Here's the honest ranking, combining all three major taxes: income, property, and sales.
The three taxes that actually hit you
Income tax gets the headlines, but property tax is the silent killer for homeowners — the average American pays $4,427 a year, and in New Jersey the average bill tops $10,499. Sales tax hits everyone, every day: Tennessee's combined state-plus-local rate approaches 9.6% [verify], the nation's highest.
The 10 most tax-friendly states (2026)
| Rank | State | Why it wins |
|---|---|---|
| 1 | Wyoming | No income tax, 3rd-lowest property taxes (0.40% effective), low sales tax |
| 2 | Alaska | No income tax, no state sales tax (local only), no tax on Social Security |
| 3 | South Dakota | No income tax, no tax on Social Security or pensions, modest property taxes |
| 4 | Tennessee | No income tax — but watch the ~9.6% [verify] combined sales tax, highest in the U.S. |
| 5 | Florida | No income tax — offset by rising property taxes and the nation's priciest homeowner's insurance (~$8,300/yr) |
| 6 | Nevada | No income tax, below-average property taxes (0.52% effective) |
| 7 | Texas | No income tax — but property taxes run high (1.25% effective, 9th nationally) |
| 8 | New Hampshire | No tax on wages; high property taxes (2.03%) are the tradeoff |
| 9 | Washington | No income tax — but taxes capital gains over $1M and has high sales taxes |
| 10 | Delaware | No state sales tax, low property taxes (0.48%), modest income tax |
Notice the pattern: 8 of the top 10 have no broad income tax. But each has a "gotcha" — Texas and New Hampshire claw it back through property taxes, Tennessee through sales tax.
The 10 least tax-friendly states (2026)
| Rank | State | The damage |
|---|---|---|
| 1 | Illinois | Highest total burden on a $100K household: ~$15,048/yr [verify]; property taxes highest in the nation (1.84%) |
| 2 | Connecticut | ~$14,260/yr total [verify]; 1.36% property tax; taxes some Social Security |
| 3 | New Jersey | ~$14,210/yr [verify]; $10,499 average property tax bill — nearly 10x West Virginia's |
| 4 | New York | High income tax (up to 10.9%), 1.23% property tax, big-city add-ons |
| 5 | California | 13.3% top income tax rate [verify], the nation's highest; pricey housing amplifies everything |
| 6 | Vermont | 1.40% property tax; one of only 8 states still taxing Social Security |
| 7 | Minnesota | Top income tax ~9.85% [verify]; taxes Social Security above thresholds |
| 8 | Wisconsin | ~$12,308/yr total burden [verify]; 5.3%+ income tax with high property taxes |
| 9 | Oregon | No sales tax — but 9.9% top income tax [verify] and no relief on property taxes |
| 10 | Massachusetts | Flat income tax plus surtax on high earners [verify]; 1.12% property tax adds up fast |
The retiree-specific twist
For retirees, the ranking shuffles. These states are especially friendly to retirement income:
- No tax on pensions: Alabama, Alaska, Florida, Hawaii, Illinois, Mississippi, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wyoming (plus Michigan's phase-out now fully effective)
- No tax on Social Security: 42 states — only CO, CT, MN, MT, NM, RI, UT, and VT still tax it
- All retirement income exempt at 55+: Iowa (new law)
Illinois is the paradox: brutal for workers (highest total burden), but it doesn't tax pensions or Social Security — genuinely decent for retirees who own a modest home.
The bottom line
Never judge a state by one tax. A "tax-free" state with 2% property taxes can cost a homeowner more than a high-income-tax state with cheap housing. Run all three taxes against your income mix and your housing plans before you move.
FAQ
Q: Which state has the lowest overall taxes?
A: By total burden, Wyoming and Alaska consistently rank lowest — no income tax plus low property and sales taxes. But the "best" state depends on whether you're a renter or homeowner, worker or retiree.
Q: Do any states have no taxes at all?
A: No. Every state collects revenue somehow. The nine states with no broad income tax (AK, FL, NV, NH, SD, TN, TX, WA, WY) lean harder on property, sales, or excise taxes.
Q: Which states tax Social Security in 2026?
A: Eight: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. West Virginia completed its phase-out and is fully exempt starting in 2026.
Q: Is Texas really tax-friendly with its property taxes?
A: For high earners who rent or own modest homes, yes. For owners of expensive homes, the 1.25% effective property tax rate can erase the income-tax savings. Do the math on your situation.
Q: How much do Americans pay in property tax on average?
A: $4,427 per year for the average single-family home (2025, ATTOM) — up 3% even as home values dipped, pushing the national effective rate to 0.9%.
Tool tie-in: State tax comparison calculator — enter income, home value, and spending to compare your total tax bill across states.