10 Tax-Friendly States for People With An Average Income


Best States for Families With Average Incomes

Before deciding on moving to a new state, you first have to make sure you check the costs of living in the area you’re about to move to. Naturally, you will want to consider the cost of housing when you initiate the research, but what’s probably even more important than that is the influence of state and local taxes on your future home.

Because according to State-by-State Guide to Taxes on Middle-Class families, state tax rates for the average income are absolutely everywhere on the map. The main difference between living in a high-tax state and a low-tax state can consist of thousands of dollars a year.

Dollars that might as well end up in your pocket, right? So here are the best states where you could move, if you are part of a middle-class family:

average tax
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Delaware has a relatively high-income tax. The state’s top income tax rate reaches 6.6%, and it applies to anyone with over $60,000 of taxable income, which is a high rate for people who warn that income range.

Even so, low sales and property tax helped Delaware climb this particular list. Sales taxes won’t get any lower than they are now…as there aren’t any in Delaware! So worry no more, because when it comes to buying stuff, you can shop until your hands drop, without paying a single dime of sales tax on whatever you might be getting.

When it comes to property taxes, Delaware has the 6th lowest median property tax rate in the whole country. The tax on a $300,000 home that you might get is estimated to be only $1,704/year.


Low-income taxes are the reason why the Grand Canyon State managed to climb the list. Middle-income families won’t pay the state’s lowest rate (2.55%) for this year, but they won’t have to pay much more either, because it’s 2.98%.

Arizona residents also have access to low property taxes. The median property tax on a $300,000 home in Arizona is only $1,932 a year, which is fairly below the median property tax in most states.

However, it is true that the state’s sales tax is higher than the average. It begins with a 5.6% state sales tax. Even so, all 15 counties in Arizona levy additional taxes, just like most municipalities. Because of that, the average combined state and local sales tax rate is around 8.4%, which is pretty high.


I know it might seem surprising, but California IS a tax-friendly state if we’re talking about middle-class families. But if you’re rich, then it’s a whole other deal. The hypothetical middle-class family will receive an income tax bill that’s the second-lowest among states that charge an income tax.

Everyone makes a big fuss about California’s 13.3% income tax rate, which is by far the highest in the country. But what few people know is that a very small percentage of Californians actually pay that rate.

Because in reality, here you will find some of the most progressive income tax systems. Also, property taxes are below average here. For a $300,000 house in California, the statewide estimated property tax is no more than $2,226, which is fairly low.


There’s only one reason why Washington made it to this list, and that’s because it doesn’t have an income tax. Without that specific tax break, Washington wouldn’t be seen as one of the most taxpayer-friendly states in America.

However, sales taxes in Washington are rather high. The state sales tax rate reaches 6.5%, which is well above the average. Property taxes in Washington turned out to be more modest.

For a $300,000 home, the median property tax bill in Washington will cost around $2,874 per year. That’s a middle-of-the-pack amount when you compare it with other states. The Tax Foundation’s average mixed state and local sales tax rate is the fourth-highest in the United States, at 9.29%.

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North Dakota

Even if North Dakota has an income tax, it’s so low, you can’t even take it into account! Besides that, for the 2022 tax year, every single resident can qualify for a non-refundable tax credit of $350 (double for a married couple).

So given the low rates and the temporary credit, we can fairly say that the hypothetical middle-class family won’t have to pay any income taxes. Sales taxes are also below average.

The state rate is only 5%. Local governments can add a maximum of 3.5%, but according to the Tax Foundation, the average combined state and local sales tax rate is only 6.96%, which is actually decent.


Alaska is very similar to Washington, tax-wise, as it’s also one of the six states that don’t have any income tax. Naturally, your overall state tax burden will be lower if you don’t have to pay tax on your wages and any other kind of income.

Even so, there is more to the Last Frontier’s low tax burden, besides the lack of an income tax. Alaska is also one of the five states that have no state sales tax. However, if you’re deciding to move to Alaska, remember that the local sales taxes, which are as much as 7.5%, might represent a concern.

Also, property taxes are more on the higher side here. If the hypothetical couple were to buy a $300,000 home here, their estimated property tax bill would end up around $3,636 a year. That’s more than the U.S. national average.


There is no income tax here. It’s true that Tennessee used to have a tax on interest and dividend income, but that expired by the end of 2020. Property taxes here are also reasonable.

The hypothetical middle-class family should expect to pay around $2,055 a year for a $300,000 home, and if you think about it, that’s way below the national average.

However, when it comes to shopping, the state will make its presence felt, with a 7% state rate. Even more, the local governments might tack on up to 2.75% more in taxes for every single sale. At 9.547%, the state’s average combined state and local sales tax rate is probably the second-highest in America.

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Florida is also a state that imposes no income tax (do you notice any trend here?). This is why a middle-class family could easily move here. But, other taxes here are just average when you compare them to other places.

For example, property taxes are getting closer to the national average. For a $300,000 home in Florida, you will have to pay $2,577 on the annual property tax bill.


Middle-class families are pretty much hooked on the fact that there is no income tax here. And it gets better: that’s not the only tax perk for residents of the Silver State. Nevada will also offer the seventh-lowest median property tax rate in the whole country.

If our middle-class family would get a $300,000 home in the state, then they would only have to pay $1,716 in property taxes every year. Sales taxes aren’t so low, unfortunately. In fact, it’s relatively high: 6.85% on the state sales tax rate. Add to that a couple of local taxes too, and you’ll end up somewhere around 8.23%, which is…high!


We’ve saved the best for the end. Wyoming is the most tax-friendly state for our hypothetical middle-class family! First and foremost, there’s no income tax here. As you might have noticed in other examples, this is basically the driving force behind the ranking.

What makes Wyoming even better is that it also has low sales taxes and property taxes.

If you enjoyed reading this article, we also recommend reading: Tax Season Knocking at the Door? 6 Easy Steps to Get Ready

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