Map Shows Most Affordable Countries Americans Can Move To

Only a few states in the union currently do not levy an individual income tax, a factor that is known to appeal to many Americans living in heavily taxed states and which can drive significant in-migration to those which don’t levy it.

But experts warn that the cost of living is not necessarily cheaper in tax-free states.

Why It Matters

During his 2024 presidential campaign, Donald Trump vowed to slash taxes for Americans and cut the cost of living—including by eliminating income taxes for all Americans and having tariffs pay for the lost revenues.

Trump’s focus on cutting taxes has galvanized long-term efforts by Republican governors and lawmakers in GOP-led states to further reduce state-level taxation. In Wyoming, for example, the conservative Freedom Caucus controlling the House wants to slash residential property taxes by 25 percent. In Texas, House and Senate lawmakers want to spend at least $6 billion on property tax cuts.

What To Know

Nine states currently do not levy individual income taxes, including Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. In New Hampshire, there is a 3 percent tax on interest and dividends for tax year 2024, but this is set to be fully phased out for 2025 and beyond. Washington levies an income tax on investment income and capital gains for high earners.

While not paying a state individual income tax may sound great to taxpayers, these states make up the lost revenues with other taxes or reduced services to their residents.

Assessing each state’s total tax burden, Investopedia found that many of the income tax-free states are not the most affordable in the country.

In Alaska, the total tax burden, measured as percentage of income, was 4.93 percent—the lowest of all 50 states. But the state scored 35 in affordability, with 1 being the best, mainly because the cost of healthcare is so high.

New Hampshire had a total tax burden of 5.63 percent—the second lowest in the country—but scored 44 in affordability, partially because it has the third-highest property tax rate in the country. Wyoming had a total tax burden of 5.70 percent—the sixth lowest in the nation—and scored 19 in affordability.

In Florida and Tennessee, the total tax burden was 6.05 percent and 6.07 percent respectively, with affordability rates of 39 and 18. While Florida is considered a tax haven for retirees, the state actually has above-average sales and excise taxes, and the recent rise in housing costs have chipped away at its affordability. Florida has the fourth-lowest tax burden in the nation, while Tennessee has the fifth.

South Dakota, where the total tax burden was 6.44 percent, had the best affordability out of all nine tax-free states, with a score of 5.

Nevada, Texas and Washington had total tax burdens of 7.37 percent, 7.56 percent, and 8.04 percent respectively, with affordability rates of 33, 28, and 47. The high cost of living and housing in Nevada and Washington put them both close to the bottom in affordability, while Texas residents face higher property taxes than in most states.

Even in states that do not levy an individual income tax, Americans still have to pay a percentage of their income to the federal government. The deadline for most taxpayers to file their federal income tax return, April 15, is fast approaching. The Internal Revenue Service (IRS) expects more than 140 million taxpayers to file their tax returns for the fiscal year 2024 ahead of the federal deadline.

What People Are Saying

Investopedia experts said: “One thing is clear: low taxes alone do not equal a low cost of living. Take time to evaluate the entire picture of a state before you make a move.”

Speaking with barbers in the Bronx, New York, during his 2024 campaign, Trump said: “When we were a smart country, in the 1890s […] this is when the country was relatively the richest it ever was. It had all tariffs. It didn’t have an income tax,” after a barber asked whether it would be possible to jettison the federal income tax. “Now we have income taxes, and we have people that are dying. They’re paying tax, and they don’t have the money to pay the tax,” Trump said.

What Happens Next

In the blueprint budget passed by Republicans in Congress last week, lawmakers paved the way to negotiate the president’s promised legislation, which includes ending taxes on tips and on Social Security benefits, among other policies.

It’s not yet clear which ones of these policies lawmakers will pursue and whether Trump will follow through on his promise to eliminate income taxes for all Americans, but experts have raised concerns about their impact on the country’s debt.