What You Didn’t Know About Living in These 10 Tax-Friendly States in 2025

Tired of seeing your hard-earned money disappear into taxes?

If you’re looking to keep more of your income, where you live can make a significant difference.

We’ve analyzed the latest data from WalletHub, Tax Foundation, and Kiplinger to bring you the most current information on the states with the lowest tax burden for middle-income families in 2025. It looks at state income tax, property taxes, and sales taxes on essential items like groceries, diapers, and feminine hygiene products.

The 10 Most Tax-Friendly States in 2025

1. Wyoming

Wyoming tops our list with no state income tax and reasonable property taxes. The median annual household income in Wyoming is $72,415, and residents spend only 2.26% of their income on taxes. Property taxes are moderate at $1,567 annually, and while the state does tax some essentials like diapers and feminine hygiene products, the overall tax burden remains extremely low.

2. Nevada

Nevada claims the second spot with no personal income tax and relatively low property taxes. With a median annual household income of $76,364, residents spend just 2.58% of their income on taxes. The state has eliminated sales tax on some feminine hygiene products but still taxes diapers. Annual property taxes average $1,884, keeping Nevada highly competitive for tax-conscious families.

3. Tennessee

Tennessee has no personal income tax and low property taxes at $1,356 annually. With a median household income of $67,631, residents spend about 2.81% on taxes. While Tennessee is one of 13 states that still tax groceries and also taxes diapers and feminine hygiene products, the absence of income tax keeps the overall burden low.

4. Florida

Florida continues to be tax-friendly with no personal income tax and no sales tax on groceries. The median household income is $73,311, with residents spending 3.25% on taxes. Recent tax relief eliminated state sales tax on numerous baby and toddler essentials, including diapers and baby wipes, as well as some feminine hygiene products. Property taxes are moderate at $2,386 annually.

5. North Dakota

With a median household income of $76,525, North Dakota residents spend about 3.65% on taxes. The state has low income tax rates for middle-class households and reasonable property taxes at $2,294 annually. North Dakota no longer taxes diapers, though it still imposes sales tax on feminine hygiene products.

6. South Dakota

South Dakota has no state income tax, which helps offset its taxation of essential items including groceries, diapers, and feminine hygiene products. With a median household income of $71,810, residents spend about 4.09% on taxes. Property taxes are moderate at $2,496 annually.

7. Alaska

Alaska ranks first in WalletHub’s overall tax burden analysis, with residents paying just 6.77% of the median U.S. household income in state and local taxes. The state has no personal income tax and no statewide sales tax, though local jurisdictions may tax groceries and other essentials. With a median household income of $86,631, residents spend about 4.26% on taxes, with property taxes being relatively high at $3,687 annually.

8. Arizona

Arizona has a state income tax but no state tax on groceries. With a median household income of $77,315, residents spend about 4.44% on taxes. The state taxes diapers and feminine hygiene products, but property taxes remain reasonable at $1,786 annually.

9. Washington

Washington has no personal income tax, helping it secure a spot in our top 10 despite having high property taxes at $4,158 annually. With a median household income of $94,605, residents spend about 4.50% on taxes. The state does tax diapers and some other essentials.

10. Texas

Texas rounds out our list with no personal income tax and no taxes on essentials. With a median household income of $75,780, residents spend about 5.11% on taxes. Property taxes are high at $3,872 annually, but recent property tax relief measures may improve Texas’s ranking in the future.

Beyond the Tax Burden: What to Consider

While tax savings are important, they shouldn’t be the only factor when choosing where to live. Consider these areas as well:

• Cost of living: Low taxes might be offset by higher costs in other areas

• Job opportunities: Higher income potential could outweigh higher taxes

• Quality of public services: Tax dollars fund education, infrastructure, and public safety

• Climate and geography: Personal preferences matter for long-term happiness

• Healthcare access: Quality and cost of healthcare vary significantly by state

 

The Shifting Tax Landscape

State tax policies will evolve, with many states implementing tax reforms. In 2025, we’re seeing a trend of rate reductions among moderate states, with many flat-tax reforms or bracket cuts underway. Meanwhile, a smaller number of states maintain or have raised top brackets near or above 10%.

As Duke University’s Professor Xu Jiang notes, “There are indications that more and more people are considering taxes when deciding where to live, given that the differences in state tax rates have increased over the years, in particular during the pandemic when people find out they do not need to live close to where they work.”

Whether you’re planning a move or just curious about how your state compares, know ing the tax landscape can help you make better financial decisions that align with your long-term goals.