Slide Show | August 2014

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

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These ten states impose some of the lowest taxes in the U.S., according to Kiplinger’s 2014 analysis of state tax rules.

State taxes and the ways they are collected vary significantly across the country. For example, some states with low income taxes impose above-average sales or property taxes — a big consideration if you intend to own your house. Most states allow cities and counties to add their own sales taxes, which can boost combined sales taxes in some cities to 10% or more.

It’s also important to consider the potential trade-offs. Low tax revenues may give a state less money to spend on education, transportation, public safety and other quality-of-life services important to you and your family. Then there's the unfolding drama in Kansas, where steep cuts in individual and business taxes enacted under Gov. Sam Brownback in 2012 to foster economic growth have drawn sharp rebukes from both Democrats and Republicans, who say the cuts threaten the state’s fiscal health. S&P recently downgraded the state's credit rating.

But for those who have reason or need to live near state borders, which side you pick can make a significant difference in your tax burden.

Sources: State tax departments, CCH, the Tax Foundation, the American Hotel & Lodging Association, the American Petroleum Institute and the Distilled Spirits Council of the United States.

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



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