Cost of Living by State Including Taxes: The Full Picture
The standard cost of living index excludes taxes, which is a massive gap. Texas looks cheap at 91.5, but add in 1.60% property tax on a $298,700 home and that is an extra $4,779 per year. Oregon has no sales tax but income tax up to 9.9%. This page combines COLI with all major tax categories to show the true cost of living in each state.
Why Standard COLI Is Incomplete
The C2ER Cost of Living Index measures prices of goods and services but deliberately excludes state and local taxes. The reasoning is that tax burden depends on individual income, which varies. But for someone comparing states for a potential move, ignoring taxes is like comparing cars without considering fuel costs.
Consider this example: New Hampshire has a COLI of 112.5 and no income tax, no sales tax, but a property tax rate of 1.86% -- among the highest in the nation. A homeowner with a $425,800 home (the median) pays $7,920 in property taxes annually. Meanwhile, Alabama has a lower COLI of 87.9 and a property tax rate of just 0.39%, meaning the median homeowner pays only $844 per year. The $7,076 difference in property tax alone is larger than the cost-of-living savings from many states.
The three tax categories that matter most for interstate comparison are income tax (varies from 0% to 13.3%), property tax (varies from 0.28% to 2.23%), and sales tax (varies from 0% to 7.25% state rate, often higher with local additions). Each affects different people differently: retirees care most about income tax on pensions and Social Security, homeowners about property tax, and renters about sales tax and income tax.
All 50 States: COLI + Tax Summary
| State | COLI | Income Tax | Property Tax | Sales Tax | Taxes SS? |
|---|---|---|---|---|---|
| Alabama | 87.9 | 2-5% | 0.39% | 4% | No |
| Alaska | 127 | None | 1.04% | None | No |
| Arizona | 102.2 | 2.5% | 0.51% | 5.6% | No |
| Arkansas | 86 | 2-4.4% | 0.57% | 6.5% | No |
| California | 142.2 | 1-13.3% | 0.71% | 7.25% | No |
| Colorado | 105.1 | 4.4% | 0.49% | 2.9% | No |
| Connecticut | 112.8 | 3-6.99% | 1.63% | 6.35% | Yes |
| Delaware | 102.4 | 2.2-6.6% | 0.53% | None | No |
| Florida | 102.8 | None | 0.8% | 6% | No |
| Georgia | 91.5 | 1-5.49% | 0.83% | 4% | No |
| Hawaii | 193.3 | 1.4-11% | 0.28% | 4% | No |
| Idaho | 96.8 | 5.695% | 0.56% | 6% | No |
| Illinois | 93.4 | 4.95% | 1.97% | 6.25% | No |
| Indiana | 89.4 | 3.05% | 0.79% | 7% | No |
| Iowa | 89 | 4.4-5.7% | 1.43% | 6% | No |
| Kansas | 86.5 | 3.1-5.7% | 1.28% | 6.5% | Yes |
| Kentucky | 87.5 | 4% | 0.8% | 6% | No |
| Louisiana | 89.6 | 1.85-4.25% | 0.52% | 4.45% | No |
| Maine | 112.1 | 5.8-7.15% | 1.13% | 5.5% | No |
| Maryland | 118.2 | 2-5.75% | 0.99% | 6% | No |
| Massachusetts | 148.4 | 5% + 4% surtax >$1M | 1.12% | 6.25% | No |
| Michigan | 90.3 | 4.25% | 1.38% | 6% | No |
| Minnesota | 97.1 | 5.35-9.85% | 1.02% | 6.88% | Yes |
| Mississippi | 83.3 | 0-5% | 0.63% | 7% | No |
| Missouri | 87.1 | 2-4.8% | 0.88% | 4.23% | No |
| Montana | 99.2 | 4.7% | 0.74% | None | No |
| Nebraska | 90.8 | 2.46-5.84% | 1.53% | 5.5% | Yes |
| Nevada | 104.2 | None | 0.48% | 6.85% | No |
| New Hampshire | 112.5 | None | 1.86% | None | No |
| New Jersey | 115.2 | 1.4-10.75% | 2.23% | 6.63% | No |
| New Mexico | 91.3 | 1.7-5.9% | 0.67% | 4.88% | No |
| New York | 126.5 | 4-10.9% | 1.4% | 4% | No |
| North Carolina | 94.9 | 4.5% | 0.7% | 4.75% | No |
| North Dakota | 94.5 | None | 0.94% | 5% | No |
| Ohio | 89.8 | 0-3.5% | 1.41% | 5.75% | No |
| Oklahoma | 84.9 | 0.25-4.75% | 0.85% | 4.5% | No |
| Oregon | 113.1 | 4.75-9.9% | 0.87% | None | No |
| Pennsylvania | 99.5 | 3.07% | 1.36% | 6% | No |
| Rhode Island | 111.8 | 3.75-5.99% | 1.24% | 7% | No |
| South Carolina | 92.5 | 0-6.2% | 0.53% | 6% | No |
| South Dakota | 95.2 | None | 1.14% | 4.2% | No |
| Tennessee | 89.7 | None | 0.56% | 7% | No |
| Texas | 91.5 | None | 1.6% | 6.25% | No |
| Utah | 103.5 | 4.65% | 0.52% | 6.1% | Yes |
| Vermont | 114.5 | 3.35-8.75% | 1.73% | 6% | Yes |
| Virginia | 103.7 | 2-5.75% | 0.74% | 5.3% | No |
| Washington | 110.7 | None | 0.84% | 6.5% | No |
| West Virginia | 84.1 | 2.36-5.12% | 0.53% | 6% | Yes |
| Wisconsin | 93.5 | 3.54-7.65% | 1.51% | 5% | No |
| Wyoming | 95.8 | None | 0.56% | 4% | No |
States With No Income Tax
Nine states charge no state income tax. This sounds like an automatic win, but each of these states recovers revenue through other means. Here is what each no-income-tax state charges instead, and whether the trade-off is genuinely favorable.
