Do you live somewhere ‘tax friendly’? Map shows every state’s grade (2024)

FAQs

What is the most tax-friendly state to live in? ›

MoneyGeek's analysis found that Wyoming is the most tax-friendly state in America, followed by Nevada, Tennessee, Florida and Alaska. Except for Arizona, states that received a grade of A all share something in common: no state income tax. Texas — which received a B — also has no state income tax.

Most states will consider you a resident for tax purposes if you spend 183 days or more in that state. If you permanently moved to another state during the year, you may have to file a part-year resident return in both states.

Income tax - The amount of state and local income tax you pay will depend on how much income you earn and the tax rate of the state or locality where you live.

St Kitts and Nevis in the Caribbean has a tax-friendly environment for its residents. The country charges zero tax on income, dividends, royalties, or interest for island residents. In Antigua and Barbuda, individuals are also free from paying taxes on personal income, wealth, capital gains, and inheritance.

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming do not levy state income taxes, while New Hampshire doesn't tax earned wages. States with no income tax often make up the lost revenue with other taxes or reduced services.

Legally, you can have multiple residences in multiple states, but only one domicile. You must be physically in the same state as your domicile for most of the year and able to prove the domicile is your principal residence, “true home” or “place you return to.”

At the top of the list are the 9 states with no state earned income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. That's not to say these are no-tax states. Many make up revenues with higher property taxes, sales tax, and other taxes and fees.

With no state income tax — the state constitution forbids it — Florida's state government generates the bulk of general revenue (75% to 80% depending on the year) from sales tax collections. It gets the rest from a variety of sources, including documentary stamp taxes, insurance taxes and corporate income taxes.

The easy rule is that you must pay nonresident income taxes for the state in which you work and resident income taxes for the state in which you live, while filing income tax returns for both states.

Do I pay income tax if I work in California but live in Nevada? ›

If you earn income in one state while living in another, you should expect to file a tax return for the state where you are living (your “resident” state). You may also be required to file a state tax return where your employer is located or any state where you have a source of income.

1. Bridgeport, Connecticut. As one of the wealthiest cities in America, Bridgeport carries the highest overall tax rate in the nation. Wealthy taxpayers earning over $150,000 per year are on the hook for up to 22% in state and local taxes.

Some of the most popular countries that offer the financial benefit of having no income tax are Bermuda, Monaco, the Bahamas, and the United Arab Emirates (UAE). There are a number of countries without the burden of income taxes, and many of them are very pleasant countries in which to live.

Mississippi: According to World Population Review, in 2023, Mississippi holds the title of the cheapest state to live in the United States. Its cost of living index is 85, and overall costs in the state are 17% lower than the national average.

Some states do not tax Social Security or income, which could appeal to retirees. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming stand out for their tax-friendly policies and other amenities that retirees may enjoy.

The nine states that don't have an earned income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.