5. Alabama
Overall Rating for Middle-Class Families: Tax-friendly
Alabama has a 4 percent levy, and localities can bring about even 7.5 percent to it. According to the Tax Foundation website, the average combined rate in Alabama is 9.22 percent. And although prescription drugs are exempt from taxation, we can’t say the same regarding clothing and groceries (they are fully taxable). Motor vehicles are also taxed at a 2 percent rate, but you may face additional local taxes.
The highest income tax rate is 5 percent on more than $3,000 of taxable income for single filers and more than $6,000 for married couples filing jointly. The lowest rate is 2 percent applied on up to $500 of taxable income for single filers and up to $1,000 for married joint filers.
However, that’s not all, since certain municipalities can impose occupational taxes on wages and salaries, too. Luckily for homeowners, Alabama’s median property tax rate is $395 per $100,000, the lowest on this list.
See also: What Taxes in Retirement Look Like in All 50 States!
