12 States With the Lowest Taxes for Residents

Wyoming imposes no state income tax, corporate income taxes, or estate tax. That translates to significant tax savings for residents with high annual income, business profits, or retirement account withdrawals.

Its low property tax rate and the absence of any local income tax keep Wyoming’s overall tax burden among the lowest in the nation. Instead of traditional income taxation, Wyoming relies on severance taxes from natural resource extraction to raise revenue.

South Dakota offers zero personal income tax, no corporate income tax, and one of the most favorable state tax systems in the U.S. The absence of an inheritance tax or estate tax makes it ideal for wealth transfer and retirement income planning.

The sales tax rate is modest, with limited local sales taxes. South Dakota’s balanced approach to state and local taxes keeps the total tax burden low for both individuals and businesses.

Alaska doesn’t tax individual income, corporate income, or state sales tax. Local jurisdictions may charge local sales taxes, but overall, Alaska’s tax structure places minimal pressure on residents.

The state also pays residents annually through the Permanent Fund Dividend, further reducing the net tax burden. There’s no taxation on retirement income, capital gains, or pass through businesses.

Florida’s lack of a state income tax benefits wage earners, investors, and retirees alike. It doesn’t tax dividend income, long term capital gains, or retirement account withdrawals.

While the sales tax and excise taxes are slightly higher, the absence of local income taxes, estate tax, and inheritance tax keeps Florida’s total tax burden below average.

Its tax code supports a growing population and tourism-driven economy.

New Hampshire has no state sales tax and doesn’t tax wage income. It formerly taxed dividend and interest income via an Interest and Dividends Tax, but that tax was fully repealed effective January 1, 2025.

High property tax rates fund state and local governments, which lack other major taxes.

The state provides no tax credits for low-income earners or families, making it better suited for high earners with limited taxable income from investments.

Tennessee recently phased out its tax on dividend income, now joining the no-state income tax club. It doesn’t tax business profits from pass through businesses, retirement income, or capital gains.

Its sales tax rate is high, and local sales taxes can add up. But moderate property taxes and low corporate income tax rates balance the equation.

Tennessee imposes a small gross-receipts tax on businesses (the Business Tax) in lieu of a corporate income tax, with rates ranging roughly from 0.02 percent up to 0.3 percent depending on the business category.

Texas generates revenue through high property taxes and sales and excise taxes but imposes no individual income taxes, no corporate income tax, and no taxes on retirement income or estate transfers.

However, businesses face a gross receipts tax, and local governments can impose additional tax increases to cover services. Still, Texas ranks well for low tax burdens across income groups.

Nevada avoids income tax altogether—no personal income, corporate income, or estate taxes. Its state tax code is designed to support a service-heavy economy with robust sales tax collections.

There are limited local taxes, and property taxes remain low. The absence of individual income taxes and minimal other taxes make Nevada a smart choice for retirees and entrepreneurs alike.

Washington forgoes a state income tax but compensates with a gross receipts tax on business taxes and one of the highest sales tax rates in the U.S., including steep local sales taxes.

It did, however, recently enact a capital gains tax, affecting high earners.

The federal estate tax also has a large exemption threshold (nearly $14 million per person as of 2025), but Washington State imposes its own estate tax with a much lower exemption, meaning certain estates in Washington face state estate taxes on wealth transfers

Indiana uses a flat tax rate for state income tax, with reasonable corporate income tax rates and average sales tax. Tax credits help offset costs for families, and property taxes remain below national averages.

The system is built to encourage savings and investing, with breaks for retirement income and small businesses. Overall, it’s a solid mid-tier, low-tax state.

North Carolina’s tax reform introduced a flat state income tax rate and gradually reduced corporate income taxes. There's no inheritance tax, and excise taxes are targeted rather than broad.

Property taxes and sales tax are moderate, but the simplified tax system keeps compliance easy. North Carolina does not provide special tax deductions for pass-through business income, and in fact it currently has no state Earned Income Tax Credit or similar broad credit for low-income working families.

The District of Columbia operates like a state, with progressive individual income taxes, standard sales tax, and competitive property tax rates.

It provides exemptions for retirement income and credits for low-income residents. While not tax-free, D.C. offers a balanced approach that supports state and local governments without imposing a heavy tax burden.

We created this article in conjunction with AI technology, then made sure it was fact-checked and edited by a HowStuffWorks editor.