The 5 States With the Fairest Taxes (and the 5 Worst States)

Photo (cc) by 401(K) 2013

Mirror, mirror, on the wall, who has the fairest tax system of all?

According to a new survey by WalletHub, Montana’s state and local tax system is the fairest in the nation. The Big Sky state was ranked first in tax fairness by both liberals and conservatives.

Montana Department of Revenue director Mike Kadas told the Helena Independent Record:

From the perspective of our own structure, what really underlies this is a roughly proportional property tax system, a mildly progressive income tax system and no sales tax. It is the sales tax that adds the regressivity into an overall tax structure.

Yep, no general sales tax. The Washington Post shed more light on the state government’s sources of revenue:

Beyond income taxes, Montana relies on selective sales taxes on items such as tobacco and gasoline for about a fifth of its total tax revenue. Taxes on licenses — such as licenses for alcohol sales and operating licenses — and taxes on oil and gas production account for another fifth, and all are more stable revenue sources than income taxes.

WalletHub’s state rankings for the most and least fair tax systems are based on its online survey of more than 1,000 people. The site asked respondents about what they think makes up a fair state and local tax system, then compared that with the actual structure of states’ tax systems.

It turns out Americans think a progressive tax structure, where the more money you make, the higher the percentage you pay in taxes, is the fairest way for government to raise revenue. Even when considering political ideology, the results were the same.

WalletHub analyzed the state and local tax burdens (by income level) across all 50 states. The results are startling, though not unexpected.

“The real relationship between household income and state and local tax burden is negative — as income goes up, state and local tax burden goes down — the exact opposite of what Americans think is fair,” WalletHub said.

The top five fairest state and local tax systems are:

  1. Montana.
  2. Oregon.
  3. South Carolina.
  4. Delaware.
  5. Idaho.

The least fair state and local tax systems are:

  1. Washington state (last place).
  2. Hawaii.
  3. Arkansas.
  4. Illinois.
  5. Florida.

According to the Post, Washington is one of just seven states with no income tax, so it raises the bulk of its money through a regressive sales tax, which spreads the tax burden evenly, regardless of how much money an individual earns.

Click here to see where your state ranks.

I was thrilled to see my home state ranked first for the fairness of its tax system. Go, Montana!

How did your state rank? Share your comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Brace to Pay More for These 26 Prescriptions in 2020
Brace to Pay More for These 26 Prescriptions in 2020

More than 600 drugs — including these commonly prescribed meds — have seen price hikes so far this year.

The 10 Best and 10 Worst States for Raising a Family in 2020
The 10 Best and 10 Worst States for Raising a Family in 2020

There are trade-offs no matter where you live. However, some states have big advantages when it comes to choosing a home for your family.

7 Free Tools for Saving More Money at Amazon
7 Free Tools for Saving More Money at Amazon

Use these websites and other tools to save money — or earn extra cash — when shopping at Amazon.

8 Ways to Slash the Cost of Homeowners Insurance
8 Ways to Slash the Cost of Homeowners Insurance

Reviewing this critical insurance policy takes a little effort, but it pays off big.

27 Things You Should Never Pay For — and How to Get Them for Free
27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

15 Free Streaming Services to Watch While Stuck at Home
15 Free Streaming Services to Watch While Stuck at Home

These free movie streaming sites offer thousands of movies and TV shows, including recent releases and beloved classics. If you love free movies, online sites are where you need to look for the best list of features that are just one easy click away.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.