Top Stories
Top Stories
Personal Finance

10 states that are the most tax-friendly for middle-income households

Key Points
  • Illinois ranked as the least tax-friendly state for middle-income households, while Alaska took top honors, according to a  study from GOBankingRates.
  • Though individual income tax rates matter, so do sales and property taxes. Be sure to consider the overall tax picture when deciding where to live.
Sitka, Alaska.
Getty Images

Illinois residents looking to save on taxes may want to start by getting estimates on a move to Alaska.

At least that's the recommendation from personal finance website GOBankingRates, which published a study Tuesday that rates the most and least tax-friendly states for the middle class. The study compared total sales tax, property tax and personal income taxes paid by the middle 20 percent of households.

GOBankingRates compiled data from the Institution of Taxation and Economic Policy's 2018 "Who Pays" report.

Top 10 most tax-friendly states:
• Alaska
• Delaware
• Nevada
• Wyoming
• Montana
• Florida
• Tennessee
• Idaho
• South Carolina
• North Dakota

It's not surprising that states with no income tax, such as Alaska, Nevada or Florida, fare better, said Andrew DePietro, study researcher and data analyst.

However, states that don't levy individual income must find revenue from other sources. This also factored into the rankings.

New Hampshire, for example, ranked 12th on the list. Although the state doesn't tax incomes, New Hampshire does have higher property and state taxes.

Millennium Park in Chicago, Illinois
Jeff Greenberg | Getty Images

The states lower on the list all had higher state tax rates — with Illinois residents forking over a whopping 12.6 percent of state taxes paid by the middle 20 percent.

The 10 least tax-friendly states:
• Illinois
• Connecticut
• New York
• Hawaii
• Kentucky
• Indiana
• Pennsylvania
• Nebraska
• Maryland
• Iowa

More from Personal Finance:
3 tips to help you boost your tax-free retirement income
Work a lot? You can save more for retirement, too
Failed to withhold enough in 2018? The IRS has a surprise for you

WATCH: Here's what the new tax law means for your retirement

VIDEO1:4501:45
Here's what the new tax law means for your retirement
Next Article
Personal Finance

Here's who is most likely to get a bigger tax refund this year

Key Points
  • Tax refunds checks are 8.4 percent less compared to this time last year, thanks to changes ushered in by the Tax Cuts and Jobs Act.
  • While many individuals could receive less back or even owe the IRS, there are still some who will actually receive bigger checks this year.
  • Even if you do get more money back, that's not all bad news, according to one tax expert.