The Highest & Lowest Taxed Places in America

The highest and lowest taxed jurisdictions in America

There are many types of tax, but the main taxes the wealthy have to face are income taxes and property tax. The uber rich have an army of lawyers and accountants to pay reasonable tax rates. The HENRYs - high income not rich yet, those with an income of $250k to $1mm a year as of 2025, especially W-2 Earners, pay a shit-ton of taxes that are unavoidable.

That being said, some places are better off than others in terms of taxes you pay. For this excursion, we will assume you are a rich W-2 earner earning $500k in taxable income, who owns his own house for roughly $1mm dollars. We will consider income taxes only, including federal, state, and jurisdictional. For income tax purposes, we assume you are single and take no deductions.

I will give a top 5 and bottom 5 taxed states for tax year 2024. We use SmartAsset and Tax Foundation as the source.

1. NYC

New York, especially NYC, is an expensive place to live. With high property values in the center of finance, NYC’s property tax is roughly 1.925% according to SmartAsset. And with the most expensive properties in the country, that amounts to significant expense for homeowners. The state also has a significant sales tax, 4.5% in NYC, and 4% in the rest of NY state. Combined with the excise taxes, NYC is one of the most highly taxed jurisdictions in the world.

Your total tax rate 42.18%

2. Hawaii

It should be argued that Hawaii is the highest tax burdened state. It has a high income tax rate, a high gross receipts tax - which is typically passed on to consumers. Because of high property values, property taxes are roughly similar to what is paid in other states even though property taxes are lower. However, the island environment and friendly people may make this place worth it for you

Your total tax rate 41.05%

3. California

Welcome to the land of sunny, perfect weather nearly all the time, beaches, and high taxes. The California Republic has high income taxes, corporate taxes, and sales taxes. Famously, there was a tax revolt in California that capped property taxes. Due to Democratic dominance, taxes are more likely to go up than down.

Your total tax rate is 41.03%

4. The District of Columbia

The capital of the United States has no representation in Congress. DC is the seat of the American government, with a large amount of job opportunities for work in government and with government contractors. However, being resident in this jurisdiction comes with a notable disadvantage. The jurisdiction is highly taxed, with different sales taxes for different purchases. Combined with a high cost of living, and even high earning DC residents are feeling squeezed.

Your total tax rate is 40.42%

5. Vermont

A beautiful state in New England, Vermont is known for not actually being one of the 13 colonies. It was claimed by both New York and New Hampshire, only gaining independence shortly after the Revolutionary war - with negotiations with New York. Vermont has beautiful mountains and maple syrup, and amazing scenery, but it is also a highly taxed state.

Your total tax rate is 39.51%

Least taxed jurisdictions

If you own your own business, the least taxed jurisdictions would be the US Virgin Islands and Puerto Rico, each possibly with less than 5% total tax. However, as a W-2 Earner, one has more restrictions in the US for taxes, so it is preferable to live in a zero tax state. In these states, if you earn $500,000, you still pay 28.05% in income tax. But there are other taxes to be aware of.

We will look at the tax competitiveness of jurisdictions in the US from the Tax Foundation for this part.

1. Wyoming

Known for Yellowstone National Park, its lush geography, and its egalitarianism as Wyoming was the first territory and state to grant women the right to vote, Wyoming has a lot to offer. Wyoming was a frontier state, enabling pioneers to settle for land and being a stop point towards the highly sought out California gold rush. Several key advantages are within Wyoming. There is no State nor Corporate Tax here. Property taxes are extremely low, among the lowest in the country. Being a resident of Wyoming has many advantages.

2. South Dakota

Known for Mount Rushmore and the Crazy Horse Memorial, Its high Native American population, and its agricultural and manufacturing, South Dakota is an excellent place to make your residence. South Dakota doesn’t have a State or Corporate Income tax, just like Wyoming. It doesn’t have a uniform property tax, it depends on the municipality, but average property taxes are a moderately expensive 1%. Sales tax is dependent on municipality as well, with 4.2% statewide and municipalities allowed to add up as much as 2%.

3. Alaska

If you like snow, fishing, glaciers, and mountains, you’ll love this State. Alaska is the largest state by landmass in the Union. You will be able to see the Northern Lights with ease in Alaska, especially the closer you get to the Arctic. Land is cheap, but cost of living is high compared to wages, but if you are willing to brave the harsh environment, you’ll benefit from a generous tax environment, with no State income nor sales tax.

4. Florida

Florida is the land of “Florida Man”, alligators, the everglades, Disney, and famous cities like Miami and Ft. Lauderdale. It is arguably more of a Latin American State than a Southern State, as it was part of the former Spanish Empire. It is very hot and humid in the summers, and you will have to brave hurricane season if you live there full time, but its beaches, its culture, and its economic opportunities are first rate. There is zero personal income tax, or an estate tax, but there are sales, corporate, and property taxes.

5. Montana

Montana is one of those states with preserved natural beauty. There are plenty of activities - hiking, dirt bikes, fly fishing, and eating bison burgers or huckleberry pie. Montana has moderate state taxes, but it collects roughly 5.9% at its top marginal rate out of a two tiered tax system. Municipalities collect property taxes. Montana doesn’t have a sales tax, but certain municipalities have a resort tax. Montana is a beautiful state.

Which jurisdictions in the US you think are most competitive for a W-2 worker earning $500,000?

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