These Are The U.S. States With The Highest And Lowest Tax Burdens

A new study looked at the highest and lowest tax burdens, per state, in the U.S.

To rank states by tax burden, WalletHub analyzed all 50 based on three factors: property taxes, income taxes, and sales/excise taxes — each measured as a share of personal income — and combined them for an overall score.

Hawaii tops the nation in total tax burden, with residents surrendering nearly 14% of their income to state and local taxes, according to the new report from WalletHub. This includes 4.2% for income taxes, 2.6% for property taxes, and a hefty 7.2% for sales and excise taxes.

At the opposite end, Alaska has the lightest tax load. With no state income tax, and modest property and sales tax burdens of 3.5% and 1.5% respectively, Alaskans pay just 4.9% of their income in total.

Wyoming and New Hampshire follow closely behind, with total tax burdens of 5.79% and 5.94%, respectively. Wyoming similarly benefits from having no income tax, while New Hampshire, despite its steep property taxes — the second highest in the nation — offsets this with extremely low sales taxes and no general sales tax at all.

Other low-burden states include Tennessee, South Dakota, and Florida, all of which also forgo a state income tax. Tennessee residents pay only 6.38% of their income in total taxes, while South Dakotans and Floridians pay slightly more at 6.46% and 6.49%, respectively. Delaware also ranks low at 6.52%, due in large part to its minimal sales tax burden — the second lowest in the country.

These states reflect a broader trend: the lowest-taxed states often avoid personal income taxes altogether and keep consumption-based taxes in check, making them attractive destinations for taxpayers seeking to maximize their earnings.

When it comes to income taxes alone, New York leads with the highest burden, taking 5.8% of residents’ income. 

Vermont ranks highest for property taxes, collecting 5% of personal income. In contrast, Alabama offers the lowest property tax burden, claiming only 1.4%.

For sales and excise taxes, Hawaii again leads, with residents paying 7.2% of their income annually. New Hampshire sits at the other extreme, with no general sales tax and minimal excise taxes, amounting to less than 1% of income.

The WalletHub report says red states have a lower tax burden than blue states, on average.

Analyst Chip Lupo commented: “It’s easy to be dismayed at tax time when you see just how much of your income you lose. Living in a state with a low tax burden can alleviate some of that stress. Some states charge no income tax or no sales tax, although all states have some form of property taxes and excise taxes.”