We’ve all heard the adage, “Nothing is certain except death and taxes.” We all know that we have to pay taxes if we live in the United States, but did you know that some states have lower tax rates than others? Some states also may eliminate certain taxes, but often, they’re merely paying more in other types of taxes.
Adult citizens in the United States pay a variety of different taxes. We pay taxes to the federal government. We also pay local and state taxes. It isn’t just your annual state tax return, either. We pay property taxes, sales taxes, and other taxes that help fund things like schools, roads, and critical infrastructure.
Because there are so many different types of taxes, there isn’t just one list of states with the lowest tax rates. For example, property tax in one state may be much lower but personal income tax may be much higher. But we can break down the states with the lowest taxes based on tax type.
The top 10 states with the lowest property tax rates in 2018 were:
- District of Columbia
- West Virginia
- South Carolina
- New Mexico
When it comes to states with the lowest personal income tax rates, there are several that top the list because they have no personal income tax. Those states are:
- South Dakota
- Tennessee and New Hampshire also do not charge taxes on income from wages. However, interest and dividend income are taxed.
When it comes to sales tax, five states do not have charge sales tax. Those states are:
It’s important to note that local municipalities in Montana and Alaska can impose a sales tax.