When you’re planning a move whether for retirement, better affordability, or a lifestyle change understanding a state’s tax burden is one of the smartest financial decisions you can make. Taxes vary dramatically across the country, and according to new research from The Market Distillery, using data from the Tax Foundation, the difference between top-ranked and bottom-ranked states can translate into thousands of dollars every year.
The States With the Lowest Tax Burdens in 2025
The 2025 rankings highlight one state as the clear winner: Wyoming. With its low property taxes, no state income tax, and business-friendly policies, Wyoming takes the #1 spot for the lowest overall tax burden.
Rounding out the top tier of tax-friendly states:
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South Dakota (#2) – No state income tax and consistently low overall tax pressure.
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Alaska (#3) – Known for minimal tax obligations and unique revenue structures.
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Florida (#5) – A top pick for retirees and remote workers thanks to no state income tax and competitive property tax rates.
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Nevada (#7) – Popular for its tax environment combined with strong job growth in metros like Las Vegas and Reno.
What these states have in common: no state income tax, a generally favorable business climate, and lower property or sales tax burdens compared to the national average.
The States With the Highest Tax Burdens
At the other end of the spectrum, residents in certain states face much higher combined state and local taxes. According to the same data, the bottom three include:
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New Jersey (#50) – High property taxes and significant income tax obligations.
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New York (#49) – One of the nation’s highest income tax brackets paired with rising living costs.
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California (#48) – High-income earners face steep tax rates, and property taxes remain elevated due to home values.
These states are often popular for career opportunities and culture, but the financial trade-off can be substantial especially for families, business owners, and retirees.
Why Tax Burden Matters When Choosing Where to Live
Your tax environment impacts more than your annual return it shapes your long-term financial picture. A lower tax burden may:
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Increase take-home income
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Reduce the cost of owning a home
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Improve retirement budgeting
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Offset rising insurance or living costs
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Allow for more discretionary spending and investing
For homebuyers, especially those relocating from high-tax regions, understanding this difference can significantly change what “affordable” looks like.
Florida: A Top Contender for Tax-Savvy Movers
While Wyoming tops the 2025 list, Florida’s #5 ranking continues to make it one of the most attractive destinations for Americans moving south. Beyond the sunshine, beaches, and lifestyle perks, Florida offers:
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No state income tax
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Competitive property tax rates
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Strong housing options for retirees, families, and investors
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Lower cost of living compared to states like New York and New Jersey
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Growing job markets in major metros and coastal communities
Local Expert Take
Florida continues to attract new residents for more than just great weather. With no state income tax and a consistent ranking among the top 5 tax-friendly states, it’s a major financial advantage especially for buyers relocating from high-tax markets like New York and New Jersey. When paired with lower insurance premiums in some counties and a lifestyle built around outdoor living, Florida remains one of the most compelling relocation choices heading into 2025.
