If you are a high-income earner, where you live can greatly impact your tax burden. According to a study by WalletHub, these states offer the most favorable tax environments for the wealthy. It lets you retain a significant portion of your earned income.
Alaska
Alaska is the best state for high-income individuals in regards to paying taxes. The state has the lowest tax burden across all income brackets. With a mere 3.95% tax rate for high-earning individuals, it offers an unparalleled financial landscape. The state’s unique position is further enhanced by its lack of state income tax, 1.18% in sales and excise tax, followed by 2.77% in property tax. It makes Alaska a prime destination for the wealthy seeking to maximize their savings.
New Hampshire
The Granite State lives up to its “Live Free or Die” motto, especially for the affluent. Ranking second for middle- and high-income tax burdens, this state imposes a mere 5.72% tax on high earners. This favorable tax climate is coupled with a minimum of 0.82% sales tax, 0.39% income tax, and a 4.50% property tax. This creates a lucrative environment for those looking to preserve their wealth.
North Dakota
North Dakota’s tax aspect particularly appeals to high-income earners, ranking third with a mere 6.12% tax burden. Moreover, North Dakota only requires 3.50% in sales and excise tax, 2.06% in property tax, and a mere 0.57% in income tax. The Peace Garden State’s progressive approach to taxation and booming energy sector create a unique environment. This blend of opportunity and tax efficiency makes North Dakota an unexpected yet compelling choice for the wealthy looking to optimize their financial situation.
Wyoming
Wyoming emerges as a financial oasis for the rich. The state ranks fourth in tax-friendliness for high-income individuals with a modest 6.22% tax burden. The Equality State’s appeal is enhanced by its absence of state income and low sales and excise tax of 3.01% and property tax of 3.20%. This combination of lenient tax structure and the natural beauty of the state makes it a great option for affluent individuals seeking adventure and financial advantages.
Florida
The Sunshine State shines bright for high-income residents, ranking fifth with a 6.50 tax burden. Florida’s lack of state income tax, combined with its year-round warm climate and vibrant lifestyle, makes it a favorite among the wealthy. Plus, the state only has a mere 3.77% of sales and excise tax followed by an even lesser 2.73% of property tax. The state’s diverse economy and luxury real estate market further enhance its appeal.
South Dakota
South Dakota stands tall in the tax-friendly states, ranking sixth for high-income earners with a 6.55% tax burden. This state levies 4.11% of sales tax and 2.44% of property tax. A zero percentage of income tax is a huge benefit for the residents. The state is positioned as a developing hotspot due to its fiscal climate, low living expenses, and expanding economy. It aids high-income individuals seeking financial optimization.
Nevada
Nevada, known for its glittering casinos, offers another kind of jackpot in the form of tax savings. The state ranks seventh for high-income earners with a 6.70% tax burden. The state’s lack of a state income tax is one of its major appeals. Nevada charges only 3.85% when it comes to sales and excise tax, 2.35% for property tax, and a mere 0.51% for income tax. This favorable tax climate, coupled with a thriving entertainment and hospitality industry, makes the state a great option for high-net-worth individuals.
Tennessee
Tennessee maintains a harmonious tax environment for the wealthy, ranking eighth with a 7.12% tax burden for high-earners. Tennessee’s elimination of investment income tax, coupled with only 0.22% state tax on wages, and 1.80% on property tax creates distinctive financial benefits. This tax-advantageous state offers reduced living expenses and a thriving cultural heritage. Because of this, wealthy people are choosing Tennessee more and more frequently.
Montana
Montana offers a panorama of tax benefits for high-income earners, ranking ninth with a 7.37% tax burden. The Treasure State’s relatively low property taxes of only 3.78%, income tax of 1.25%, and sales tax of 2.33% contribute to its appeal. Montana’s low tax burden along with its breathtaking beauty, positions it as an attractive destination. Individuals with high incomes looking for financial benefits and a high standard of living are finding this place to be perfect.
Texas
The Lone Star State lives up to its reputation for doing things big, except when it comes to taxes on the wealthy. Texas has an overall 7.51% tax burden, thereby getting the tenth position on this list. The state’s lack of state income tax along with 3.21% of property tax and 4.29% sales and excise tax is a major draw. This favorable tax climate, combined with a robust economy and diverse cultural landscape, makes Texas an ideal choice for affluent individuals and businesses alike.
Delaware
Delaware may be small in size, but it offers substantial tax benefits for high-income earners. It ranks eleven with a 7.64% tax burden. This state levies 1.87% on property tax and 1.28% on sales tax. Apart from this, the residents have to pay an income tax of only 4.48%. The strategic location of Delaware along with less tax burden and business-friendly laws makes it an attractive option. It is especially so for wealthy individuals and corporations seeking financial optimization.
Arizona
Arizona presents a refreshing tax climate for high-income-earning individuals. The state ranks twelfth with a 7.99% tax burden. The Grand Canyon State’s relatively high property tax of 2.15% and income tax of 1.76% result in its attractiveness. A favorable tax environment, a year-round sunshine, and a growing economy make Arizona an increasingly popular destination.
Alabama
Alabama offers a surprising tax haven for high-income earners, ranking thirteenth with 8.14% of the tax burden. It has a balanced tax structure with 3.44% of sales and excise tax followed by 3.36% of income tax. Property tax in the state is as low as 1.33%. With a tax-friendly climate along with a low living cost and rich cultural heritage, this state is an often-overlooked gem for wealthy individuals.