In this article we will discuss the 25 Least Taxed States in the US.
Income Taxes in the US
Federal income taxes in the US range from 10% to 37%, based on the incomes of an individual or a household. Whereas, some states have a flat income tax rate, while others impose a progressive system or no tax at all. The least taxed states in the US are mostly those states with no or low income tax rates. The federal income taxes in the US are one of the main drivers of revenue for the government. According to the Treasury Government Fiscal Data, the US gathered around $4.44 trillion in revenues from taxes. So far in 2024, the government has gathered a total revenue of around $3.75 trillion, as of July 31. Individual income taxes have added $1.89 trillion or 50% to the total revenue collected so far. The corporate income taxes have added over 10%, or $393 billion. Social Security and Medicare taxes are the second biggest source of revenue for the federal government.
At the state level, there are eight states with no personal income tax in the US including Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. There are a total of five states with no sales tax. Alaska is also among those states with no sales tax, however, certain areas in the state impose sales taxes. Therefore, Alaska has an average combined state sales tax rate of almost 1.76%. Whereas, the majority of the states have a low property tax rate. Hawaii and Alabama have the lowest property taxes in the US at 0.32% and 0.40%, respectively. Other states with low property taxes include Colorado, Louisiana, and Wyoming, having property tax rates of 0.55%, 0.56%, and 0.56%, respectively.
The US states have an average property tax rate of 1.04%, while the average income tax of states is around 5%. Similarly, the average sales tax for the states is around 5%. The average corporate taxes for the states are slightly higher at 5.85% compared to the average income taxes. At the start of 2024, around 34 states went through notable tax changes with 17 states reducing individual or corporate income taxes. Colorado is practicing a temporary relief on property tax, while Indiana and Pennsylvania have increased property tax rebates and income thresholds.
On July 11, the IRS announced that they achieved a ‘major milestone’ of collecting over $1 billion in tax debt from high-income individuals during the past year. In September 2023, the IRS announced plans to expand its scrutiny for millionaires and gather over $250,000 in recognized tax debt from people earning above $1 million. The increasing tax scrutiny in the country is creating a new potential market for tax service providers.
Leading Tax Services Provider in the US
Intuit Inc. (NASDAQ:INTU) is the leading tax services provider in the US and is a diversified SaaS company that has over 100 million customers worldwide. Some of the famous products of Intuit Inc. include TurboTax, Credit Karma, QuickBooks, and Mailchimp.
In May, during the Q2 2024 earnings report, the company announced that it lost one million users following which the shares plunged by more than 8%. Even after losing over a million users, Intuit Inc. (NASDAQ:INTU) was able to surpass both earnings and revenue estimates. The earnings of $9.88 per share beat the consensus estimate of $9.37 per share, while the revenue was reported at $6.74 billion, beating the estimates of $6.65 billion. As of July 31, analysts are still bullish on the stock and have a consensus Buy rating. The average price target of $730 implies an upside potential of almost 13% from current levels.
On July 10, the CEO of Intuit Inc. (NASDAQ:INTU) in a memo announced that the company is laying off approximately 1,800 employees to reduce costs and invest in AI. Here is what the letter addressed to employees said:
“Intuit is at a critical moment in our history. For over 40 years, we’ve had a successful track record of self-disruption and reinvention, transforming through multiple technological shifts. We were early to bet on and invest in AI, building one of the largest AI-driven expert platforms to fuel the success of consumers, small and mid-market businesses, and important partners like accountants, financial institutions, and marketing agencies who rely on us daily to prosper. With the introduction of GenAI, we are now delivering even more compelling customer experiences, increasing monetization potential, and driving efficiencies in how the work gets done within Intuit. But it’s just the beginning of the AI revolution.
Today we will be communicating to approximately 1,800 employees, which is 10% of our workforce, that they will be leaving Intuit.”
Compared to its counterparts, Intuit Inc. (NASDAQ:INTU) is investing intensively in AI. On July 25, the company announced that it has appointed a new AI leader, Forrest Norrod, who is executive vice president and general manager of the Data Center Solutions Business at AMD. Norrod brings extensive experience in data, AI, and GenAI, working in AMD. Norrod has also held various leadership and engineering positions at Dell. Norrod has assisted and led AMD through the ongoing AI transition, adding to the company’s data center growth and open AI ecosystem strategy.
Intuit Inc. (NASDAQ:INTU) is getting ready for the future and has already launched its GenAI-powered financial assistant, Intuit Assist, backed by experts. For international customers, the company is working on bringing QuickBooks and Mailchimp together to create one growth platform with AI-driven technology and experts. Baron Funds mentioned the firm in its Q4 2023 investor letter and said:
“Intuit is benefiting from the sale of higher-value services and is well positioned to capitalize on increasing adoption of artificial intelligence (AI) given its vast data sets. The company recently launched Intuit Assist, a generative AI-powered digital assistant that improves productivity and unlocks valuable insights for customers. We continue to own the stock due to Intuit’s strong competitive position and numerous growth opportunities.”
