States with the highest and lowest taxes and cost of living

Since the pandemic, people have been relocating all across the country at a record pace. The freedom the remote workforce is enjoying is great, but it can come at a cost. It is important to understand the financial repercussions of such a decision and to understand the change in the cost of living associated with the state you choose to live in. 

Moving to Different State than Employer: Part 2

In this edition of Moving to a Different State than Your Employer blog series, we’ll look at which states have the highest and lowest reported cost of living, highest and lowest income tax and personal property tax rates. While all of these factors can vary within states, we’re mainly focusing on the state-level. 

States with No Personal Income Tax

There are currently 9 states that do not have an income tax. 

  • Alaska
  • Florida
  • Nevada
  • New Hampshire
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Just because there are no income taxes, does not mean you get off scot-free. Each state needs to earn revenue one way or another! That state revenue usually comes in the form of higher sales tax and/or property taxes, when there are no state income taxes imposed.

States with the Highest Personal Income Tax

These are the top 6 states with the highest personal income tax (highest bracket)

  • California can get as high as 13.3% (no surprise here that they top this list)
  • Hawaii can get as high as 11%
  • New Jersey may go all the way up to 10.75%
  • Oregon can get up to 9.9%
  • Minnesota goes to 9.85%

States with the Lowest Personal Property Tax

  • Hawaii
  • Alabama
  • Colorado
  • Louisiana
  • South Carolina

States with the Highest Personal Property Taxes

  • New Jersey (again! Note that NJ was also on the list of states for high personal income tax.)
  • Illinois
  • New Hampshire
  • Connecticut
  • Vermont
  • Wisconsin
  • Texas

It’s important to note that we see a different list of states with the highest income taxes and highest property taxes – with New Jersey being the exception. States choose to collect their share of taxes differently. Now we’ll dive into sales tax rates across the United States. Some states do not even have a sales tax – how sweet that would be?!

Lowest State Sales Tax rates (no sales tax)

There are 5 US states that do not impose a state sales tax. However, one of these states does permit sales tax at the local level. 

  • Alaska – 0% Although local sales taxes are permitted with a max local sales tax rate of 7.5%
  • Delaware – 0% Delaware doesn’t have state sales tax and does not permit local sales tax
  • Montana – 0% Montana doesn’t have a state sales tax and does not permit local sales taxes
  • New Hampshire – 0% New Hampshire doesn’t have a state sales tax and does not permit local sales taxes
  • Oregon – 0% – Oregon doesn’t have state sales tax and does not permit local sales taxes 

Highest State Sales Tax rates

  • Tennessee – 9.55% (they have an additional beer tax as well!)
  • Louisiana – 9.52%
  • Arkansas – 9.51%
  • Washington – 9.23%
  • Alabama – 9.22%

As you can see, another totally different list of high sales tax states than the highest income tax states. No matter where you live, they are going to get their money one way or another. 

Cost of Living in the US

Now let’s move on to the states with the highest and lowest cost of living in the United States. Cost of Living per state takes into account factors such as health care, child care, meals and groceries, utilities, and more.

States with Lowest Cost of Living

  • Mississippi
  • Kansas
  • Alabama
  • Georgia
  • Tennessee
  • Missouri
  • Iowa

States with Highest Cost of Living

  • New York
  • California
  • Alaska
  • Oregon
  • Maryland
  • Massachusetts
  • Hawaii

Bottom Line

The states that have the highest income tax rates, highest personal property tax rates, and highest state sales tax rates, are mostly different (mostly – we’re looking at you New Jersey). As we’ve discussed, states need to earn revenue one way or another. And these factors can also vary widely within a state (think city vs a rural area). 

If you’re trying to estimate expenses in a new state, factor in tax rates on the big things – income taxes, property taxes, and so on. But, also leave room for unexpected taxes and expenses. You always want wiggle room in your budget. 

Stay tuned for Part 3 of the Moving to a Different State than your Employer series. Questions? Feedback?  Drop a note in the comments below. Source: Tax Foundation, Money

You might also be interested in:

Moving to a Different State than Your Employer Part 1 

2023 Tax Law Changes 

5 Common Tax Myths Debunked

Numberwise Book Club: Greenlights

About the Author

Picture of Steve Turk

Steve Turk

Steve Turk, Accountant at Numberwise, is a Xero Certified Advisor and Guru. He has been on the Numberwise team for 9 years. Steve was always interested in working with numbers. He loves the Numberwise culture and family-type bonds shared among the team. He also appreciates how the team stays ahead of the curve with technology and continues to work smarter instead of harder. Steve resides with his family just outside of Nashville, TN. He has a wife, 3 children and 2 dogs. He loves reading books, enjoying bourbon and cigars.

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