tax free states in us; You may not be able to escape taxes at home, but that doesn’t mean you can’t enjoy the perks of living in a tax-free state. While these states don’t offer protection from local and federal taxes like a more protective tax haven, they provide some relief from the cost of living in a major city. Essentially, these states offer you the opportunity to reduce your overall living costs by lessening your impact on the environment and giving you benefits that the government won’t tax.
However, if you’re thinking about moving to one of these states or currently looking for ways to cut down your expenses, keep reading as we explain what these tax-free states entail and how you can find ways to enjoy them at a lower cost.
What Are Tax-Free States?
Tax-free states offer residents certain benefits when it comes to tax collection. Unlike some tax havens, these states don’t provide a total exemption from all taxes but rather offer certain tax benefits for residents. Typically, these benefits come in lower income tax brackets and deductions. In addition, some states offer an income tax waiver for military personnel.
Depending on which state you live in, you might also be able to take advantage of other benefits like lower utility costs. Tax-free forms are often accompanied by low-tax conditions, which provide lower taxes in some areas, like utilities or sales taxes. These states might have lower income tax brackets than high-tax states but may also have a higher sales tax rate or higher utility costs.
Location of Tax-Free States
Tax-free states are located mainly in the West and South, with a few exceptions. The most northern state with a tax-free status is South Dakota, while the most southern state is Florida. All of these states except for North Dakota, Florida, and Washington have under 10 million people.
Why Move to a Tax-Free State?
The first and perhaps most apparent is that you’re looking to reduce your overall living costs. When you choose to move to a tax-free state, you’ll be able to drastically reduce your income tax burden and lower your utility and grocery costs. Additionally, you’ll avoid paying state taxes and avoid paying city taxes, which can be significant savings for those who work in big cities.
What it Costs to Live in a Tax-Free State
Before you decide to head out to the nearest tax-free state, you’ll want to look at what it costs to live in a tax-free state. As with any form, it’s important to remember that you’re not finding the lowest cost of living in any given state. You’re likely to spend more in certain conditions than you would in others. The cost of living in tax-free states will be lower than most other places.
That said, you’ll likely be able to find cheaper ways to live, like in a smaller home in a less-crowded suburb. Tax-free states also tend to be more spread out than states with higher taxes, which means you might be able to find a house in a less populated area.
Tips for Living in a Tax-Free State
While living in a tax-free state is an excellent option for reducing your costs, it isn’t free. You’ll still have to think about what you can do to lower your expenses. Here are some tips for living in a tax-free state.
- Switch from Gas to Electric
When it comes to energy costs, electric utilities are often among the lowest in the country. You should switch to them if you live in a high-tax state or city. You can easily save a small fortune by switching from gas to electric.
- Shop in Bulk
Grocery stores are often among the most expensive in a place like New York City or Los York, while they can be pretty cheap in South Dakota.
- Look for Community Events
There are several community events and activities you can look into joining in your new town. You can meet lots of people, make new friends this way, and enjoy several free activities.
- Switch to Public Transportation
Public transportation is often among the cheapest forms of transportation. At the same time, it’s also an excellent way to get around while avoiding the high levels of pollution that come with car use.
- Shop Online
Many items, especially those meant for daily use, can be found at a much lower price online than found in brick-and-mortar stores.
- Get a roommate
If you have a nearby roommate, they can often help you get by on a much cheaper budget than living alone.
Which US State Is the Most Tax-Free?
To determine which state is tax-free, we looked at the following factors:
- Tax-Free State Population
The lower the population, the easier it is to avoid paying taxes. All these factors mean a lower tax burden for residents.
- Tax-Free State Income Tax
The lower the income tax, the better. The fewer taxes people have to pay in a state or city, the less they’ll spend on things like transportation, food, and housing.
- Tax-Free State Utility Costs
Low utility costs are essential since a large portion of your monthly bill is often spent on energy.
A move to a tax-free state can be highly beneficial for those looking to lower their costs of living and find a place with a lower impact on the environment. However, you’ll need to think carefully about how much you’re willing to sacrifice to enjoy the benefits of living in a tax-free state.