Low-Tax States for 'Middle-Class' Families (2024)

Low-Tax States for 'Middle-Class' Families (1)

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Low-Tax States for 'Middle-Class' Families (2)

By Katelyn Washington

last updated

If you hate paying taxes, and you want to keep more of your income, you might consider moving to one of these states that have a relatively low tax burden for middle-income families. After all, the cost of living for families considered to be “middle-class” is high enough as it is, and who doesn’t want to pay less taxes?

'Tax Friendly' States for Middle-Income Families

Median salaries can differ greatly from state to state, so we considered each state's median annual salary to determine which states have the lowest tax burden for households with middle incomes. Then, we calculated the average annual tax spent for three tax categories: state income tax, property taxes, and sales taxes on essential items (groceries, diapers, and feminine hygiene products).States with the lowest tax burden are considered to be "tax-friendly " for these rankings.

Sales tax was not calculated for states that don't tax essentials at the state level. However, it is important to note that local sales taxes may apply. The states with the lowest percentage of income spent on state taxes made our list. And here they are.

Note: See below for full details about the methodology Kiplinger used to rank the states for this story.

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Low-Tax States for 'Middle-Class' Families (3)

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Wyoming

Median annual household income: $70,042

Percent of income spent on taxes: 2.15%

Wyoming taxes some essentials such as diapers and feminine hygiene products. Even so, no state income tax and reasonable property taxes (when compared to those in other states) place Wyoming as the highest rated on our list for middle-income households, when it comes to low tax burden.

  • Average income tax: $0
  • Median annual property taxes: $1,442
  • Average sales tax for essentials: $62.03
  • Total annual amount spent on taxes: $1,504.03

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Low-Tax States for 'Middle-Class' Families (5)

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Nevada

Median annual household income: $72,333

Percent of income spent on taxes: 2.50%

Most states still tax diapers, and Nevada is one of them. However, the state has banned sales tax on some feminine hygiene products. No personal income tax and low property taxes relative to other states, make Nevada an overall tax-friendly state for middle-income families and households.

  • Average income tax: $0
  • Median annual property taxes: $1,736
  • Average sales tax for essentials: $74.12
  • Total annual amount spent on taxes: $1,810.12

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Low-Tax States for 'Middle-Class' Families (7)

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Tennessee

Median annual household income: $65,254

Percent of income spent on taxes: 2.75%

Tennessee taxes diapers and feminine hygiene products. It is also one of 13 states that still tax groceries. However, the state does not have a personal income tax, and property taxes are on the low end when compared to those in other states, so Tennessee comes in at number three in our ranking.

  • Average income tax: $0
  • Median annual property taxes: $1,270
  • Average sales taxes on essentials: $524.90
  • Total annual amount spent on taxes: $1,794.90

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4/10

Low-Tax States for 'Middle-Class' Families (9)

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Florida

Median annual household income: $69,303

Percent of income spent on taxes: 3.1%

Florida has no personal income tax. Additionally, a Florida tax relief bill eliminated the state sales tax on numerous baby and toddler essentials, including diapers, baby wipes, and strollers. The bill also eliminated sales tax on some feminine hygiene products. Average property taxes are not extremely high, but they aren’t extremely low either as compared to those in other states. Florida doesn’t tax groceries.

  • Average income tax: $0
  • Median annual property taxes: $2,143
  • Average sales tax on essentials: $0
  • Total annual amount spent on taxes: $2,143

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5/10

Low-Tax States for 'Middle-Class' Families (11)

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North Dakota

Median annual household income: $71,970

Percent of income spent on taxes: 3.48%

North Dakota does have a personal income tax, but the rates for middle-class households are low compared to most other states that impose income tax. North Dakota property taxes are reasonable, and the state no longer taxes diapers. North Dakota still imposes a sales tax on feminine hygiene products, but overall, it’s still one of the best states for middle-income families when it comes to paying less taxes.

  • Average income tax: $396
  • Median annual property taxes: $2,092
  • Average sales tax on essentials: $16.89
  • Total amount spent on taxes: $2,504.89

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Low-Tax States for 'Middle-Class' Families (13)

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Alaska

Median annual household income: $88,121

Percent of income spent on taxes: 3.93%

Alaska doesn’t have a personal income tax, and it doesn’t have a statewide sales tax either. However, local tax tax jurisdictions may tax groceries, diapers and feminine hygiene products. Alaska winds up in the middle of our ranking due to its high property taxes.

