You've probably seen the headlines or heard your cousin brag about it at Thanksgiving. "I’m moving to Florida—no state income tax!" It sounds like a dream, right? You look at your paycheck, see that chunk of change disappearing into the state’s coffers, and imagine what you could do with an extra 5% or 7% in your pocket every month.
But here’s the thing: states are like businesses. They have bills to pay. If they aren’t taking your money through a payroll deduction, they’re almost certainly getting it somewhere else.
If you're hunting for the lowest overall tax burden by state, you have to look past the "no income tax" glitter. Honestly, some states with zero income tax end up being more expensive for the average family than states that take a small, flat bite out of your salary.
The States That Actually Let You Keep Your Cash
When we talk about the lowest overall tax burden by state, we’re looking at the "big three": income tax, sales tax, and property tax. According to the latest 2026 data from the Tax Foundation and Wallethub, a few states consistently fight for the top spot.
Alaska is basically the unicorn of the tax world. It has no state income tax and no state-level sales tax. Most people there end up with an overall tax burden of around 4.9%. That’s wild. But—and there's always a "but"—you're paying for it in other ways. If you don't like -20 degree mornings or paying $8 for a gallon of milk in Juneau, the tax savings might not feel like such a win.
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Wyoming and South Dakota are the other heavy hitters. Wyoming sits at an overall burden of roughly 5.8%. They make their money from mineral royalties and severance taxes on oil and gas. Basically, they tax the ground so they don't have to tax you. South Dakota is similar, hovering around 6.5%. These states are great if you own a business or have a high income because they just don't have the mechanisms to take your money based on how much you earn.
The 2026 Leaderboard: Total Tax Burden
- Alaska: ~4.9%
- Wyoming: ~5.8%
- New Hampshire: ~5.9% (No sales tax, no earned income tax)
- Tennessee: ~6.4%
- Florida: ~6.5%
Why Tennessee and Florida Might Surprise You
Wait, didn't I just say these were the "good" ones? They are, but you've gotta watch the sales tax. Tennessee has no income tax, which is great. However, they have one of the highest combined state and local sales tax rates in the country—averaging around 9.55% to 9.61% in 2026.
If you’re a big spender, Tennessee might actually cost you more than a state with a modest income tax but low sales tax. Think about it. You buy a $40,000 truck in Nashville, and you're handing over nearly $4,000 just in sales tax.
Florida is another tricky one. No income tax? Check. But property taxes in many Florida counties have been creeping up as home values skyrocket. Plus, the cost of homeowners' insurance in the Sunshine State is basically a "hidden tax" at this point. You might save $3,000 on state income taxes only to see your insurance premium jump by $5,000. It’s a shell game.
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The "Middle Class" Sweet Spot: The Flat Tax Revolution
Lately, we’ve seen a massive shift in how states approach taxes. It's not just about "zero" anymore; it's about "simple." In 2026, several states have moved toward flat-rate income taxes that are low enough to compete with the no-tax giants.
Ohio just implemented a flat 2.75% tax for most residents. That’s low. It’s simple. Indiana is down to 2.95%. Even North Carolina is dropping to 3.99% this year. These states are trying to lure families who want a balance of decent services—like paved roads and good schools—without the 9% or 10% "success penalty" found in places like Oregon or New Jersey.
Don't Forget the Property Tax Trap
New Hampshire is a classic example of "tax displacement." They have no sales tax and no tax on your paycheck. Sounds perfect, right? Well, New Hampshire has some of the highest property taxes in the United States.
The effective property tax rate in the Granite State often hovers around 1.6% to 1.8%. On a $500,000 home, you’re looking at $9,000 a year just for the right to live in your own house. Compare that to Alabama or Hawaii, where property tax rates are some of the lowest in the nation.
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If you're a renter, the "no income tax" states are almost always a better deal. But if you’re a homeowner, you have to do the math. Sometimes, paying a 3% income tax is cheaper than paying an extra $500 a month on your mortgage escrow.
What Most People Get Wrong About Moving for Taxes
Moving is expensive. kKinda obvious, I know. But people often forget to factor in the "lifestyle tax."
If you move from California (high tax) to Texas (no income tax) to save money, but your commute grows from 15 minutes to an hour, you're "taxing" your time. If you move to a state with the lowest overall tax burden by state but your utility bills double because of the heat or the cold, did you actually win?
Experts like those at the Tax Foundation point out that "tax competitiveness" isn't just about the lowest number. It's about stability. States like Utah (ranked 15th for competitiveness) often provide a better long-term value because they have diverse revenue streams. They don't have to jack up sales tax just because the price of oil dropped, which is a constant risk in Alaska or Wyoming.
Actionable Steps for Your Next Move
Before you pack the U-Haul, you need to run your own numbers. Most people just look at the income tax bracket and stop there. Don't do that.
- Calculate your "Big Three" spend: Estimate your annual income tax, property tax (based on the value of the home you'd buy), and sales tax (based on about 30% of your take-home pay).
- Check the "Trigger" laws: Some states, like Kentucky and Nebraska, have laws that automatically lower taxes if the state hits certain revenue goals. 2026 is a big year for these triggers.
- Factor in the "Service Gap": Low-tax states often have higher fees for things like car registration or tolls. In some states, registering a new car can cost $500+ every single year.
- Look at the 2026 reforms: States like Iowa and Georgia have undergone massive tax overhauls in the last 24 months. Old rankings from 2022 or 2023 are basically useless now.
The "best" state for you depends entirely on whether you're a high-earner, a big consumer, or a property owner. There is no one-size-fits-all answer, just a series of trade-offs. Keep your eyes on the total burden, not just the flashy "zero percent" headlines.