Tennessee
COLI 89.7Property Tax
0.56%
Sales Tax
7%
Property Tax Bill
$1,672/yr
Median home: $298,500 | Median income: $59,695
Texas
COLI 91.5Property Tax
1.6%
Sales Tax
6.25%
Property Tax Bill
$4,779/yr
Median home: $298,700 | Median income: $67,321
North Dakota
COLI 94.5Property Tax
0.94%
Sales Tax
5%
Property Tax Bill
$2,336/yr
Median home: $248,500 | Median income: $66,519
South Dakota
COLI 95.2Property Tax
1.14%
Sales Tax
4.2%
Property Tax Bill
$3,254/yr
Median home: $285,400 | Median income: $63,920
Wyoming
COLI 95.8Property Tax
0.56%
Sales Tax
4%
Property Tax Bill
$1,672/yr
Median home: $298,500 | Median income: $65,003
Florida
COLI 102.8Property Tax
0.8%
Sales Tax
6%
Property Tax Bill
$3,188/yr
Median home: $398,500 | Median income: $63,062
Nevada
COLI 104.2Property Tax
0.48%
Sales Tax
6.85%
Property Tax Bill
$2,091/yr
Median home: $435,600 | Median income: $66,274
Washington
COLI 110.7Property Tax
0.84%
Sales Tax
6.5%
Property Tax Bill
$4,775/yr
Median home: $568,500 | Median income: $82,228
New Hampshire
COLI 112.5Property Tax
1.86%
Sales Tax
None
Property Tax Bill
$7,920/yr
Median home: $425,800 | Median income: $83,449
Alaska
COLI 127Property Tax
1.04%
Sales Tax
None
Property Tax Bill
$3,595/yr
Median home: $345,700 | Median income: $77,640
Tax Impact at Different Income Levels
Tax burden is not uniform. High earners benefit dramatically from no-income-tax states, while low earners may pay more in regressive sales and property taxes. Here is how the tax picture changes at four different income levels using estimated effective rates.
| Scenario | California | Texas | Tennessee | Florida |
|---|---|---|---|---|
| $50k income + renter | $2,200 income tax | $0 income tax | $0 income tax | $0 income tax |
| $80k income + $300k home | $4,400 + $2,130 prop | $0 + $4,800 prop | $0 + $1,680 prop | $0 + $2,400 prop |
| $120k income + $500k home | $8,200 + $3,550 prop | $0 + $8,000 prop | $0 + $2,800 prop | $0 + $4,000 prop |
| $200k income + $750k home | $17,600 + $5,325 prop | $0 + $12,000 prop | $0 + $4,200 prop | $0 + $6,000 prop |
Estimates based on effective state income tax rates and median property values. Does not include local taxes, deductions, or credits. Actual tax burden varies by individual circumstances.
Property Tax: Highest and Lowest
Lowest Property Tax Rates
Highest Property Tax Rates
Frequently Asked Questions
Which states have no income tax?
Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire (interest/dividends only until recently), North Dakota (effective 2025), South Dakota, Tennessee, Texas, Washington, and Wyoming. However, no income tax doesn't mean low total tax burden -- many of these states compensate with higher property taxes or sales taxes.
Does cost of living include taxes?
No, the standard C2ER Cost of Living Index does NOT include state or local taxes. This is its biggest limitation. For example, Texas has no income tax but property taxes averaging 1.60%, adding $4,779 to the median homeowner's annual cost. Oregon has no sales tax but income taxes up to 9.9%.
What state has the lowest property tax?
Hawaii has the lowest effective property tax rate at 0.28%, followed by Alabama (0.39%), Colorado (0.49%), and Nevada (0.48%). However, low rates on expensive homes can still mean high dollar amounts -- Hawaii's median property tax bill is still significant due to high home values.
Which state has the highest total tax burden?
New York, Connecticut, and New Jersey consistently rank as having the highest total tax burden when combining income, property, and sales taxes. New Jersey's property tax rate of 2.23% is the highest in the nation, and combined with income tax up to 10.75%, the total tax load is among the heaviest.
What is the most tax-friendly state?
It depends on your income level and sources. For high earners, Wyoming and South Dakota offer no income tax, low property taxes, and low sales taxes. For retirees, Tennessee and Florida combine no income tax with no Social Security tax. Alaska has no income tax and no sales tax but has higher property taxes and extreme cost of living.