States vary widely in overall taxation impact on residents

When considering relocation to reduce state tax liability, the nine states without individual income taxes often attract attention. However, these states may compensate with higher sales or property taxes. A WalletHub report analyzed the average overall tax burden across all 50 states to identify where residents spend the least on taxes.

In the contiguous United States, New Hampshire has the lowest overall state tax burden. The state's residents face no state tax on wages and salaries and have the country's lowest sales tax burden, spending 5.63% of their income on state taxes, mainly through property taxes. Hannah Jones, a senior economic research analyst for Realtor.com®, notes that while "property taxes in New Hampshire are among the highest in the U.S., income tax and sales tax are among the lowest."

Jones also highlights home affordability as an attractive factor for potential movers to New Hampshire: "Manchester-Nashua, NH, has garnered significant attention as home shoppers seek out lower-priced homes within commuting distance from high-priced Boston." This metro area has topped Realtor.com's list of hottest property markets nine times in the past year.

Six other states without income taxes made it into WalletHub's top ten for low overall tax burdens: Alaska (ranked No. 50), Wyoming (No. 48), Florida (No. 47), Tennessee (No. 46), South Dakota (No. 44), and Nevada (No. 41). Surprisingly, Delaware ranked No. 45 despite having one of the highest income tax burdens due to its low sales and property taxes.

Texas and Washington did not fare as well; Texas ranked No. 37 with a state tax burden of 7.56%, while Washington came in at No. 29 with an 8.04% burden.

On the opposite end of the spectrum, New York holds first place for state taxes with a burden of 12.02%, followed by Hawaii (11.8%), Vermont (11.12%), Maine (10.74%), and California (10.4%). Jones points out that "New York and Hawaii are among the most expensive states in terms of home prices" alongside high total tax burdens.

Other Northeastern states like Connecticut, New Jersey, and Rhode Island also rank highly for taxation costs along with Midwest representatives Minnesota and Illinois.

"The seven states with the highest property tax burden are all in the Northeast," according to Jones who noted increased popularity for affordable metros near large business hubs due to hybrid work arrangements.

WalletHub's findings align with political stereotypes; Republican-leaning 'Red' states generally exhibit lower average tax burdens than Democratic-leaning 'Blue' ones—30.84 versus 20.08 respectively based on recent presidential election votes.

Blaine G Saito from Ohio State University emphasizes that lower-tax regions like Texas or Florida may encourage growth but cautions against oversimplification: “Economic growth can be tied to a lot of other factors.” He adds that tourism boosts Florida's economy through sales taxation while Texas attracts businesses from California via regulatory ease combined with cost savings including cheaper housing options compared nationally according to Realtor.com data showing affordability scores favoring Texas over California last October—0 .63 vs .44 respectively relative against national score .66