Which States Have the Lowest Taxes in 2026? Tax Burden Ranked
Wyoming ranks #1 for fiscal health in 2026 with a total tax burden of 5.79%, well below the national average of 8.7%. All 50 states are ranked by total tax burden, income tax, property tax, sales tax, debt, pension funding, and credit ratings.
The 10 most tax-friendly states
Tax burden is a major relocation factor. The difference between living in a high-tax and low-tax state can be worth thousands of dollars a year — and with remote work erasing geographic constraints, more people are making that move. We ranked all 50 states on fiscal health using Tax Foundation data, covering income tax, property tax, sales tax, total burden, debt, reserves, pension funding, and credit ratings.
Wyoming leads with a fiscal health score of 79.4/100 and a total tax burden of 5.79%. The national average burden is 8.7%. 9 states charge no income tax at all: New Hampshire, South Dakota, Wyoming, Washington, Florida, Tennessee, Texas, Alaska, Nevada.
Our fiscal health score isn't just about who charges the least. It accounts for whether the state can sustain its spending without raising taxes — rainy day funds, pension obligations, debt levels, and credit ratings all factor in. A state with 0% income tax but crushing debt isn't truly tax-friendly in the long run.
| Rank | State | Score | Tax Burden |
|---|---|---|---|
| #1 | Wyoming | 79.4 | 5.79% |
| #2 | South Dakota | 76.3 | 6.46% |
| #3 | Tennessee | 76.1 | 6.38% |
| #4 | Alaska | 74.2 | 4.93% |
| #5 | Texas | 72.2 | 7.77% |
| #6 | North Carolina | 71.5 | 8.18% |
| #7 | Utah | 71.4 | 9.46% |
| #8 | Nebraska | 71.4 | 8.78% |
| #9 | Idaho | 71.0 | 7.54% |
| #10 | Florida | 70.2 | 6.49% |
#1: Wyoming
Wyoming tops the fiscal health rankings with a score of 79.4/100. Total tax burden: 5.79% (national average: 8.7%). No state income tax. Property tax: 0.58%. Sales tax: 5.56%. GDP per capita: $72,523. Credit rating: AAA. This isn't just about low taxes — it's about fiscal management, reserves, and long-term stability.
Wyoming ranks #16 overall (69.4/100), so low taxes come with a solid quality of life. Median income: $71,847. Cost of living: 91.
#2: South Dakota
South Dakota scores 76.3/100 for fiscal health. Tax burden: 6.46%. No income tax. Property tax: 1.14%. Sales tax: 6.11%. GDP per capita: $64,792. The rainy day fund covers 12.9% of annual spending.
South Dakota ranks #2 overall (81.8/100), so low taxes come with a solid quality of life. Median income: $72,280. Cost of living: 88.
#3: Tennessee
Tennessee scores 76.1/100 for fiscal health. Tax burden: 6.38%. No income tax. Property tax: 0.58%. Sales tax: 9.61%. GDP per capita: $61,193. The rainy day fund covers 13.2% of annual spending.
Tennessee ranks #36 overall (46.8/100). Low taxes don't automatically mean high quality of life — the state's outdoor access score of 13.3 is a weak spot. Median income: $64,036. Cost of living: 93.
#4: Alaska
Alaska scores 74.2/100 for fiscal health. Tax burden: 4.93%. No income tax. Property tax: 1.16%. Sales tax: 1.82%. GDP per capita: $76,415. The rainy day fund covers 68.2% of annual spending.
Alaska ranks #41 overall (42.1/100). Low taxes don't automatically mean high quality of life — the state's education score of 0.0 is a weak spot. Median income: $84,143. Cost of living: 102.
#5: Texas
Texas scores 72.2/100 for fiscal health. Tax burden: 7.77%. No income tax. Property tax: 1.63%. Sales tax: 8.2%. GDP per capita: $68,820. The rainy day fund covers 17.8% of annual spending.
Texas ranks #37 overall (45.8/100). Low taxes don't automatically mean high quality of life — the state's outdoor access score of 4.7 is a weak spot. Median income: $73,035. Cost of living: 97.
#6: North Carolina
At #6, North Carolina scores 71.5/100. Tax burden: 8.18%. Income tax: 4.25%. Property: 0.73%. Sales: 7%. The fiscal picture includes debt management, pension funding, and reserves — not just tax rates.
North Carolina ranks #27 overall (53.7/100). Low taxes don't automatically mean high quality of life — the state's outdoor access score of 13.5 is a weak spot. Median income: $66,880. Cost of living: 94.
#7: Utah
At #7, Utah scores 71.4/100. Tax burden: 9.46%. Income tax: 4.55%. Property: 0.55%. Sales: 7.42%. The fiscal picture includes debt management, pension funding, and reserves — not just tax rates.
Utah ranks #4 overall (79.3/100), so low taxes come with a solid quality of life. Median income: $87,804. Cost of living: 95.
#8: Nebraska
At #8, Nebraska scores 71.4/100. Tax burden: 8.78%. Income tax: 5.2%. Property: 1.54%. Sales: 6.98%. The fiscal picture includes debt management, pension funding, and reserves — not just tax rates.
