Short answer: Income tax is the state levy everyone compares, and it is often not the one that costs the most. Three others do more damage to a household balance sheet: property tax, charged annually on what you own rather than what you earn; estate and inheritance tax, which several states charge at thresholds far below the federal $15,000,000; and transfer and recording taxes at closing, which are invisible until the settlement statement arrives. A state with no income tax is not automatically a cheap state.
How to use this guide: work out which of the four levies your decision actually triggers, then price that one. Moving triggers all four over time; buying a house triggers property and transfer tax immediately; inheriting triggers the estate layer alone.
Comparisons between states almost always start and stop at income tax, because it is the number with a clean headline. It is also the number that varies least in its effect on an ordinary household, because it scales with earnings and stops when they do.
The levies that catch people out are the ones charged on assets and transactions. They do not stop when your income does, they are not withheld from a paycheck, and they are set at the state and often the county level, so two addresses forty minutes apart can differ substantially. This guide maps the four families and points each at the tool that prices it.
The four state levies, and when each one reaches you
| Levy | Charged on | Triggered by | Price it with |
|---|---|---|---|
| Income tax | What you earn | Earning, or changing residency | State income tax comparator |
| Property tax | What you own, annually | Owning real property; reassessed on purchase | Property tax estimator |
| Estate and inheritance tax | What you leave, or receive | Death — of you, or of a relative | Inheritance tax by state |
| Transfer, recording and title costs | The transaction itself | Buying or selling property | Closing cost calculator |
The no-income-tax trap
The states that levy no personal income tax still have to fund schools, roads and emergency services, and the revenue comes from somewhere. In practice that usually means a heavier reliance on property tax, sales tax, or both.
This matters because the two levies fall on different people. Income tax scales with earnings, so it falls lightly on a retiree with a paid-off house and a modest pension. Property tax scales with the assessed value of the home, so it falls on that same retiree in full, every year, whether or not they earned anything. A household that moves to a no-income-tax state for the headline saving, and buys a larger house with the proceeds, can end up worse off in cash terms while believing it saved money.
The honest comparison is total annual cost at your own numbers: run your salary through the state income tax comparator, run the house you would actually buy through the property tax estimator, and add them. Do not compare a rate to a rate.
Where the federal SALT cap changes the arithmetic
State income tax and property tax are both deductible on a federal return, but only as itemised deductions and only up to a cap. From 2018 that cap was $10,000, which meant that above a fairly low level, extra state tax cost you the full amount — there was no federal offset left.
For 2026 the cap is $40,400 ($20,200 married filing separately), reduced where modified adjusted gross income exceeds $505,000 but never below $10,000. That restores a meaningful federal offset for households in high-tax states, and it changes the after-tax cost of living in one. It also makes itemising worth re-testing for people who stopped years ago. Both points are covered in detail in our guide to the 2026 tax law changes; the decision itself is arithmetic, and the itemised vs standard deduction calculator settles it.
One caveat that catches high earners: the alternative minimum tax disallows the state and local tax deduction outright. In a year you land in AMT, the higher cap is worth nothing at all.
Estate and inheritance tax: two different taxes with similar names
These are frequently confused, and the difference decides who pays.
- An estate tax is charged to the estate, before anything is distributed. The federal estate tax works this way, with a basic exclusion of $15,000,000 per person for 2026.
- An inheritance tax is charged to the recipient, after distribution, and the rate commonly depends on how closely related you were to the deceased. A surviving spouse is typically exempt; a sibling, niece or unrelated beneficiary frequently is not.
A minority of states levy one or the other, and a couple levy both. The thresholds where they do are generally far below the federal exclusion, which is the source of most unpleasant surprises — a family confidently under the federal line can still owe at state level. Because an inheritance tax follows the beneficiary's relationship rather than the estate's size, it is also possible for two people inheriting equal shares of the same estate to owe very different amounts.
Check the federal position with the estate tax estimator and the state layer with inheritance tax by state. They answer different questions and you need both.
Transfer taxes: the levy nobody budgets for
Buying property triggers a set of one-off, state- and county-level charges: transfer or deed taxes, mortgage recording taxes in some jurisdictions, and title work priced by local convention. These vary enormously — in some states the buyer pays, in others the seller, in others it is negotiated — and none of them appear in a monthly-payment calculation.
They are also the costs most likely to be missing from a buyer's savings plan, because a down payment is easy to picture and a settlement statement is not. Two of these items are worth pricing before you make an offer rather than after: transfer taxes, because they can run to thousands and are non-negotiable; and prepaid property tax, because the proration at closing depends on where in the tax year you complete. The closing cost calculator sizes the range for your state and purchase price.
Frequently Asked Questions
Which state is cheapest overall?
There is no single answer, because the levies fall on different things. A high earner who rents is exposed mainly to income tax; a retiree who owns is exposed mainly to property tax; someone inheriting is exposed to neither but possibly to inheritance tax. The cheapest state depends on which of those you are.
If a state has no income tax, do I save money by moving there?
Only if the levies that replace it fall more lightly on you than income tax did. Those states typically lean harder on property and sales tax. Compare your total annual cost, not the headline rates.
Is state tax deductible on my federal return?
State and local income, sales and property taxes are deductible if you itemise, capped at $40,400 for 2026 ($20,200 married filing separately), reduced above $505,000 of modified adjusted gross income but never below $10,000. The deduction is disallowed entirely under the alternative minimum tax.
What is the difference between estate tax and inheritance tax?
Estate tax is paid by the estate before distribution; inheritance tax is paid by the person receiving, often at a rate that depends on their relationship to the deceased. A state may levy either, both, or neither, and its threshold is typically far below the federal $15,000,000 exclusion.
Do property taxes follow the price I paid?
Often, yes. Many jurisdictions reassess on sale, so the tax the previous owner paid can be a poor guide to what you will pay. Estimate from your own purchase price rather than the listing's stated tax figure.
Is my information private?
Yes. Every calculator linked from this guide runs entirely in your browser; nothing you type is uploaded.
Sources
- Internal Revenue Service — correction to the state and local income tax deduction amount in the 2026 Form 1040-ES: the 2026 SALT cap, taper and floor.
- Internal Revenue Service — tax inflation adjustments for tax year 2026: federal estate tax basic exclusion.
- Internal Revenue Service — Topic no. 503, Deductible taxes: which state and local taxes are deductible.
- State-level rates, thresholds and beneficiary classes vary by jurisdiction and are cited on the individual state tools linked above.