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Portfolio > Economy & Markets > Fixed Income

The 10 most tax-friendly states for wealthy clients in 2015

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For clients in every income bracket, geographic location is an important factor in determining tax burden. A state that is economically friendly for low-income families may tax the high-net-worth at stratospheric rates (and vice versa). With this in mind, the folks at WalletHub set out to determine the most tax-friendly spots for residents at three income levels: low ($25,000), medium ($50,000) and high ($150,000). Their research team looked not at tax rates, but at the share of a person’s income that goes toward various tax obligations, including sales tax, property tax and income tax.

It’s no surprise that the results look very different from one income bracket to the next. For high earners, the total tax rate in the friendliest state was just 3.43 percent. In the least-friendly state (Connecticut, if you’re wondering), it was a whopping 11.19 percent. Where you live makes a difference but — and this may surprise you — region does not. Wealthy clients can settle in the South, the West, even on the East Coast and keep tax rates reasonably low.

Keep reading to view the ten states that make tax season a bit more bearable for affluent clients.

 

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10. Delaware

Sales tax as % of income: 0.72%

Property tax as % of income: 1.26%

Income tax as % of income: 4.16%

Total tax as % of income: 6.14%

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9. Alabama

Sales tax as % of income: 2.30%

Property tax as % of income: 1.10%

Income tax as % of income: 2.64%

Total tax as % of income: 6.03%

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8. North Dakota

Sales tax as % of income: 3.00%

Property tax as % of income: 1.50%

Income tax as % of income: 1.20%

Total tax as % of income: 5.70%

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7. Florida

Sales tax as % of income: 3.14%

Property tax as % of income: 2.40%

Income tax as % of income: 0.02%

Total tax as % of income: 5.56%

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6. New Hampshire

Sales tax as % of income: 0.72%

Property tax as % of income: 3.94%

Income tax as % of income: 0.70%

Total tax as % of income: 5.36%

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5. South Dakota

Sales tax as % of income: 3.09%

Property tax as % of income: 2.09%

Income tax as % of income: 0.00%

Total tax as % of income: 5.17%

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4. Tennessee

Sales tax as % of income: 3.27%

Property tax as % of income: 1.51%

Income tax as % of income: 0.19%

Total tax as % of income: 4.97%

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3. Nevada

Sales tax as % of income: 2.21%

Property tax as % of income: 2.05%

Income tax as % of income: 0.46%

Total tax as % of income: 4.71%

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2. Wyoming

Sales tax as % of income: 2.22%

Property tax as % of income: 1.76%

Income tax as % of income: 0.00%

Total tax as % of income: 3.98%

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1. Alaska

Sales tax as % of income: 0.88%

Property tax as % of income: 2.35%

Income tax as % of income: 0.20%

Total tax as % of income: 3.43%


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