Which States Have The Lowest Overall Taxes?

By Jay White

June 7, 2015   •   Fact checked by Dumb Little Man

Not all jurisdictions in the United States have the same rates of taxation. Depending on the particular financial situation and lifestyle of individuals, families and business entities, some states are more favorable than others when tax season arrives.

Naming a single state in the Union as the one with the lowest overall taxes is not possible without first establishing the financial lifestyle of the taxpayer. For example, if we go by the axiom of the American consumer society, we may say that Delaware, Montana, New Hampshire, and Oregon offer the greatest advantage since they barely impose any sales taxes. However, not many taxpayers actually fall under the sole category of consumers, and thus other factors must be considered.

From a salary and earnings point of view, the following states do not impose personal income taxes:

South Dakota

To a certain extent, New Hampshire and Tennessee can be added to the list above as long as dividend and interest income is not taken into consideration. Based on these financial assumptions thus far, we could say that wage earners who do not have significant savings or investments will probably fare better in New Hampshire from a taxation point of view; however, this advantage evaporates when we get to property taxes.

Real estate taxation is virtually unavoidable in the United States. In many states, property tax rates may vary significantly from one county to another, and thus it is easier to consider annual averages paid on median home values. With this in mind, we find states such as Louisiana and Alabama as the most advantageous, followed by Arkansas, South Carolina, and West Virginia. Not all southern states feature low real estate taxes; in Florida, for example, the average property tax burden is around $1,620 per year.

States with low rates of sales and income taxes tend to impose very high taxation on properties. In New Hampshire, for example, the average taxes paid each year on a single-family home come up to $4,620. Still, for someone who is a wage earner and who is not a property owner, New Hampshire may appear to be a tax haven.

It is important to note that the tax codes in just about all states have special provisions and programs that ameliorate taxation. In Florida, for example, homeowners can request property tax exemptions on homestead residences.

Jay White

I started Dumb Little Man many years ago so great authors, writers and bloggers could share their life "hacks" and tips for success with everyone. I hope you find something you like!

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