Tax Burdens: How Does Your State Measure Up?

Where you live can have a major impact on your tax bill. If you’re retiring or able to work remotely, you might be thinking about relocating, and taxes can be a major factor in that decision. The financial service website WalletHub.com recently published a study of U.S. state “tax burdens.” Tax burden refers to the proportion of total personal income that residents pay toward taxes. Here’s a closer look at which states’ residents carry the highest (and lowest) tax burdens for various types of taxes.

State and Local Income Tax Burden

Individual income tax as a percentage of personal income is the highest in the following states:

1. New York (5.76%),
2. California (4.87%),
3. Maryland (4.47%),
4. Oregon (4.39%), and
5. Hawaii (4.18%).

Conversely, some states — including Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming — don’t charge residents any income tax. However, these states may increase other types of taxes to fund state and local governments. For example, Washington state residents don’t pay income tax, but their state sales and excise tax burden (5.97%) is among the highest in the country.

State Property Tax Burden

You can’t escape paying property taxes if you own real estate in the United States. All 50 states charge some kind of property tax, but it tends to be higher in the Northeast. As a percentage of personal income, property tax is the highest in the following states:

1. Vermont (5%),
2. New Hampshire (4.87%),
3. New Jersey (4.67%),
4. New York (4.28%), and
5. Maine (4.14%).

Alabama’s state property tax burden is by far the lowest, at just 1.35%. Other states with low property taxes are Arkansas (1.56%), Oklahoma (1.62%) and Tennessee (1.64%).

State Sales and Excise Tax Burden

Most states impose general sales tax on retail purchases. Retailers typically collect the tax at the point of purchase and remit it to the state. Excise tax is often embedded in the price, not added at checkout, and it applies only to specific items, such as gasoline, alcoholic beverages, tobacco and vape products, and marijuana (where legalized). These taxes vary significantly across state lines.

Sales and excise tax as a percentage of personal income is the highest in the following states:

1. Hawaii (7.17%),
2. Nevada (6.47%),
3. Washington (5.97%),
4. New Mexico (5.6%), and
5. Louisiana (5.33%).

New Hampshire has the lowest state sales and excise tax burden. It doesn’t charge a general sales tax, and excise taxes are less than 1% of the average resident’s income each year. Delaware ranks 49th on the list of state sales and excise tax burdens at 1.02% (though it also has the 8th highest income tax burden at 3.69%). Other states with low sales and excise taxes are Montana (1.3%) and Alaska (1.47%).

States with the Lowest Overall Tax Burden

When deciding where to live, most people think about other nontax factors — such as job opportunities, proximity to family, climate, housing costs, school quality and culture. However, if state taxes are your top concern, the study identifies the following 10 states with the lowest overall tax burden:

1. Alaska (4.93%),
2. Wyoming (5.79%),
3. New Hampshire (5.94%),
4. Tennessee (6.38%),
5. South Dakota (6.46%),
6. Florida (6.49%),
7. Delaware (6.52%),
8. North Dakota (6.61%),
9. Oklahoma (7.01%), and
10. Idaho (7.54%).

Residents pay the highest overall taxes in Hawaii (13.92%), New York (13.56%), Vermont (11.53%), California (11%) and Maine (10.64%).

Look at the Full Picture

It’s important to point out that the WalletHub study doesn’t cover all types of taxes that a state might impose on its residents — for example, estate and death taxes or business taxes. If taxes are your primary concern and you are retired or own a business, you should investigate those tax burdens before relocating.

Additionally, the study is based on March 2025 data from the Tax Policy Center. It’s possible that some states could change their tax laws, which would affect rankings going forward.

You might also want to research the types of taxes that are most relevant based on your current situation. For example, if income taxes are your top concern and you’re considering moving to a state with an income tax, look at the specific types of income they tax. Some states don’t tax wages but do tax interest and dividend income. And some states offer tax breaks for pension payments, retirement plan distributions and Social Security payments.

If You Move, Plant Some Roots

If you make a permanent move to a new state, it’s important to establish legal domicile there. The exact definition of legal domicile varies from state to state. In general, your domicile is your fixed and permanent home location and the place where you plan to return, even after periods of residing elsewhere.

Because each state has its own rules regarding domicile, you could wind up in the worst-case scenario: Two states could claim you owe state income taxes. This can happen if you establish domicile in the new state but didn’t successfully terminate domicile in the old state.

In general, the more time that elapses after you change states and the more steps you take to establish domicile in the new state, the harder it will be for your old state to claim you’re still domiciled there for tax purposes. To establish your domicile in a new state, consider buying or leasing a home, registering your vehicle, changing your address on legal documents, and registering to vote.

Make an Informed Choice

Increasingly, people are factoring tax issues into their decisions about where to call home. Before relocating, however, contact a tax professional to help you evaluate the financial variables involved in this major life decision.

Copyright 2025

This article appeared in Walz Group’s June 16, 2025 issue of The Bottom Line e-newsletter, produced by TopLine Content Marketing. This content is for informational purposes only.