Best States For Middle

Dec 27, 2023

Here are the best states for middle-class families with "middle incomes" (due to low tax burdens).

If you hate paying taxes, and you want to keep more of your income, you might consider moving to one of these best states for "middle-class" families (states that have a relatively low tax burden for middle-income families).

After all, the cost of living for families considered to be “middle-class” is high enough as it is, and who doesn’t want to pay less taxes?

What it Really Costs to Be Middle Class

Median salaries can differ greatly from state to state, so to find out which states have the lowest tax burden for households with middle incomes, we considered each state’s median annual salary. Then, we calculated the average annual tax spent for three main tax categories: state income tax, property taxes, and sales taxes on essential items (groceries, diapers, and feminine hygiene products).

Be a smarter, better informed investor.

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.

The states with the lowest percentage of income spent on state taxes made our list. And here they are.

Median annual household income: $68,002

Percent of income spent on taxes: 2.2%

Wyoming taxes some essentials such as diapers and feminine hygiene products. Even so, no state income tax and reasonable property taxes (when compared to those in other states) place Wyoming as the highest rated on our list for middle-income households, when it comes to low tax burden.

Median annual household income: $65,686

Percent of income spent on taxes: 2.8%

Most states still tax diapers, and Nevada is one of them. However, the state has banned sales tax on some feminine hygiene products. No personal income tax and low property taxes relative to other states, make Nevada an overall tax-friendly state for middle-income families and households.

Median annual household income: $58,516

Percent of income spent on taxes: 3.4%

Tennessee taxes diapers and feminine hygiene products. It is also one of 13 states that still tax groceries. However, the state does not have a personal income tax, and the property taxes are on the low end when compared to those in other states, so Tennessee comes in at number three in our ranking.

Median annual household income: $61,777

Percent of income spent on taxes: 3.5%

Florida has no personal income tax. Additionally, a recent Florida tax relief bill eliminated the state sales tax on numerous baby and toddler essentials, including diapers, baby wipes, and strollers. The bill also eliminated sales tax on some feminine hygiene products. Average property taxes are not extremely high, but they aren’t extremely low either as compared to those in other states. Florida doesn’t tax groceries.

Median annual household income: $68,131

Percent of income spent on taxes: 4.3%

North Dakota does have a personal income tax, but the rates for middle-class households are low compared to most other states that impose income tax. North Dakota property taxes are reasonable, and the state no longer taxes diapers. North Dakota still imposes a sales tax on feminine hygiene products, but overall, it’s still one of the best states for middle-income families when it comes to paying less taxes.

Median annual household income: $80,287

Percent of income spent on taxes: 4.3%

Alaska doesn’t have a personal income tax, and it doesn’t have a statewide sales tax either. However, local tax tax jurisdictions may tax groceries, diapers and feminine hygiene products. Alaska winds up in the middle of our ranking due to its high property taxes.

Median annual household income: $65,913

Percent of income spent on taxes: 4.7%

Arizona has a state income tax. The state also taxes diapers and feminine hygiene products. But there is no state tax on groceries, and Arizona’s average property taxes aren’t very high compared to those in other states, so Arizona is in the number seven spot on this list.

Median annual household income: $82,400

Percent of income spent on taxes: 4.7%

Washington has high property taxes when compared with other states. Washington taxes diapers, too, but the state still makes this list since the state has no personal income tax.

Median annual household income: $63,920

Percent of income spent on taxes: 4.7%

South Dakota taxes essential items, including diapers, feminine hygiene products, and even groceries. Property taxes in South Dakota are not very low either compared to those in other states. But because the state has no state income tax, South Dakota makes the number nine spot for tax-friendly states for middle-income families and households.

Median annual household income: $53,571

Percent of income spent on taxes: 4.9%

Louisiana has a personal income tax, but the state has one of the lowest property taxes in the U.S., and the state doesn’t tax essential items like groceries or diapers, either. So, Louisiana gets in at number 10 for the best states for middle-income families who hate paying taxes.

Middle-Class Income and Taxes: Full Methodology

Median annual household salaries for each state were collected from the U.S. Census Bureau for the year 2021 (most recent data available). Personal income taxes were calculated using an ADP salary calculator. We used monthly pay periods and opted for joint filing statuses and two allowances (where applicable). Income taxes paid vary from filer to filer and can depend on your income, filing status, and the number of credits and deductions you qualify for when filing your taxes.

Total average grocery costs were calculated by averaging the average grocery spending by high and low-income households in 2021 as reported by the U.S. Department of Agriculture. The average monthly diaper expense is based on estimates from the National Diaper Bank Network. The average cost of feminine hygiene products was taken from the National Organization for Women. We used sales tax rates (average combined local and state sales tax rates) provided by the Tax Foundation to calculate the average sales taxes spent on essential items. Tax spent on essential items may be higher than $0 in some localities, even if essentials aren't taxed at the state level.

The data for median annual property taxes paid is from PropertyShark and is based on data provided by the U.S. Census Bureau.

Average taxes spent were added for each state to find the total percentage of household income paid to state taxes. Dollar amounts were rounded to the nearest cent. Percentages are rounded to the nearest tenth of a percent.

To determine what “middle income” (what is also referred to in this story as "middle-class") means, the median household income for each state was used. However, the definition of “middle-income” can vary 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.

Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.

You can now use direct deposit switching to allow lenders to verify your income through pay stubs, bank statements and payroll data.

By Joey SolitroPublished 28 August 23

Investors will enjoy a long weekend, with both the stock and bond markets closed on Monday for Labor Day.

By Karee VenemaPublished 28 August 23

Retirement TaxesThe IRS is offering relief on new 401(k) catch-up contribution rules for certain high earners. Here’s what it means for you.

By Kelley R. TaylorLast updated 28 August 23

State TaxConnecticut’s week-long sales tax holiday has ended. Here’s what you could buy tax-free.

By Kelley R. TaylorLast updated 25 August 23

Tourist TaxesIf you plan on traveling abroad, you may be charged higher tourist taxes. Here’s where —and when — your vacation might cost more.

By Katelyn WashingtonPublished 16 August 23

State TaxesThere's a new Oregon child tax credit, but how many families will it actually help?

By Katelyn WashingtonPublished 15 August 23

IRSA new report says the IRS placed 'deceased locks' on accounts of more than 90,000 taxpayers who weren’t dead.

By Kelley R. TaylorLast updated 15 August 23

Tax HolidayThe Maryland tax-free week can help you save money on back-to-school shopping.

By Katelyn WashingtonPublished 12 August 23

Tax HolidayThe 2023 Texas tax-free weekend can save you money on your back-to-school shopping. Here’s what you should know before you buy.

By Katelyn WashingtonPublished 10 August 23

Tax HolidayHere's everything you need to know about the annual Massachusetts tax-free weekend.

By Katelyn WashingtonPublished 10 August 23