How State Taxes Can Shape Where You Live—and What You Keep

September 5, 2025

When people think about where to live, they often consider lifestyle. They imagine warm beaches, mountain views, or sunny weather all year. But beyond lifestyle, financial factors play a big role too. Among them, state income taxes can make a meaningful difference in how much of your income you actually keep.

Why Taxes Matter in the Relocation Decision

Taxes affect more than just your April filing. They influence your after-tax income, which directly impacts your budget, savings potential, and even long-term wealth building. States with higher tax rates can reduce your earnings. In contrast, states with low or no income tax may let you keep more money.

This is one reason we’ve seen population shifts across the country. Recent data from the U.S. Census Bureau shows that lower-tax Sun Belt states are attracting new residents. In contrast, many higher-tax states are growing slowly or even losing people. For instance:

●     California lost roughly 466,000 people in 2024.

●     New York gained 296,000 residents, but that hasn’t erased years of prior losses.

●     Florida welcomed more than 760,000 new residents—over twice the number it gained in 2023.

●     Texas added about 787,000 residents, a 66% jump from the prior year.

Taxes are not the only reason for these moves, but they are a big factor for many families and retirees.

Source: Fidelity

Charts assume earned income of $100,000. All income is assumed to be ordinary income subject to income taxation. A FICA effective tax rate, federal income brackets, and state income tax brackets are used. We assume that state adjusted gross income (AGI) is the same as the federal AGI and that the only deduction that applies is federal standard deduction based on filing status. We assume further that the additional federal standard deduction for age is included, and no credits are claimed. All data is as of 2024. Tax law may have changed between 2024 and the publishing date of the article.

States with No Income Tax

Nine states do not tax earned income. These states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

These states still make money. They often do this through higher sales taxes, property taxes, or fees. For higher-income households, not having a state income tax can save them thousands of dollars each year.

For example, a single filer earning $250,000 annually in Vermont faces an estimated effective tax rate of about 32.8%—roughly $82,000 in combined federal, state, and payroll taxes. By contrast, the same individual in New Hampshire would see an effective rate closer to 26.8%, saving around $15,000 per year.

On a smaller scale, someone earning $100,000 in Oregon—one of the highest-tax states—could save about $7,000 annually by moving to a no-tax state such as Florida or Texas. Conversely, moving from no-tax Nevada to neighboring Utah could increase a person’s tax bill by nearly $4,000 annually.

Effective Tax Rates by State

Among the 41 states that impose income taxes, effective rates vary widely. Effective tax rate means the percentage of your total income that goes toward taxes, factoring in deductions and credits—not just your marginal bracket.

●     For single filers earning $100,000, combined federal, state, and payroll taxes range from a high of 28.1% in Oregon to about 21.1% in no-tax states (with North Dakota being the lowest among states that do tax income, at 21.8%).

●     For married couples earning $100,000 jointly, the range is from 20.6% in Oregon to 15.3% in no-tax states plus North Dakota.

Interestingly, while the Northeast is often seen as the highest-tax region, Oregon and Hawaii top the list for effective income tax rates. States like Maine, Minnesota, and Virginia also rank among the highest. On the other hand, Ohio, New Jersey, and Arizona appear on the lower end for married filers, while California lands in the middle—expensive for singles but relatively favorable for married couples.

Source: Fidelity

Charts assume income of $100,000. All income is assumed to be ordinary income subject to income taxation. A FICA effective tax rate, federal income brackets, and state income tax brackets are used. We assume that state adjusted gross income (AGI) is the same as the federal AGI and that the only deduction that applies is federal standard deduction based on filing status. We assume further that the additional federal standard deduction for age is included, and no credits are claimed. All data is as of 2024. Tax law may have changed between 2024 and the publishing date of the article.

Balancing Lifestyle and Finances

Taxes aren’t the only factor to weigh when considering a move. Housing costs, job opportunities, healthcare, and overall cost of living all come into play. Still, knowing how much state taxes could affect your bottom line is an essential part of the equation.

For many households, relocating to a lower-tax state can free up money to save, invest, or spend on lifestyle goals. But every financial situation is unique, and what makes sense for one family may not for another.

Final Thoughts

Relocation is both a lifestyle choice and a financial decision. Understanding how state income taxes may impact your take-home pay is a key step in making an informed choice.

If you’re weighing a move—or simply curious about how your state’s tax rates compare—it may be helpful to run the numbers. A conversation with a financial or tax professional can ensure you have a clear picture of how a potential move could affect your long-term financial plan.

Sources:

https://www.fidelity.com/learning-center/personal-finance/best-states-for-taxes

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.