tied)
Maximum corporate income tax rate: 7% — 21st highest
Personal income per capita, 2023: $63,732 — 22nd lowest
State tax collection per capita, 2023: $4,468 — 18th highest
Total population, 2023: 2,940,546

34. Louisiana

Overall tax score: 54.57 out of 100
Maximum personal income tax rate: 4.25% — 15th lowest (tied)
State sales tax rate: 4.45% — 14th lowest
Maximum corporate income tax rate: 7.50% — 17th highest
Personal income per capita, 2023: $57,100 — 8th lowest
State tax collection per capita, 2023: $3,389 — 13th lowest
Total population, 2023: 4,573,749

33. Wisconsin

Overall tax score: 54.74 out of 100
Maximum personal income tax rate: 7.65% — 9th highest
State sales tax rate: 5% — 18th lowest (tied)
Maximum corporate income tax rate: 7.90% — 13th highest
Personal income per capita, 2023: $63,963 — 24th lowest
State tax collection per capita, 2023: $4,017 — 22nd lowest
Total population, 2023: 5,910,955

32. Alabama

Overall tax score: 54.80 out of 100
Maximum personal income tax rate: 5% — 25th lowest (tied)
State sales tax rate: 4% — 7th lowest (tied)
Maximum corporate income tax rate: 6.50% — 25th highest
Personal income per capita, 2023: $53,175 — 3rd lowest
State tax collection per capita, 2023: $3,272 — 10th lowest
Total population, 2023: 5,108,468

31. Arkansas

Overall tax score: 55.22 out of 100
Maximum personal income tax rate: 4.90% — 22nd lowest
State sales tax rate: 6.50% — 11th highest (tied)
Maximum corporate income tax rate: 5.30% — 18th lowest
Personal income per capita, 2023: $54,347 — 5th lowest
State tax collection per capita, 2023: $4,159 — 25th lowest
Total population, 2023: 3,067,732

30. Pennsylvania

Overall tax score: 55.33 out of 100
Maximum personal income tax rate: 3.07% — 11th lowest
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 8.99% — 5th highest
Personal income per capita, 2023: $67,839 — 18th highest
State tax collection per capita, 2023: $4,249 — 25th highest
Total population, 2023: 12,961,683

29. Oregon

Overall tax score: 56.03 out of 100
Maximum personal income tax rate: 9.90% — 5th highest
State sales tax rate: 0% — the lowest (tied)
Maximum corporate income tax rate: 7.60% — 14th highest
Personal income per capita, 2023: $65,426 — 22nd highest
State tax collection per capita, 2023: $4,932 — 14th highest
Total population, 2023: 4,233,358

28. South Carolina

Overall tax score: 56.31 out of 100
Maximum personal income tax rate: 6.50% — 16th highest (tied)
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 5% — 15th lowest
Personal income per capita, 2023: $56,123 — 7th lowest
State tax collection per capita, 2023: $2,912 — 6th lowest
Total population, 2023: 5,373,555

27. West Virginia

Overall tax score: 56.51 out of 100
Maximum personal income tax rate: 6.50% — 16th highest (tied)
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 6.50% — 25th highest
Personal income per capita, 2023: $52,585 — 2nd lowest
State tax collection per capita, 2023: $4,316 — 23rd highest
Total population, 2023: 1,770,071

26. New Mexico

Overall tax score: 56.80 out of 100
Maximum personal income tax rate: 5.90% — 19th highest
State sales tax rate: 4.88% — 17th lowest
Maximum corporate income tax rate: 5.90% — 22nd lowest
Personal income per capita, 2023: $54,428 — 6th lowest
State tax collection per capita, 2023: $6,748 — 4th highest
Total population, 2023: 2,114,371

25. Kentucky

Overall tax score: 57.08 out of 100
Maximum personal income tax rate: 4.50% — 18th lowest
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 5% — 15th lowest
Personal income per capita, 2023: $54,326 — 4th lowest
State tax collection per capita, 2023: $3,804 — 20th lowest
Total population, 2023: 4,526,154

24. Georgia

Overall tax score: 58.22 out of 100
Maximum personal income tax rate: 5.75% — 23rd highest (tied)
State sales tax rate: 4% — 7th lowest (tied)
Maximum corporate income tax rate: 5.75% — 20th lowest
Personal income per capita, 2023: $58,581 — 10th lowest
State tax collection per capita, 2023: $3,056 — 7th lowest
Total population, 2023: 11,029,227