AI is one of the reasons why investors are bullish on the stock. Intuit Inc. (NASDAQ:INTU) is expected to earn $16.83 per share in 2024, up 17% year over year. Even with this growth rate, INTU isn’t cheap at current levels while it trades at a 54% premium to its sector.
AI is changing all the major industries, here are the top 10 latest AI stock news and analyst ratings. With that said, let’s take a look at the least taxed states in the US.
Our Methodology
We gathered tax data from the Tax Foundation, including personal income tax, property tax, and state sales tax, as of 2024. We have calculated the tax burden of each state by adding all the taxes and finding the total taxes paid against the average individual income of the state. The data for average individual income for each state was taken from Forbes. We have ranked the 25 least taxed states in the US in descending order of their tax burden.
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25 Least Taxed States in the US
25. Ohio
State Tax Burden: 11.09%
Income Tax: 3.50%
Sales Tax: 6%
Property Tax: 1.59%
Ohio has one of the least tax burdens in the US, as of 2024. The personal income tax rate ranges between 2.75% and 3.50%. The state has a 6% sales tax rate and a 1.59% property tax rate. Ohio ranks among the 25 least taxed states in the US.
24. Indiana
State Tax Burden: 10.89%
Income Tax: 3.05%
Sales Tax: 7%
Property Tax: 0.84%
Indiana has a flat personal income tax rate of 3.05%. The state imposes a 7% sales tax rate and property tax rate of 0.84%. With a state tax burden of 10.89%, Indiana is one of the least taxed states in the US in 2024.
23. Oregon
State Tax Burden: 10.83%
Income Tax: 9.90%
Sales Tax: 0%
Property Tax: 0.93%
Oregon has a state tax burden of 10.83%, as of 2024. The state imposes a personal income tax rate of 9.90% and has zero sales tax. The property tax rate stands at 0.93%.
22. Kentucky
State Tax Burden: 10.83%
Income Tax: 4.00%
Sales Tax: 6%
Property Tax: 0.83%
Kentucky has a state tax burden of 10.83%, which encompasses a personal income tax rate of 4%, a state sales tax of 6%, and a property tax rate of 0.83%. Kentucky ranks 22nd among the least taxed states in the US.
21. Oklahoma
State Tax Burden: 10.64%
Income Tax: 4.75%
Sales Tax: 5%
Property Tax: 0.89%
Oklahoma has a graduated personal income tax, ranging from 0.25% to 4.75%. The state has a 5% sales tax rate and a property tax rate of 0.89%.
20. Pennsylvania
State Tax Burden: 10.56%
Income Tax: 3.07%
Sales Tax: 6%
Property Tax: 1.49%
Pennsylvania has a flat individual income tax rate of 3.07%. Pennsylvania has a combined state and average local sales tax rate of 6.34%. Pennsylvania ranks 20th among the least taxed states in the US.
19. Georgia
State Tax Burden: 10.41%
Income Tax: 5.49%
Sales Tax: 4%
Property Tax: 0.92%
Georgia also has a flat individual income tax rate of 5.49% and a relatively low sales tax rate of 4%. The combined state and average local sales tax rate is around 7.38%.
18. North Carolina
State Tax Burden: 10.32%
Income Tax: 4.50%
Sales Tax: 5%
Property Tax: 0.82%
North Carolina has a state tax burden of 10.32% and is one of the least taxed states in the US. The state has a flat personal income tax of 4.50%, while sales tax is 5% and property tax is 0.82%.
17. Missouri
State Tax Burden: 9.81%
Income Tax: 4.80%
Sales Tax: 4%
Property Tax: 1.01%
Missouri has graduated state individual income tax, with rates ranging from 2% to 4.80%. With a sales tax rate of 4% and a property tax rate of 1.01%, Missouri ranks among the least taxed states in the US in 2024.
16. Alabama
State Tax Burden: 9.40%
Income Tax: 5%
Sales Tax: 4%
Property Tax: 0.40%
Alabama’s personal income tax starts from 2% and goes up to 5%. The state has a combined state and average local sales tax rate of 9.29%.
15. Arizona
State Tax Burden: 9.13%
Income Tax: 2.50%
Sales Tax: 6%
Property Tax: 0.63%
Arizona ranks 15th among the least taxed states in the US and has a flat individual income tax of 2.50%. The state imposes a sales tax of 6% and a property tax of 0.63%.
