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
7 Small Appliances You Don’t Need — and What to Use Instead
7 Small Appliances You Don’t Need — and What to Use Instead

Here’s how to get the job done without blowing money — or losing counter space.

Small Splurges That Make It Feel Like You’re Living Large
Small Splurges That Make It Feel Like You’re Living Large

Cutting costs is the shortest path to financial freedom. However, there are times when a little spending can produce big returns.

20 Generic Brands That Amazon Created
20 Generic Brands That Amazon Created

Amazon’s growing collection of private brands offers everything from toilet paper and coffee to motor oil and clothing.

5 Reasons You Should Work for as Long as You Live
5 Reasons You Should Work for as Long as You Live

These benefits might make you think twice about retirement.

7 Steps to Keep Your Car Looking Like New
7 Steps to Keep Your Car Looking Like New

Take a few steps to preserve the beauty of your car, and you stand to get a lot more money at trade-in time.

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.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

This iconic dinnerware is prized for everyday use as well as reselling for profit.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

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.

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

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.