23. Oklahoma

Overall tax score: 59.14 out of 100
Maximum personal income tax rate: 4.75% — 19th lowest (tied)
State sales tax rate: 4.50% — 15th lowest
Maximum corporate income tax rate: 4% — 8th lowest
Personal income per capita, 2023: $58,499 — 9th lowest
State tax collection per capita, 2023: $3,415 — 14th lowest
Total population, 2023: 4,053,824

22. Washington

Overall tax score: 59.88 out of 100
Maximum personal income tax rate: 0% — the lowest (tied)
State sales tax rate: 6.50% — 11th highest (tied)
Maximum corporate income tax rate: 0% — the lowest
Personal income per capita, 2023: $79,659 — 5th highest
State tax collection per capita, 2023: $4,867 — 15th highest
Total population, 2023: 7,812,880

21. Idaho

Overall tax score: 60.57 out of 100
Maximum personal income tax rate: 5.80% — 20th highest
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 5.80% — 21st lowest
Personal income per capita, 2023: $59,035 — 11th lowest
State tax collection per capita, 2023: $3,759 — 19th lowest
Total population, 2023: 1,964,726

20. Mississippi

Overall tax score: 60.86 out of 100
Maximum personal income tax rate: 5% — 25th lowest (tied)
State sales tax rate: 7% — 5th highest (tied)
Maximum corporate income tax rate: 5% — 15th lowest
Personal income per capita, 2023: $48,110 — the lowest
State tax collection per capita, 2023: $3,514 — 15th lowest
Total population, 2023: 2,939,690

19. Virginia

Overall tax score: 61.30 out of 100
Maximum personal income tax rate: 5.75% — 23rd highest (tied)
State sales tax rate: 5.30% — 20th lowest
Maximum corporate income tax rate: 6% — 23rd lowest
Personal income per capita, 2023: $72,855 — 12th highest
State tax collection per capita, 2023: $4,259 — 24th highest
Total population, 2023: 8,715,698

18. Utah

Overall tax score: 61.46 out of 100
Maximum personal income tax rate: 4.85% — 21st lowest
State sales tax rate: 6.10% — 16th highest
Maximum corporate income tax rate: 4.85% — 12th lowest
Personal income per capita, 2023: $62,823 — 20th lowest
State tax collection per capita, 2023: $3,947 — 21st lowest
Total population, 2023: 3,417,734

17. Colorado

Overall tax score: 62.98 out of 100
Maximum personal income tax rate: 4.40% — 17th lowest
State sales tax rate: 2.90% — 6th lowest
Maximum corporate income tax rate: 4.40% — 11th lowest
Personal income per capita, 2023: $78,918 — 7th highest
State tax collection per capita, 2023: $3,085 — 8th lowest
Total population, 2023: 5,877,610

16. Michigan

Overall tax score: 64.44 out of 100
Maximum personal income tax rate: 4.25% — 15th lowest (tied)
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 6% — 23rd lowest
Personal income per capita, 2023: $59,714 — 12th lowest
State tax collection per capita, 2023: $3,699 — 17th lowest
Total population, 2023: 10,037,261

15. Arizona

Overall tax score: 64.95 out of 100
Maximum personal income tax rate: 2.50% — 9th lowest
State sales tax rate: 5.60% — 23rd lowest
Maximum corporate income tax rate: 4.90% — 13th lowest
Personal income per capita, 2023: $61,652 — 18th lowest
State tax collection per capita, 2023: $3,144 — 9th lowest
Total population, 2023: 7,431,344

14. North Carolina

Overall tax score: 65.76 out of 100
Maximum personal income tax rate: 4.75% — 19th lowest (tied)
State sales tax rate: 4.75% — 16th lowest
Maximum corporate income tax rate: 2.50% — 7th lowest
Personal income per capita, 2023: $60,484 — 15th lowest
State tax collection per capita, 2023: $3,594 — 16th lowest
Total population, 2023: 10,835,491

13. Indiana

Overall tax score: 66.01 out of 100
Maximum personal income tax rate: 3.15% — 12th lowest
State sales tax rate: 7% — 5th highest (tied)
Maximum corporate income tax rate: 4.90% — 13th lowest
Personal income per capita, 2023: $60,038 — 13th lowest
State tax collection per capita, 2023: $4,419 — 21st highest
Total population, 2023: 6,862,199

12. Tennessee

Overall tax score: 66.12 out of 100
Maximum personal income tax rate: 0% — the lowest (tied)
State sales tax rate: 7% — 5th highest (tied)
Maximum corporate income tax rate: 6.50% — 25th highest
Personal income per capita, 2023: $61,049 — 16th lowest
State tax collection per capita, 2023: $3,342 — 12th lowest
Total population, 2023: 7,126,489

