The States That Actually Let You Keep Your Income

Something we can all agree on is that every paycheck you earn gets smaller before it hits your bank account, often as a result of federal taxes taking their share first, but what happens next depends entirely on the state where you live. According to WalletHub's 2025 Tax Burden by State analysis, the gap between the highest-taxed and lowest-taxed states is quite staggering. Residents of Hawaii lose a whopping 14% of their personal income to state and local taxes, while Alaska residents lose less than 5%.

For anyone trying to earn a living and build wealth simultaneously, the spread between the top and bottom states can represent thousands of dollars a year in take-home pay that either stays in your pocket or disappears into a government budget you didn't choose. Most importantly, this isn't just about income tax rates, but also about property taxes and even sales tax.

Below are the 14 states where residents keep most of what they earn, and each entry includes the state's total tax burden, a breakdown of where those taxes can come from. Of course, most important isn't just the tax information, but whether or not you'd actually want to live anywhere on this list.

Kicking this off for Alabama is the idea that it has the lowest property tax burden in the country, at just 1.35%, and while the state does include an income tax, the overall income burden stays under 8% of earnings thanks to rock-bottom housing costs and assessments. This is good, given that the median home price hovers around $225,000, and the cost of living ranks among the five lowest in the country.

For Montana residents, you don't have to contend with any state sales tax, which means the sticker price is exactly what you pay. This keeps the sales and excise burden at a bottom dollar 1.30% of income, one of the lowest amounts in the nation. The tradeoff is that Montana has seen property and income taxes go up relative to other states on this list, but the total still stands at under 8% of your overall take-home income. Plus, you get beautiful landscapes and scenery everywhere you look.

Missouri keeps its tax burden spread evenly across three primary categories, and not one of them jumps up high enough to really make you flinch. Property taxes are somewhere in the middle of the pack as far as the country goes, while income taxes remain moderate, and property taxes are manageable. You also have access to areas like Kansas City and St. Louis that offer metro living with professional sports and career opportunities.

The big draw of Texas isn't just that it has no income tax, but that it's the biggest state in the country to do so. The downside is that you have some of the highest property taxes in the country and above-average sales tax rates. However, if you live in a more modest home, you can find yourself living without any income tax burdens, which, when combined with a strong job market, makes Texas a big draw.

With Idaho introducing a flat 5.8% income tax rate in recent years, the overall income tax burden lands somewhere at just 2.34% of personal income. Add to this the notion that property taxes are low, and while the state does have a sales tax, it isn't enough of a burden to be a major concern. One consideration is that you have tech-sector growth in Boise and an influx of remote workers from California and Washington looking for cheaper living that has helped bring the area more attention and activity.

Oklahoma has the lowest cost of living in the nation, and this affordability extends directly to its tax structure. If being number one in cost-of-living wasn't already good enough, Oklahoma also has the second-lowest property taxes in the country, combined with minimal income tax rates. The median home price is only around $200,000, making it one of the best value propositions for those who want to save as much of their paychecks as possible.

North Dakota works magic for its residents by keeping its income tax burden to only 0.85% of personal income, one of the lowest among any state that actually levies an income tax. The state has a big energy-driven economy that can keep government coffers funded without putting a heavy burden on residents. The lifestyle is also quieter and colder than most states on this list, but it's worth it all the same.

The big headline advantage for Delaware is that it doesn' thave any sales tax, so every purchase is exactly what it says on the sticker. Better yet, the total sales and excise burden is only 1.02% of income, the second lowest in the country. The income tax rate is higher than in other states on this list, but the combination of zero sales tax and low property tax means that only 6.52% of a paycheck is coming out in state taxes.

Thanks to its plentiful sunshine and income-tax-free living, Florida is one of the most popular relocation states in the country. Having no state income tax means that every dollar of salary and even investment gains stays yours at the state level. Property taxes can be moderate depending on where you live, and the average state sales tax is right around 7%.

Without any income tax, estate tax, or inheritance tax, South Dakota is far more than meets the eye. The total tax burden for residents at the state level is around 6.46% of personal income, and while sales tax is slightly above average, property taxes are in line with the national norm. The cost-of-living is well below the national average, something that should heavily contribute to any relocation conversation.

Tennessee fully repealed its income tax early in this decade, and as a result, 0% of your income comes out at the state level. Adding to this is one of the lowest property taxes in the country, but there is a catch with the state. The only downside is that it does have a combined state and local sales tax that can reach 9.6%, one of the highest totals in the nation, meaning that everyday living can cost more, but this still only leads to around a total tax burden of 6.38% of your income at the state level.

New Hampshire is a great place to live with plenty of outdoor activities and peaceful living, and it's pretty much a zero-income-tax state now and into the future. No state tax means you are putting a sales and excise burden at just 0.92% of your paycheck, the lowest in the country. Property taxes are high at around 4.87% of personal income, but it's still one of the best places to live.

Living in a state with a 4% flat sales tax and a total tax burden of 5.79% of income is absolutely as good as it sounds. Wyoming offers itself as a popular destination for remote workers who want maximum tax efficiency, along with plenty of open space separating them from their neighbors, which is a hard thing to ignore if you have spent any time at all living in condensed metro areas where everyone is on top of one another.

In a surprise turn of events, it's Alaska that offers the lowest total tax burden of any state in the country, at just 4.93% of income being taxed at the state level. The state has no income tax and no state sales tax, which is a combination that no other state on this list matches. Property taxes are above average for obvious reasons, given Alaska's environment, and the cost of living is higher due to its separation from the country, but it's still hard to ignore how affordable it can be if you live smartly.