Nebraska ranks #8 overall (74.9/100), so low taxes come with a solid quality of life. Median income: $73,423. Cost of living: 90.
#9: Idaho
At #9, Idaho scores 71.0/100. Tax burden: 7.54%. Income tax: 5.7%. Property: 0.56%. Sales: 6.03%. The fiscal picture includes debt management, pension funding, and reserves — not just tax rates.
Idaho ranks #13 overall (70.7/100), so low taxes come with a solid quality of life. Median income: $68,930. Cost of living: 91.
#10: Florida
At #10, Florida scores 70.2/100. Tax burden: 6.49%. No income tax. Property: 0.82%. Sales: 6.98%. The fiscal picture includes debt management, pension funding, and reserves — not just tax rates.
Florida ranks #28 overall (52.8/100). Low taxes don't automatically mean high quality of life — the state's outdoor access score of 27.8 is a weak spot. Median income: $71,516. Cost of living: 103.
Income tax vs. total tax burden
Having no income tax doesn't guarantee a low overall burden. Some zero-income-tax states compensate with higher sales or property taxes. The total tax burden — what percentage of your income goes to all state and local taxes combined — is the metric that actually affects your wallet.
Among the 9 no-income-tax states, the average total tax burden is 6.8%, versus the national average of 8.7%. That's lower, but the gap is smaller than you might expect. Some states with moderate income taxes but low property and sales taxes end up with a similar total burden.
Highest-tax states
Illinois (10.22%), New Jersey (10.3%), Hawaii (13.92%), Connecticut (9.9%), Kentucky (8.93%) have the highest overall tax burdens. Illinois's total burden of 10.22% means roughly 10.22 cents of every dollar goes to state and local taxes.
These states typically offer more in return: better-funded schools, more public services, stronger infrastructure. Illinois's education score is 71.4 and its health score is 59.2. Whether that trade-off works for you depends on what you value and what you can afford.
Frequently Asked Questions
Q:Which state has the lowest taxes?
Wyoming ranks #1 for fiscal health in 2026 with a total tax burden of 5.79%, well below the national average of 8.7%. However, our fiscal health ranking goes beyond just tax rates — it combines tax burden (15%), state debt per capita (15%), rainy day fund reserves (15%), pension funded ratio (15%), credit rating (15%), GDP per capita (10%), budget surplus/deficit (10%), and GDP growth (5%). A state can have low taxes but still rank poorly if it carries excessive debt, underfunded pensions, or a weak credit rating. Wyoming scores well across these broader fiscal measures, not just on low taxes alone.
Q:Which states have no income tax?
New Hampshire, South Dakota, Wyoming, Washington, Florida, Tennessee, Texas, Alaska, Nevada charge no state income tax in 2026. For a household earning $100,000 in a state with a 5% income tax, that's $5,000 a year in potential savings. However, no-income-tax states aren't automatically the lowest-tax states overall — they often compensate with higher sales taxes, property taxes, or severance taxes on natural resources. The average total tax burden among no-income-tax states is 6.8%, compared to the national average of 8.7%. That's lower, but the gap is smaller than most people expect. Check our full guide on no-income-tax states for a detailed comparison.
Q:Is no income tax better than low overall taxes?
Not necessarily. The total tax burden — what percentage of your income goes to all state and local taxes combined — is the metric that actually affects your wallet. Some no-income-tax states compensate with significantly higher property taxes, sales taxes, or fees. The average total tax burden among the 9 no-income-tax states is 6.8%, versus the national average of 8.7%. Meanwhile, some states with moderate income taxes but low property and sales taxes end up with a similar or even lower total burden. The right approach is to calculate your specific tax liability based on your income level, homeownership status, and spending patterns rather than focusing on any single tax rate.
Q:Do low-tax states have worse services?
Often, yes — lower tax revenue means less funding for schools, roads, public safety, and healthcare infrastructure. But the relationship isn't automatic. Some low-tax states manage their budgets efficiently and provide adequate services. Others rely on non-tax revenue sources like natural resource royalties, tourism taxes, or federal transfers. Among the top 10 fiscally healthy states, the average education score is 50.8 and the average health score is 45.7. Higher-tax states like Illinois (tax burden: 10.22%) typically score higher for education (71.4) and health (59.2). Whether the trade-off is worth it depends on what you value and your personal financial situation.
Q:How does state tax burden affect migration?
Tax burden is one of several factors driving interstate migration, especially for high earners and retirees on fixed incomes. Among the 10 fastest-growing states, the average tax burden is lower than the national average, and several have no income tax. However, taxes alone don't explain migration — cost of living, job opportunities, climate, and quality of life also drive relocation decisions. The rise of remote work has amplified the tax factor because workers earning location-independent salaries can now choose their tax jurisdiction. A remote worker earning $200,000 who moves from a state with 6% income tax to a no-tax state saves $12,000 annually — a compelling financial incentive that has accelerated migration to tax-friendly states in recent years.