14. North Dakota
State Tax Burden: 8.88%
Income Tax: 2.90%
Sales Tax: 5%
Property Tax: 0.98%
North Dakota has a sales tax of 5% and charges a graduated personal income tax rate ranging from 1.10% to 2.90%.
13. Louisiana
State Tax Burden: 8.81%
Income Tax: 4.25%
Sales Tax: 4%
Property Tax: 0.56%
Louisiana is one of the least taxed states in the US in 2024. Louisiana has a minimum individual income tax rate of 1.85%, which goes up to 4.25%. Louisiana’s property tax rate is 0.56% and the sales tax rate is 4%.
12. Colorado
State Tax Burden: 7.95%
Income Tax: 4.40%
Sales Tax: 2.90%
Property Tax: 0.55%
Colorado has a sales tax of 2.90% and a property tax of 0.55%. Colorado has a tax burden of just under 8% and ranks 12th among the least taxed states in the US.
11. Washington
State Tax Burden: 7.87%
Income Tax: 0%
Sales Tax: 7%
Property Tax: 0.87%
Washington does not impose a traditional income tax but levies a 7% tax on capital income gains. The state has a combined and average local sales tax of 9.38%.
10. Texas
State Tax Burden: 7.68%
Income Tax: 0%
Sales Tax: 6.25%
Property Tax: 1.68%
Texas is one of the states with no income tax. Texas has a sales tax of 6.25% and a property tax of 1.68%. Texas ranks 10th among the least taxed states in the US.
9. Tennessee
State Tax Burden:7.67%
Income Tax: 0%
Sales Tax: 7%
Property Tax: 0.67%
Tennessee is another state with no personal income tax. Tennessee imposes a sales tax rate of 7% and a property tax rate of 0.67%.
8. Nevada
State Tax Burden: 7.59%
Income Tax: 0%
Sales Tax: 7%
Property Tax: 0.59%
Nevada has a low property tax rate of 0.59% and a sales tax rate of 7%. Nevada has a tax burden of 7.59% and it is one of the least taxed states in the US in 2024.
7. Delaware
State Tax Burden: 7.21%
Income Tax: 6.60%
Sales Tax: 0%
Property Tax: 0.61%
Delaware has a state tax burden of 7.21%, as of 2024. The state does impose a personal income tax rate of 6.60%, but it has no sales tax and a low property tax of 0.61%.
6. Florida
State Tax Burden: 6.91%
Income Tax: 0%
Sales Tax: 6%
Property Tax: 0.91%
Having no individual income tax, Florida has a state tax burden of 6.91%, as of 2024. The state charges a sales tax rate of 6% and ranks sixth among the least taxed states in the US.
5. Montana
State Tax Burden: 6.64%
Income Tax: 5.90%
Sales Tax: 0%
Property Tax: 0.74%
Montana has a graduated personal income tax, ranging from 1% to 5.90%. Montana has zero sales tax and 0.74% property tax. The state is one of the least taxed in the US in 2024.
4. South Dakota
State Tax Burden: 5.17%
Income Tax: 0%
Sales Tax: 4%
Property Tax: 1.17%
South Dakota has a tax burden of 5.17%, with a slightly higher property tax rate which adds to the tax burden. The state has no personal income tax and a 4% sales tax.
3. New Hampshire
State Tax Burden: 4.93%
Income Tax: 3%
Sales Tax: 0%
Property Tax: 1.93%
New Hampshire is ranked third among the least taxed states in the US with a tax burden of 4.93%. New Hampshire has a flat 3% tax on personal income.
2. Wyoming
State Tax Burden: 4.56%
Income Tax: 0%
Sales Tax: 4%
Property Tax: 0.56%
Wyoming has no tax on individual income and a 0.56% tax on property. Wyoming has a sales tax of 4% and a local sales tax rate of 1.44%. With a tax burden of 4.56%, Wyoming ranks second among the least taxed states in the US in 2024.
1. Alaska
State Tax Burden: 1.04%
Income Tax: 0%
Sales Tax: 0%
Property Tax: 1.04%
Alaska has an exceptionally low tax burden of just 1.04%, as of 2024, making it one of the most tax-friendly states in the U.S. The state has no personal income tax and no sales tax, allowing residents to retain their full earnings. Alaska has a graduated corporate income tax, with rates ranging from 0% to 9.4%. Alaska has an average combined state and local sales tax rate of 1.82% and imposes a property tax of 1.04%.
Alaska also does not have an estate tax or inheritance tax. The tax on gas is around 8.95 cents per gallon and has a $2 excise tax rate. According to the Tax Foundation, the state gathers around $4,189 in state and local tax per capita, while Alaska has a state and local debt per capita of $11,799. Alaska is the least taxed state in the US in 2024.
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