10 Tax-Friendly States for a Better Life in the U.S.

Arizona

State income tax: 2.59% (on taxable income of less than $10,346 for single filers or $20,690 for joint filers) — 4.54% (on taxable income of more than $155,159/single or $310,317/joint) Income levels are for the 2017 tax year.

Average local sales tax: 8.38%

Gas taxes and fees: 19 cents per gallon

Arizona’s top income tax rate of 4.54% doesn’t kick in until taxable income exceeds $155,159 for single filers or $310,317 for married couples filing jointly. The property tax on the state’s median home value of $176,900 is $1,367, below average for the U.S. And at 19 cents per gallon, state gas taxes are well below the national average of 34 cents per gallon.

Like most states, the Grand Canyon State excludes prescription drugs and food for home consumption from state sales taxes. However, all 15 counties levy additional taxes, as do many municipalities, and some jurisdictions extend their taxes to groceries. The average combined state and local sales tax rate is 8.38%, the 11th-highest in the U.S., according to the Tax Foundation.

While the gas tax is low, car owners must pay an annual vehicle license tax. The tax is based on an assessed value of 60% of the manufacturer’s base retail price, reduced by 16.25% for each year since the vehicle was first registered in Arizona. The rate is $2.89 for new vehicles and $2.80 for used vehicles, for each $100 of assessed value. For example, for a new vehicle that costs $25,000, the assessed value in the first year would be $15,000 — and the corresponding license tax would be $420.