Right here Are the Prime 10 Tax-Pleasant States

After years of cussed inflation and rising housing prices, the query of the place your cash goes the furthest has taken on new urgency — and state taxes could make a giant distinction.

A brand new evaluation from the Tax Foundation’s 2026 State Tax Competitiveness Index presents an in depth take a look at how every state’s tax system impacts residents and companies — rating them based mostly on greater than 150 variables inside 5 tax classes, together with company, particular person revenue, gross sales and excise, property and wealth and unemployment insurance coverage.

“The index measures tax construction, not all the opposite issues companies care about, like an informed workforce, high quality of life, proximity to related markets and even the climate — and a few of these issues contain trade-offs,” the Tax Basis, a Washington, D.C.-based suppose tank, mentioned within the report.

“Taxes, nonetheless, are an essential a part of the combination, and modernizing a state’s tax construction helps place IT for progress. States that rank higher on the Index have better-structured tax codes, and states with better-structured tax codes get Wins Above Alternative.”

Wins Above Alternative, or WAR, is a baseball time period that measures what number of extra wins a participant contributes in contrast with a replacement-level participant. On this analogy, a well-structured tax code is just like the star participant, giving a state an edge over what IT would get with a mediocre or poorly structured one.

One clear sample stands out among the many top-ranked tax-friendly states: Many forgo at the very least one main tax — comparable to particular person revenue tax, company revenue tax or state-level gross sales tax — despite the fact that all nonetheless levy property and unemployment insurance coverage taxes.

As an example, South Dakota and Wyoming do not levy both a company or a person revenue tax. Alaska and New Hampshire have neither a person revenue tax nor a state-level gross sales tax. Florida, Tennessee and Texas don’t have any particular person revenue tax. And Montana has no gross sales tax.

That mentioned, a state doesn’t have to eradicate main taxes to rank nicely. States like Idaho and Indiana nonetheless levy all 5 foremost taxes — revenue, gross sales, company, property and unemployment insurance coverage — but they rank ninth and tenth, respectively.

Idaho, specifically, climbed the rankings this yr by implementing a collection of tax reforms, together with decreasing its flat particular person and company revenue tax charges. These adjustments helped enhance the state two spots on the index, from eleventh to ninth total.

Right here’s a take a look at the ten states that ranked highest on the 2026 State Tax Competitiveness Index:

1. Wyoming

• Particular person revenue tax rank: 1st (tie)
• Gross sales tax rank: sixth
• Property tax rank: thirty seventh

2. South Dakota

• Particular person revenue tax rank: 1st (tie)
• Gross sales tax rank: thirty first
• Property tax rank: eighth

3. New Hampshire

• Particular person revenue tax rank: 1st (tie)
• Gross sales tax rank: 1st
• Property tax rank: forty fourth

4. Alaska

• Particular person revenue tax rank: 1st (tie)
• Gross sales tax rank: fifth
• Property tax rank: thirty first

5. Florida

• Particular person revenue tax rank: 1st (tie)
• Gross sales tax rank: sixteenth
• Property tax rank: twentieth

6. Montana

• Particular person revenue tax rank: twelfth
• Gross sales tax rank: third
• Property tax rank: seventeenth

7. Texas

• Particular person revenue tax rank: 1st (tie)
• Gross sales tax rank: thirty sixth
• Property tax rank: thirty eighth

8. Tennessee

• Particular person revenue tax rank: 1st (tie)
• Gross sales tax rank: forty seventh
• Property tax rank: thirty second

9. Idaho

• Particular person revenue tax rank: 14th
• Gross sales tax rank: eighth
• Property tax rank: third

10. Indiana

• Particular person revenue tax rank: twentieth
• Gross sales tax rank: 14th
• Property tax rank: 4th

Lowest-ranked states

On the different finish, the ten lowest-ranked states — Hawaii, Vermont, Massachusetts, Minnesota, Washington, Maryland, Connecticut, California, New Jersey and New York — have a tendency to mix excessive tax charges with complicated tax constructions, decreasing monetary flexibility for taxpayers.

Take New Jersey, for instance, the place residents and companies face among the nation’s steepest taxes. IT has one of many highest company revenue tax charges (with rates ranging from 6.5% to 11.5%), one of many highest particular person revenue tax charges and among the highest property taxes within the nation.

On high of that, the Backyard State taxes worldwide revenue aggressively, imposes an inheritance tax and has a sophisticated system for calculating particular person revenue taxes.

Here is a snapshot of the lowest-ranked states on this yr’s index:

41. Hawaii

• Particular person revenue tax rank: forty fifth
• Gross sales tax rank: twenty ninth
• Property tax rank: fifteenth

42. Vermont

• Particular person revenue tax rank: thirty ninth
• Gross sales tax rank: thirtieth
• Property tax rank: fiftieth

43. Massachusetts

• Particular person revenue tax rank: forty second
• Gross sales tax rank: twenty second
• Property tax rank: forty eighth

44. Minnesota

• Particular person revenue tax rank: forty fourth
• Gross sales tax rank: thirty fifth
• Property tax rank: twenty third

45. Washington

• Particular person revenue tax rank: thirty first
• Gross sales tax rank: forty ninth
• Property tax rank: twenty fifth

46. Maryland

• Particular person revenue tax rank: forty seventh
• Gross sales tax rank: fortieth
• Property tax rank: thirty sixth

47. Connecticut

• Particular person revenue tax rank: forty sixth
• Gross sales tax rank: nineteenth
• Property tax rank: forty ninth

48. California

• Particular person revenue tax rank: forty ninth
• Gross sales tax rank: forty sixth
• Property tax rank: twenty seventh

49. New Jersey

• Particular person revenue tax rank: forty eighth
• Gross sales tax rank: thirty fourth
• Property tax rank: forty second

50. New York

• Particular person revenue tax rank: fiftieth
• Gross sales tax rank: forty second
• Property tax rank: forty seventh

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