  • Average income tax: $0
  • Median annual property taxes: $3,464
  • Average sales tax on essentials: $0
  • Total amount spent on taxes: $3,464

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7/10

Low-Tax States for 'Middle-Class' Families (15)

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South Dakota

Median annual household income: $69,728

Percent of income spent on taxes: 4.07%

South Dakota taxes essential items, including diapers, feminine hygiene products, and even groceries. Property taxes in South Dakota are not very low either compared to those in other states. But because the state has no state income tax, South Dakota makes the number seven spot for tax-friendly states for middle-income families and households.

  • Average income tax: $0
  • Median annual property taxes: $2,331
  • Average sales tax on essentials: $506.49
  • Total amount spent on taxes: $2,837.49

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Low-Tax States for 'Middle-Class' Families (17)

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Washington

Median annual household income: $91,306

Percent of income spent on taxes: 4.23%

Washington has high property taxes when compared with other states. Washington taxes diapers, too, but the state still makes this list since the state has no personal income tax.

  • Average income tax: $0
  • Median annual property taxes: $3,752
  • Average sales tax on essentials: $106.92
  • Total amount spent on taxes: $3,858.97

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Low-Tax States for 'Middle-Class' Families (19)

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Arizona

Median annual household income: $74,568

Percent of income spent on taxes: 4.34%

Arizona has a state income tax. The state also taxes diapers and feminine hygiene products. But there is no state tax on groceries, and Arizona’s average property taxes aren’t very high compared to those in other states, so Arizona takes the number seven spot on this list.

  • Average income tax: $1,491.36
  • Median annual property taxes: $1,648
  • Average sales tax on essentials: $95.43
  • Total amount spent on taxes: $3,234.79

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Low-Tax States for 'Middle-Class' Families (21)

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Texas

Median annual household income: $72,284

Percent of income spent on taxes: 4.87%

Texas does not impose a state income tax, and the state no longer taxes essentials either. Still, higher property taxes cause the Lonestar State to barely make this list, at number ten. However, voters recently approved a new Texas property tax relief measure that might give the state a more favorable ranking in the future.

  • Average income tax: $0
  • Median annual property taxes: $3,520
  • Average sales tax on essentials: $0
  • Total amount spent on taxes: $3,520

Middle-Class Income and Taxes

Full Methodology

Median annual household salaries for each state were collected from the latest U.S. Census Bureau data (most recent data available). Personal income taxes were calculated using an ADP salary calculator. We used monthly pay periods and opted not to factor in extra withholdings or allowances. Income taxes paid vary from filer to filer and can depend on your income, filing status, and the number of credits and deductions you qualify for when filing your taxes.

Total average grocery costs were calculated by averaging the average grocery spending by high and low-income households as reported by the U.S. Department of Agriculture. The average monthly diaper expense is based on estimates from the National Diaper Bank Network. The average cost of feminine hygiene products was taken from the National Organization for Women. We used sales tax rates (average combined local and state sales tax rates) provided by the Tax Foundation to calculate the average sales taxes spent on essential items. Tax spent on essential items may be higher than $0 in some localities, even if essentials aren't taxed at the state level.

The data for median annual property taxes paid is from PropertyShark and is based on data provided by the U.S. Census Bureau.

Average taxes spent were added for each state to find the total percentage of household income paid to state taxes. Dollar amounts were rounded to the nearest cent. Percentages are rounded to the nearest tenth of a percent.

To determine what “middle income” means, the median household income for each state was used. However, the definition of “middle-income” can vary greatly. For purposes of this ranking, “family” means any household with at least one adult still raising at least one child. The amount of taxes paid can vary depending on several factors, including family size and the number of adults in the household who work.

Related Content

-The 'Food Tax': Grocery Tax by State

-States With the Lowest Property Taxes

-States That Still Tax Diapers

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Katelyn Washington

Tax Writer

Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.

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Low-Tax States for 'Middle-Class' Families (2024)

FAQs

What is the best tax state for the middle class? ›

However, some states without income taxes give middle-class residents a break: Alaska (rank No. 50), New Hampshire (49), Wyoming (47), South Dakota (42), Nevada (40), and Florida (36) are all among the 15 states with the lowest amount of income going to state taxes.

