The Most Tax-Friendly States in the U.S.

10 Best States to Live In for Taxes

The Internet has given rise to a mobile workforce of telecommuters, independent contractors and entrepreneurs who can work where they want to live, instead of living where they have to work. But if you enjoy this kind of flexibility, proximity to ski slopes or beaches shouldn’t be your only criteria in selecting a home state. You should also calculate how much state taxes will extract from your paycheck and pocketbook. The difference from state to state can be dramatic — thousands of dollars every year.

Updated for 2016, here is our list of the 10 most tax-friendly states in the U.S. Five of the states on our list, including the top four, have no state income tax at all. Wyoming, our new No. 1 state this year, is one of those – and maintains a vibrant economy that will insulate residents from tax hikes for years to come.

Before you start packing the U-Haul, though, consider the possible trade-offs of moving to a low-tax state. If your state can’t afford to maintain its roads, you could end up spending more on car repairs than you’ll save in taxes. You may be willing to pay above-average property taxes in exchange for excellent schools.

One other caution: Some states have been able to keep their taxes low because of an abundance of wealth derived from natural resources. But as oil prices continue to plummet, states such as Alaska may have to look elsewhere for revenue.

Take a look.

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