10 States with the Lowest Tax Burdens

April 20, 2017
Sarah Handzel, BSN, RN

Has the tax man left your pockets feeling a little light? With Tax Day having come and gone, many dentists are left smarting. The good news is that when it comes to taxes, the grass may actually be greener in another state. The number-crunchers over at WalletHub recently released their complete ranking of tax burdens on a state-by-state basis. These are the states that enjoy the lowest tax burdens.

See if your state landed among WalletHub's list of 10 states with the lowest tax burdens.

This time of year, with Tax Day having just come and gone, the pockets of many dentists are feeling a little bit lighter after the federal government has collected what was owed.

If not you, then your CPA is well acquainted with how your tax rate is calculated. Several factors determine your rate, including your yearly income and your marital status. But did you know that you can gauge how hard you’ll be hit each year by looking at your state’s tax burden?

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The tax burden of your state is different from your tax rate. Instead of calculating what you personally owe based on individual factors, your state’s tax burden is a measurement of the total personal income that residents pay toward different state and local taxes. Tax burdens vary widely across the U.S., with some states paying significantly less in taxes than others.

WalletHub has analyzed the 50 states’ tax burdens and determined which states’ residents enjoy paying less. The analysis compared every state by looking at three tax types — property tax, individual income tax, and sales and excise tax. Then, they ranked these numbers as a percentage of total personal income in each state.

Click next to see which 10 states have the lowest tax burdens, starting with number one:

1. Delaware

· People living in Delaware have the lowest tax burden countrywide, with only 5.59 percent of their personal income going toward state and local taxes.

· On average, residents of Delaware have the second lowest property tax burden in the nation, totaling 1.83 percent of their personal income.

2. Alaska

· The average individual income tax burden for people living here is 0 percent of residents’ total personal income, the lowest in the U.S.

· People living in Alaska typically pay 1.43 percent of their incomes in sales and excise taxes each year, also the lowest amount countrywide.

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3. Tennessee

· The total tax burden for the state of Tennessee is only 6.45 percent.

· A 2.06 percent overall property tax burden helps residents pay less each year.

4. Oklahoma

· On average, the individual income tax burden for people living in Oklahoma is only 1.69 percent.

· Oklahoma also has the fifth lowest overall property tax burden in the country, totaling 1.38 percent of personal incomes.

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5. New Hampshire

· People in New Hampshire save money each year, since their total tax burden is 6.70 percent.

· New Hampshire also has the third lowest sales and excise tax burden, totaling 1.24 percent of personal incomes.

6. Florida

· The state ties Alaska in lowest overall individual tax burden — 0 percent for residents of the Sunshine State.

· Floridians also enjoy low property tax burdens totaling an average of 2.76 percent of individual income.

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7. South Dakota

· The total tax burden for people living here is approximately 7.12 percent.

· Along with Alaska and Florida, individual income tax burden is 0 percent of total personal income in this state.

8. Alabama

· Residents enjoy the fourth lowest property tax burden in the country, averaging only 1.41 percent of their personal incomes.

· The excise and sales tax burden is also a small percentage of personal income, totaling 3.93 percent each year.

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9. Wyoming

· State residents shoulder a 0 percent individual income tax burden while living in Wyoming, matching Alaska, Florida, and South Dakota.

· The property tax burden is slightly higher, coming in at 3.77 percent of personal income.

10. Montana

· Montana’s overall tax burden is 7.51 percent of total personal income.

· People living here have a low sale and excise tax burden, only 1.34 percent of total personal income.

Discover more Dentist’s Money Digest® news coverage here.

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