States with the
Lowest Tax Burdens
Taxes are the single largest annual expense for the typical American family. From property taxes to sales taxes to income taxes, taxation at all levels of government is projected to continue rising in the years ahead. Tax Freedom Day – the day in the calendar that the average American would theoretically have worked long enough to satisfy all his tax obligations – arrived on April 18th in 2013, five days later than in 2012. This year’s Tax Freedom Day arrived on April 21st, according to the Tax Foundation.
You’ll never be able to escape the bite of the tax man entirely, but you can reduce the pain at the state and local level simply by moving to a lower-tax jurisdiction. By doing so, you could
easily move your own personal Tax Freedom Day several days ahead in the calendar, especially if you presently live in a heavily taxed Northeastern state such as New York or Massachusetts.
Say No to High Taxes
No surprise, rural states such as Wyoming, Alaska, Nevada, and the Dakotas come in with low average tax bites per household. But the “blue” state of Washington also scores well for low taxes, with the 6th lowest average tax burden per household. Even though the Seattle area is known as a hotbed of social liberalism and political correctness run amok, Washingtonians have consistently rejected efforts by the political class to impose an income tax and have even forced the repeal of some taxes through ballot initiatives. By contrast, most of the socially conservative states from the South don’t do so well at holding down taxes.
Pay No Taxes
on Retirement Income
In high-tax, high-cost-of-living areas, wages are often higher as well. But in retirement, Social Security and investment income may be the same no matter where you live. Your retirement dollars will go much further in low-cost jurisdictions.
There are 12 states where you owe no taxes on retirement income (Social Security, public pension benefits, and private pension benefits/ withdrawals). They are:
- New Hampshire
- South Dakota*
*States that have no income tax at all.