11. North Dakota

Overall tax score: 68.08 out of 100
Maximum personal income tax rate: 2.90% — 10th lowest
State sales tax rate: 5% — 18th lowest (tied)
Maximum corporate income tax rate: 4.31% — 10th lowest
Personal income per capita, 2023: $73,341 — 11th highest
State tax collection per capita, 2023: $7,716 — the highest
Total population, 2023: 783,926

10. Ohio

Overall tax score: 70.08 out of 100
Maximum personal income tax rate: 3.99% — 13th lowest
State sales tax rate: 5.75% — 24th lowest
Maximum corporate income tax rate: 0% — the lowest
Personal income per capita, 2023: $60,402 — 14th lowest
State tax collection per capita, 2023: $3,288 — 11th lowest
Total population, 2023: 11,785,935

9. Delaware

Overall tax score: 71.28 out of 100
Maximum personal income tax rate: 6.60% — 14th highest
State sales tax rate: 0% — the lowest (tied)
Maximum corporate income tax rate: 8.70% — 8th highest
Personal income per capita, 2023: $65,392 — 24th highest
State tax collection per capita, 2023: $6,361 — 6th highest
Total population, 2023: 1,031,890

8. Montana

Overall tax score: 73.43 out of 100
Maximum personal income tax rate: 6.75% — 12th highest
State sales tax rate: 0% — the lowest (tied)
Maximum corporate income tax rate: 6.75% — 22nd highest
Personal income per capita, 2023: $63,918 — 23rd lowest
State tax collection per capita, 2023: $4,158 — 24th lowest
Total population, 2023: 1,132,812

7. Florida

Overall tax score: 73.84 out of 100
Maximum personal income tax rate: 0% — the lowest (tied)
State sales tax rate: 6% — 25th lowest (tied)
Maximum corporate income tax rate: 5.50% — 19th lowest
Personal income per capita, 2023: $68,248 — 17th highest
State tax collection per capita, 2023: $2,738 — 2nd lowest
Total population, 2023: 22,610,726

6. Nevada

Overall tax score: 77.79 out of 100
Maximum personal income tax rate: 0% — the lowest (tied)
State sales tax rate: 6.85% — 7th highest
Maximum corporate income tax rate: 0% — the lowest
Personal income per capita, 2023: $65,168 — 25th highest
State tax collection per capita, 2023: $4,439 — 20th highest
Total population, 2023: 3,194,176

5. Texas

Overall tax score: 78.10 out of 100
Maximum personal income tax rate: 0% — the lowest (tied)
State sales tax rate: 6.25% — 15th highest (tied)
Maximum corporate income tax rate: 0% — the lowest
Personal income per capita, 2023: $65,422 — 23rd highest
State tax collection per capita, 2023: $2,845 — 4th lowest
Total population, 2023: 30,503,301

4. New Hampshire

Overall tax score: 82.70 out of 100
Maximum personal income tax rate: 4% — 14th lowest
State sales tax rate: 0% — the lowest (tied)
Maximum corporate income tax rate: 7.50% — 17th highest
Personal income per capita, 2023: $77,260 — 9th highest
State tax collection per capita, 2023: $2,530 — the lowest
Total population, 2023: 1,402,054

3. Alaska

Overall tax score: 83.40 out of 100
Maximum personal income tax rate: 0% — the lowest (tied)
State sales tax rate: 0% — the lowest (tied)
Maximum corporate income tax rate: 9.40% — 4th highest
Personal income per capita, 2023: $71,616 — 14th highest
State tax collection per capita, 2023: $4,461 — 19th highest
Total population, 2023: 733,406

2. South Dakota

Overall tax score: 83.85 out of 100
Maximum personal income tax rate: 0% — the lowest (tied)
State sales tax rate: 4.20% — 12th lowest
Maximum corporate income tax rate: 0% — the lowest (tied)
Personal income per capita, 2023: $70,353 — 16th highest
State tax collection per capita, 2023: $2,860 — 5th lowest
Total population, 2023: 919,318

1. Wyoming

Overall tax score: 85.52 out of 100
Maximum personal income tax rate: 0% — the lowest (tied)
State sales tax rate: 4% — 7th lowest (tied)
Maximum corporate income tax rate: 0% — the lowest (tied)
Personal income per capita, 2023: $77,837 — 8th highest
State tax collection per capita, 2023: $5,730 — 10th highest
Total population, 2023: 584,057

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Read more: Banking, finance, and taxes, alaska taxes, estate tax, new hampshire taxes, south dakota taxes, state corporate income tax, state sales taxes, state taxes, Taxes, texas taxes, wyoming taxes

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