Top Financially Friendly US States to Live In
Financial Friendliness State Selector
Financial Impact Analysis
Current Location
State: California
Estimated Annual Taxes: $15,000
Monthly Housing Cost: $3,500
Total Monthly Expenses: $5,500
Target Location
State: Tennessee
Estimated Annual Taxes: $0
Monthly Housing Cost: $2,000
Total Monthly Expenses: $3,000
Potential Annual Savings: $18,000
Top 5 Financially Friendly States
1. Tennessee
3.2 Housing Index
0% Income Tax
0.70% Property Tax
2. Texas
3.5 Housing Index
0% Income Tax
1.80% Property Tax
3. Wyoming
3.1 Housing Index
0% Income Tax
0.61% Property Tax
4. South Dakota
3.3 Housing Index
0% Income Tax
1.22% Property Tax
5. Florida
3.6 Housing Index
0% Income Tax
0.98% Property Tax
Thinking about moving but worried about how far your paycheck will stretch? You’re not alone. Deciding best state to live in financially means looking beyond sunshine and scenery and digging into the numbers that really matter: taxes, housing costs, and everyday expenses. Below you’ll find a clear method for ranking states, a snapshot of the top performers in 2025, and a practical checklist to see which state matches your own financial goals.
Key Takeaways
- States with no income tax and low housing costs usually rank highest.
- In 2025 the five most financially friendly states are Tennessee, Texas, Wyoming, South Dakota, and Florida.
- Look at a blend of cost of living, the overall price level for everyday goods and services, tax burden, and housing affordability.
- Use the checklist at the end to match a state’s profile to your personal situation.
- Free online calculators can help you project the real impact of a move before you sign a lease.
How We Rank Financial Friendliness
To keep the ranking transparent, we score each state on four core metrics. All data come from the U.S. Census Bureau, Bureau of Economic Analysis, and reputable cost‑of‑living indexes updated for 2025.
Median household income average earnings before taxes for a typical family shows how much money residents earn on average. Higher income can offset higher costs, so we give a positive weight to this figure.
State income tax the percentage of earned income that the state levies directly reduces take‑home pay. States with zero or very low rates score better.
Property tax annual tax on real‑estate value, expressed as a percentage matters whether you rent or own. High property taxes can erode savings even for renters because landlords typically pass the cost on.
Sales tax the statewide percentage added to most retail purchases affects day‑to‑day expenses like groceries, gas, and clothing.
We also factor in two supporting indicators: Unemployment rate percentage of the labor force without a job (lower is better) and the Housing affordability index ratio of median home price to median household income. A lower index means a home is more within reach.
2025 Rankings: Top 5 Financially Friendly States
| Rank | State | Median Income | Income Tax % | Property Tax % | Sales Tax % | Housing Affordability Index |
|---|---|---|---|---|---|---|
| 1 | Tennessee | $68,000 | 0% | 0.70% | 7% | 3.2 |
| 2 | Texas | $71,500 | 0% | 1.80% | 6.25% | 3.5 |
| 3 | Wyoming | $66,300 | 0% | 0.61% | 5% | 3.1 |
| 4 | South Dakota | $65,900 | 0% | 1.22% | 4.5% | 3.3 |
| 5 | Florida | $70,200 | 0% | 0.98% | 6% | 3.6 |
All five states share a common advantage: they have zero personal income tax. That alone can save a household earning $80k a year roughly $4,000‑$5,000 in state taxes. When you combine low property taxes and moderate sales taxes, the overall tax bite drops dramatically.
Why These States Excel
Tennessee tops the list because its combining a modest cost‑of‑living index with the lowest property tax rate among the group. Nashville’s booming job market also keeps the unemployment rate under 3%.
Texas offers huge median incomes thanks to its diversified economy (energy, tech, and healthcare). Although property taxes are higher than in Tennessee, the lack of income tax and a wide range of affordable suburbs keep total living costs low.
Wyoming benefits from abundant natural resources and a tiny population, which translates into very low sales and property taxes. The state’s housing market stays affordable, with median home prices well below the national average.
South Dakota balances low taxes with a stable job market driven by finance and agriculture. Its capital, Sioux Falls, consistently ranks among the best places for young professionals.
Florida is famous for its beaches, but financially it shines thanks to zero income tax and a comparatively low property tax rate for a coastal state. Retirees love the warm climate and the fact that Social Security benefits aren’t taxed at the state level.
Checklist: Matching a State to Your Money Goals
- Tax profile: Do you want zero income tax? Prioritize states like Tennessee, Texas, Wyoming, South Dakota, or Florida.
- Housing needs: If buying, check the housing affordability index; if renting, compare average rent per bedroom.
- Job market: Look at unemployment rates and industry concentration relevant to your career.
- Daily expenses: Use the cost‑of‑living index to gauge grocery, gas, and healthcare costs.
- Long‑term outlook: Consider state GDP growth and population trends to ensure your investment holds value.
Tools & Resources to Crunch the Numbers
Before you pack boxes, test the financial impact with these free calculators:
- State Tax Calculator (provides a quick estimate of income, sales, and property taxes based on your salary and home value).
- Cost‑of‑Living Comparison Tool (lets you input your current city and see a side‑by‑side cost breakdown for any target state).
- Mortgage Affordability Calculator (helps you see how a median home price translates into monthly payments).
Plug in your numbers, and you’ll see instantly whether a move saves you money or just reshuffles expenses.
Frequently Asked Questions
Which state has the lowest overall tax burden?
Tennessee leads with zero income tax, the lowest property tax rate among the top five, and a modest sales tax, giving it the smallest combined tax bite.
How important is the cost of living versus income tax?
Both matter, but for high earners the income‑tax savings often outweigh a slightly higher cost of living. For lower‑income households, a low cost‑of‑living index can be the deciding factor.
Are there hidden fees that could offset tax savings?
Yes. Some states compensate for low income taxes with higher vehicle registration fees or higher utility rates. Always review the full tax schedule before deciding.
What’s the best state for retirees?
Florida and Tennessee are popular because they don’t tax Social Security benefits, have low property taxes, and offer warm climates that appeal to many retirees.
How does the housing market affect financial friendliness?
A low housing affordability index means you can buy a home with a smaller mortgage, freeing up cash for savings or investments. States with booming markets can quickly erode this advantage.
