The 10 Most Tax-Friendly States for Middle-Class FamiliesTo help you compare the expected tax bite on ordinary Americans in all 50 states and the District of Columbia, we estimated the overall income, sales, and property tax burden in each state for a hypothetical married couple with two children,
combined wages of $77,000, and $3,000 of other income. Based on our findings, we put together the following list of the 10 most tax-friendly states for middle-class families (the most-friendly state is listed at the end). If you're moving to one of these states to take a new job or for other reasons, there's a good chance your overall state taxes will go down after the move.
https://www.kiplinger.com/taxes/state-tax/601612/most-tax-friendly-states-for-middle-class-families-20219. Arizona
8. California ???State Income Tax Range: 1% (on taxable income up to $9,325 for single filers; up to $18,650 for joint filers) to 13.3% (on taxable income over $1 million for single filers; over $1,250,738 for joint filers)
Average Combined State and Local Sales Tax Rate: 8.82%
Median Property Tax Rate: $729 per $100,000 of assessed home value
Wait, what? California is a tax-friendly state? Yes…for middle-class families. If you're a rich person, California taxes will cut deep into your earnings. But for other people, the Golden State's tax hit isn't really all that bad.
Our hypothetical middle-class family's income tax bill was the second-lowest among states that impose an income tax. Everyone makes a big deal about California's 13.3% income tax rate, which is the highest top rate in the nation, but only a small percentage of Californians pay that rate. In fact, with 10 different tax rates, California has a very progressive income tax system. Our middle-income family, for instance, only fell into the state's 6% tax bracket. That's not too bad.
Although property taxes are sky high in Silicon Valley and certain other parts of the states, property taxes are below average for the state overall. For a $300,000 home in California, the statewide estimated property tax is only $2,187, which is the 16th-lowest amount in the country.
Sales tax is one area where Californians might pay more than residents of other states. The California state sales tax rate is 7.25%, which is the highest state rate in the nation. However, local sales taxes – up to 2.5% – aren't very high. The Tax Foundation calculates the average combined state and local rate to be 8.828%, which is high.
7. Washington
6. North Dakooota
5. Alaska
4. Tennessee
3. Florida
State Income Tax Range: None
Average Combined State and Local Sales Tax Rate: 7.01%
Median Property Tax Rate: $830 per $100,000 of assessed home value
Florida is another state with no income tax (are you starting to notice a trend here?). That keeps the overall state and local tax burden down for middle-class families and everyone else. However, other taxes in the Sunshine State are just average when compared to other locations.
For instance, property taxes are right around the national average. For a $300,000 home in Florida, our hypothetical middle-class family's estimated annual property tax bill is $2,490. That's pretty much in the middle when compared to other states.
The state's average combined state and local sales tax rate is middle-of-the-road, too. It's 7.01%, according to the Tax Foundation. That's based on a 6% state tax rate and local rates that can be as high as 2%.
2. Nevada
1. Wyoming
State Income Tax Range: None
Average Combined State and Local Sales Tax Rate: 5.39%
Median Property Tax Rate: $575 per $100,000 of assessed home value
Congratulations, Wyoming – you're the most tax-friendly state for middle-class families! First, there's no income tax in Wyoming. As with many of the other states on this list, that's the driving force behind the state's favorable ranking. However, what makes Wyoming unique is that it also has both low sales taxes and property taxes.
The state sales tax rate in Wyoming is a modest 4%. Municipalities can tack on up to 2% more, which isn't that much. As a result, the state's combined state and average local sales tax rate is the eighth-lowest in the country, according to the Tax Foundation.
People who move to these parts like to own a lot of land, and low property taxes make that dream affordable. The property tax on our hypothetical middle-class family's $300,000 home in Wyoming would be about $1,725, which is tied the 10th-lowest property tax amount in our rankings.
