Tired of feeling in a tight spot come tax time? You’re not alone. According to a recent Pew Research report, slightly more than half of Americans believe they pay “more than their fair share” in taxes.
Fortunately, you could have a say over how much the taxman takes if you’re willing to relocate. But you should consider a state’s overall tax landscape before making a move.
For instance, some states make up for low income taxes with higher taxes in other areas, such as sales and property tax rates — making you perhaps no better off than you were before relocating, tax-wise.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Kiplinger found the one U.S. state that might offer the best balance of low income, sales, and property taxes for your family’s wallet.
The most tax-friendly state for the middle class
To determine the “most tax-friendly state for the middle-class,” Kiplinger considered each state's median annual salary to determine which states have the lowest tax burden for households with middle incomes.
Then we calculated the average annual tax spent on three tax categories: state income tax, property taxes, and sales taxes on essential items (groceries, diapers, and gas). (See the end of the article for more information about methodology.)
The state with the lowest tax burden is considered the most "tax-friendly " for these rankings.
Best state for middle-class taxes
Nevada.
Nevada has no state income tax, which is one reason it’s the most tax-friendly state for middle-class families. Among the many types of income that you’ll find tax-exempt in the Silver State are:
- Investment income (Nevada is one of the most tax-friendly states for investing).
- Short-term rental income and capital gains.
- Most retirement income, such as 401(k) withdrawals and Social Security benefits.
Nevada residents save on property tax bills, too. The annual median property tax paid in the Silver State is $2,143, which is about $1,000 less than the national average, according to U.S. Census Bureau data.
- This is partly due to Nevada’s effective property tax rate of .49%, per the Tax Foundation, which is one of the lowest rates in the nation.
- Nevada has a property tax abatement law that caps yearly increases on property taxes for primary residences, protecting homeowners from sudden hikes.
Even better is that the Silver State is one of the few states that don’t tax inheritance or estates, meaning more money for your heirs is also tax-exempt.
But although these tax benefits generally outweigh the tax cons in our ranking, as with all states, there might be a few tax reasons you wouldn’t want to move to Nevada. Let’s go over those next.
Nevada taxes for middle-class families
Nevada has low taxes compared to other states, yet there is one primary tax caveat that might raise an eyebrow for middle-class families.
- The Nevada sales tax rate is 6.85%, which may be higher than where you are living now.
- This is especially true when you factor in local taxes, which average 1.39%, for a combined average local and state tax rate of 8.24%, per the Tax Foundation.
Yet while Nevada might levy higher sales taxes to compensate for lower taxes in other key areas, several essentials are exempt from the Silver State’s high sales tax rate.
- Nevada has one of the lowest state gas tax rates in the U.S., which might help reduce your weekly commuting expenses (though local taxes can raise the rate).
- Groceries, diapers, prescription medicine and feminine products are all tax-exempt in Nevada, which might further reduce your monthly spending.
If most of your annual spending is on essentials, you might save on your state sales taxes even if the Nevada rate is a little higher than where you currently reside.
Is Nevada a good state for middle-class families?
Before you’re ready for a move to Nevada, there are other important factors to consider.
While Kiplinger’s ranking considered state tax burdens, you’ll probably want to research other key considerations, like cost of living, political climate and crime rates.
- For instance, Nevada is famously known for extreme heat, which might increase your monthly utility bill. The state’s desert geography makes the transportation of goods more challenging and limits local agriculture compared to most other states. Because of this, the cost of groceries might be higher than where you live now.
- Yet year-round sunshine supports Nevada’s thriving outdoor recreation scene, with a variety of national parks, and entertainment centers like Las Vegas.
- However, Nevada typically receives a lower score in national rankings that compare pre-K-12 education quality and outcomes.
Ultimately, consider your family’s unique lifestyle and financial needs before deciding to move to a new locale. Just because Nevada is generally the most tax-friendly state for middle-class families, it might not be the most optimal state for you and your family.
Note: No matter where you move, federal income taxes still apply, and local taxes might vary. The definition of “middle-income” can also differ greatly. For purposes of this ranking, “family” means any household with at least one adult still raising at least one child. The amount of taxes paid can vary depending on several factors, including family size and the number of adults in the household who work. Full details about the methodology Kiplinger used to rank state tax burdens for this story are available in Kiplinger’s report, Low-Tax States for 'Middle-Class' Families in 2026.
Read More
-
Why Playing It Safe in Retirement Is a Big RiskFear of losing money could actually cost you in retirement. Find out why being too conservative with your life savings can hurt you and how to stop that from happening.
-
Tax Refund Alert: House GOP Predicts 'Average' $1,000 Payouts in 2026Tax Refunds Here's how the IRS tax refund outlook for 2026 is changing and what steps you can take now to prepare.
-
What Not to Do in an Airport LoungeBefore you settle into that cushy lounge chair, skip the rookie moves that annoy other travelers and can even get you kicked out.
-
Tax Refund Alert: House GOP Predicts 'Average' $1,000 Payouts in 2026
Tax Refunds Here's how the IRS tax refund outlook for 2026 is changing and what steps you can take now to prepare.
-
New IRS Changes to FSA Contribution Limits for 2026: What to KnowHealth Care Flexible Spending Accounts have tax advantages worth looking into, especially in light of new IRS changes.
-
Is a New $25,000 Health Care Tax Deduction Coming in 2026?Tax Policy A proposal from GOP Sen. Josh Hawley adds to the chatter about health care affordability.
-
'Politics' Is a Dirty Word for Some Financial Advisers: 3 Reasons This Financial Planner Vehemently DisagreesYour financial plan should be aligned with your values and your politics. If your adviser refuses to talk about them, it's time to go elsewhere.
-
For a Move Abroad, Choosing a Fiduciary Financial Planner Who Sees Both Sides of the Border Is CriticalWorking with a cross-border financial planner is essential to integrate tax, estate and visa considerations and avoid costly, unexpected liabilities.
-
Costco Sues Over Trump Tariffs: What Could That Mean for Prices in 2026?Tariffs The retailer is making headlines not just for its famous hot dog and gold bars but for suing the Trump administration over tariffs.
-
Social Security Benefits Quiz : Do You Know the IRS Tax Rules?Quiz Social Security benefits often come with confusing IRS tax rules that can trip up financially savvy retirees and near-retirees.
-
How Are I Bonds Taxed? 8 Common Situations to KnowBonds Series I U.S. savings bonds are a popular investment, but the federal income tax consequences are anything but straightforward.