What are the 10 least tax-friendly states? ›

States with the heaviest tax burden:
  • New York: 12.47%
  • Hawaii: 2.31%
  • Maine: 11.14%
  • Vermont: 10.28%
  • Connecticut: 9.83%
  • New Jersey: 9.76%
  • Maryland: 9.44%
  • Minnesota: 9.41%
Apr 5, 2024

What is the most tax-friendly state in the US? ›

According to the updated MoneyGeek analysis, the most “tax friendly” state overall was Nevada, where the median family owes about 3% of its income in taxes. Meanwhile, 13 states earned either a D or F grade for tax burdens. For some of those states, like Oregon, high personal income tax rates are to blame.

What is the best state to live in without income tax? ›

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming do not levy state income taxes, while New Hampshire doesn't tax earned wages. States with no income tax often make up the lost revenue with other taxes or reduced services.

Which US state has the lowest taxes? ›

Here are the 10 states with the lowest overall tax burden:
  • Alaska.
  • Delaware.
  • New Hampshire.
  • Tennessee.
  • Florida.
  • Wyoming.
  • South Dakota.
  • Montana.
Oct 10, 2023

Where is the best place to live with low taxes? ›

1. Cheyenne, Wyoming. While not an obvious candidate, Cheyenne, Wyoming tops the list of U.S. cities with the lowest tax rates. Cheyenne tax rates are low across the board, with an average 9.7% rate for lower-income families.

How does Florida make up for no income tax? ›

With no state income tax — the state constitution forbids it — Florida's state government generates the bulk of general revenue (75% to 80% depending on the year) from sales tax collections. It gets the rest from a variety of sources, including documentary stamp taxes, insurance taxes and corporate income taxes.

What social class pays the most taxes? ›

Tax Shares in Tax Year 2021

The newly released report covers Tax Year 2021 (for tax forms filed in 2022). The newest data reveals that the top 1 percent of earners, defined as those with incomes over $682,577, paid nearly 46 percent of all income taxes – marking the highest level in the available data.

What is the best state to live in financially? ›

Top 5 Best States for Families To Live on the Average Salary
  • Connecticut: The Best State Financially for Families. ...
  • New Hampshire. ...
  • Maryland. ...
  • New Jersey. ...
  • Virginia. ...
  • Hawaii: The Worst State Financially for Families. ...
  • Nevada. ...
  • Florida.
Feb 20, 2024

What is the best state to retire for tax reasons? ›

Some states do not tax Social Security or income, which could appeal to retirees. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming stand out for their tax-friendly policies and other amenities that retirees may enjoy.

What are the best states to retire in 2024? ›

Florida has regained its status as the best state for retirees in 2024. That's according to WalletHub's latest “Best and Worst States to Retire” study. In 2023, Virginia took the top spot and knocked Florida down to No. 2.

Is it really cheaper to live in a state with no income tax? ›

States with no income taxes save residents money — on their income taxes. However, many states without income taxes can be expensive in other ways. They might have a higher sales tax, higher property taxes, and/or a higher cost of living.

Should I move to a state with no income tax? ›

Yes and no. The more you earn and the higher the tax rate in your state, the more you can potentially save by moving to an income tax-free state. However, moving to a state with no income tax isn't always beneficial.

What's the downside to living in a state with no income tax? ›

If you aren't paying income tax, you're likely paying more in other areas like sales or property taxes. In addition, low wages and few job prospects might make living in a no-income-tax state unaffordable even with this generous tax break.

Does the middle class get taxed the most? ›

Although most Americans believe the middle class bears the heaviest tax burden, it's actually the top 1% who pay the highest federal tax rate, at 25.9%, the Tax Foundation analysis found.

Who pays more taxes rich or middle class? ›

One recent study, for instance, found that income taxes take, on average, nearly 10 percent of family earnings from high earners in the Golden State, but just 1.2 percent from middle-income residents.

What is the tax rate for middle class Americans? ›

The lowest tax bracket is 10%. The highest tax bracket is 37%. If you're in the middle class, you're probably in the 22%, 24% or possibly 32% tax brackets.

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