The Ten States with the Lowest Tax Burdens

10. New Mexico
> Taxes paid by residents as pct. of income: 8.4%
> Total state and local taxes collected: $16.9 billion
> Pct. of total taxes paid by residents: 59%
> Pct. of total taxes paid by non-residents: 41%

The state and local tax burden on New Mexico residents is the tenth lowest in the country. The state has a slightly below-average business climate, with a corporate tax rate ranging from 4.8% to 7.6%. Gasoline taxes are quite low, but excise taxes on alcohol and cigarettes are above average. The state tax on beer is one of the highest in the country. A high percentage of state and local revenues come from non-residents. This is usually the case with most states with a low tax burden on its residents. Per capita, state residents pay just $2,027, the sixth-lowest amount in the country.

9. Louisiana
> Taxes paid by residents as pct. of income: 8.2%
> Total state and local taxes collected: $44.2 billion
> Pct. of total taxes paid by residents: 54%
> Pct. of total taxes paid by non-residents: 46%

Despite having the fifth highest average state and local sales tax rate, residents of Louisiana have a relatively low tax burden. A leading reason for this is the simple fact that, on average, residents pay one of the smallest amounts of total state and local taxes in the country. According to the Tax Foundation, property taxes in the state are $565.23 per capita, the fifth lowest amount among states. Louisiana also collects $1.78 in federal spending for every dollar spent on federal taxes — the fourth highest ratio. This rate of federal spending helps offset the need for higher state revenue from taxes.

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8. South Carolina
> Taxes paid by residents as pct. of income: 8.1%
> Total state and local taxes collected: $35.4 billion
> Pct. of total taxes paid by residents: 66%
> Pct. of total taxes paid by non-residents: 34%

Residents of South Carolina pay the second smallest total amount in state and local taxes per person in the country, behind only Mississippi. The average person in the state pays $2,742 in taxes. Excise taxes are extremely low: the state has the fifth lowest gasoline tax in the country and the ninth lowest cigarette tax. The state also has relatively low property taxes at both the state and local level.

7. New Hampshire
> Taxes paid by residents as pct. of income: 8%
> Total state and local taxes collected: $9.6 billion
> Pct. of total taxes paid by residents: 56.4%
> Pct. of total taxes paid by non-residents: 43.6%

New Hampshire “has no special revenue source from non-residents, but the citizens’ approval of limited government spending has kept the tax burden low,” according to the Tax Foundation, The state has a flat 5% income tax rate that only applies to dividend and interest income, but, effectively, no tax on wages, and as a result most residents don’t have to pay it. The state is also one of only five states that has no sales tax. This causes many people from outside of the state to travel to New Hampshire to purchase goods that are heavily taxed in their own states. Not all taxes in New Hampshire are low, however. The state has the third highest property tax rate in the country.

6. Texas
> Taxes paid by residents as pct. of income: 7.9%
> Total state and local taxes collected: $196.5 billion
> Pct. of total taxes paid by residents: 63.4%
> Pct. of total taxes paid by non-residents: 36.6%

The population of Texas is 30% larger than New York, but collects more than 60% less in tax revenue than the Empire State. The tax burden on residents is the sixth lowest in the country, at just 7.9% of average income per resident. The biggest reason for this is that the state is one of just six in the country to levy no personal income tax. Texas also has the 11th lowest sales tax, at 7.39%, and average or below average rates on gasoline, cigarettes and alcohol.