Top 10 States with Lowest Taxes in 2021

 

states with lowest taxes

Hey guys!. In this post, I’ll be discussing a list of Top 10 States with Lowest Taxes in 2021. As the tax experts often say, states are varied for a different reason, and no state is alike, especially when it comes to taxes. Every state has its rates, rules, and breaks. So, paying thousands of dollars in one state can mean paying a hundred less than in another. What a useful financial hack, isn't it? But there is still more to it. These taxes, especially at high rates, can eat most of your income and make it hard for you to survive daily living. But today's topic will help you make ends meet and even get a few bucks for your savings. Currently, 41 states and the District of Columbia collect personal income tax. The ranking of the best states with the lowest income tax comes from the data obtained by the Tax Foundation. Here is the result: 

10. Mississippi 

Mississippi has a low-income tax of 3 % for any income more than $1000. Meanwhile, it has a 5 % tax for income of more than $10,000. For 2018, the first $1,000 is exempt from the state's 3% taxation. For 2019, the first $2,000 of taxable income is exempt. Potentially by 2022, the first $5,000 of taxable income will be exempt. Mississippi is also known as one of the best states with the cheapest taxation of all kinds. This state exempts all forms of retirement income from taxation. Its state and local sales tax are lower than 7.1 %. 

9. Arizona 

Arizona has a State Income Tax Range of 2.59% to 4.5 %. Taxation of 2.59 applies on income up to $27,272 for single filers and $54,544 for joint filers. Meanwhile, 4.5 % taxation of a tax of over $163,632 for single filers and $327,263 for joint filers apply. What's more, is that 4.54 % taxation will not get higher as long as income does not exceed $158,996 for single filers or $317,990 for married couples filing jointly. The state is also known for its low gas taxes and fees. Residents in Arizona pay gas taxes of $0.1900 per gallon, which is much lesser than the national average gas tax. Moreover, Arizona cares so much for its residents that they exclude prescription drugs and food for home consumption from state sales taxes. Such lucky people they are! The state has an average combined state and local state tax rate of 8.4 %. 

8. Delaware 

Delaware is also one of the most tax-friendly states. It has a state income tax of 2.2 % for income ranging from $2,001 to $5,000. While for income above $60,000, they collect 6.6 % taxation for both single and joint filers. It is somehow a disadvantage for a hypothetical middle-class family to live in Delaware, especially if they have a $60,000 income. Do not worry, you have nine more states to choose from. However, Delaware has its advantages too. It is the only state in the East Coast neighbors that offer zero sales tax! You can shop anymore in Delaware without paying any single penny of sales tax. That is what Happy shopping looks like. 

7. Louisiana 

Louisiana has an income tax of 2 % for individuals with $12 500 and below. While for joint filers, 2 % applies if they have an income of $25,000. Moreover, 6 % applies for individuals with an income of $50,000 and $100,000 for joint filers. This state is also known for its low property tax. The state has an average property tax of $555 in taxes per $100,000 of assessed home value. On records, Louisiana's high-rate tax is their sales taxes, one of the highest in the country mainly because of the groceries and prescription drugs. Overall, Louisiana is still one of the most tax-friendly states in America. 

6. Alabama 

Alabama has 2 % taxation for taxable income of $500 for individuals and $1000 for joint filers. For income more than $3000 income of individuals, they apply 5 % taxation. While for joint filers who earn more than $6000, the state applies 5 % taxation. On the other hand, Alabama's property taxes are the second-lowest in the country, with an average of $432 per $100,000 of assessed home value. The average state tax and local sales tax sums up to 9.16%. 

5. New Mexico 

New Mexico has an income tax of 1.7 % for $5,500 for single and $800 for joint filers. As for their 4.9 %, taxation applies for those single filers with over $16,000 income and $24,000 for married couples filing jointly. Other than income tax, New Mexico is considered tax-friendly for it has an average property tax of $830 in taxes per $100,000 of assessed home value. Experts say that property taxes in New Mexico are so low that the state has capped the amount the taxable value of a property can increase in a year at 3%. 

4. North Dakota 

North Dakota or the Peace Garden State is also considered one of the most tax-friendly states. And expert reveals that it will be able to stay tax-friendly in the future because of the state's score for fiscal stability. It has an income tax of 1.10 % for a single income of $38,700. Also, 1.10 % for married couples filing jointly with income of $64,650. Moreover, 2.90 % taxation applies for any income over $424,950. These income tax rates are relatively low, especially for middle-level earners. This state also has reasonable average property taxes of $894 per $100,000 of assessed home value. 

3. California 

You might be surprised why California is one of the best states with low-income tax knowing that California is imposing 13.3 % taxation for income over $1 million for singles and $1,145,960 for married joint filers. That's quite huge, right? That is one of the highest income rates in America. But the reality is that only a small percentage of Californians pay that rate. And for middle-class families, the income rate of California is reasonable. California has 1 % taxation for income of $8544 for individuals and $17,088 for joint. That is why it is still considered a Tax-friendly state. Also, California's estimated property tax is only $2,187, which is the 16th-lowest amount in the country. 

2. Tennessee 

Tennessee has no income tax on salaries and wages. What the impose is just a flat 1 % taxation on all income earned from interest and dividends. Property taxes in this state are reasonable too. They have a median property tax rate of $636 per $100,000 of assessed home value, which is very suitable for the hypothetical middle-class family. The only downfall of this state is that their average combined state and local sales tax rate is the highest in the nation at 9.55 %. 

1. Montana 

Montana has a tax of 1 % for $3,000 of taxable income. As for $11,100 - $14,300 they only imposed 5 % taxation. And for income of $14,300 - $18,400 they imposed 6. % Taxation. Montana is also one of the five states that do not impose a general sales tax. The good news does not end there. Apparently, Montana also has low property tax. Montana has an average property tax of $892 in taxes per $100,000 of assessed home value. 

I hope you learn a lot from this post, especially hacks and factors to consider that could help you achieve your financial goals. The top 10 mentioned states-imposed income tax as low as flat 1 % and is undoubtedly perfect for middle-class earners. However, income tax has a significant role in the community we live in. More extreme than this, some states have 0 % personal income tax. Namely, they are Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska. If you are interested in this topic, I can definitely make a comprehensive video for this one. The low-income tax rate or 0 % tax rate does have advantages and disadvantages also. It would be good to balance things out for the development of not just us, as an individual but also the whole community. What are your thoughts and impressions about the mentioned states? Are you interested in moving to one of them? 

That is it from today’s post on Top 10 States with Lowest Taxes in 2021. If you do not agree with the points in the post and have some of your own opinions, share them with us in the comments section down below. 

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Chandan is the writer of “Top 10 States with Lowest Taxes in 2021”. Also, Connect with me on Facebook.

Chandan

Hey there! I'm Chandan and I'm from India. I'm a writer and youtuber. You can contact me at: dailykage@gmail.com pinterest

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