5 Most and 5 Least Tax-Friendly States
1. Alaska
Alaska doesn't have a state income tax, state sales tax or a state inheritance tax.
It hasn't always been that way. In 1978, Alaska was ranked 49th, making it one of the most tax-heavy states in the country. Residents can thank federal funds and big oil for the dramatic reversal.Three years ago, federal funding accounted for almost one-fifth of Alaska's revenue. Per capita, Alaska receives more federal funding than any other state in the country, an honor held since 1999. That means much of Alaska's infrastructure is paid for by federal funds, not state funds. If you don't have much in the way of expenses, you don't need much in the way of additional revenue. As a result, the tax burden stays pretty low.
But wait! The Last Frontier's tax perks get even better: The completion of the federally-funded Trans-Alaska pipeline and the establishment of Alaska as an energy center for gas and oil has proven to be a boon for residents. After the pipeline was completed, the state created a program called the Alaska Permanent Fund, that invests and distributes royalties from oil companies doing business in Alaska to residents. In 2008, the check was a record $3,269 per eligible resident. Eligible residents are those (including children) who have lived in Alaska for a full calendar year.
(iStock Photo)
It hasn't always been that way. In 1978, Alaska was ranked 49th, making it one of the most tax-heavy states in the country. Residents can thank federal funds and big oil for the dramatic reversal.Three years ago, federal funding accounted for almost one-fifth of Alaska's revenue. Per capita, Alaska receives more federal funding than any other state in the country, an honor held since 1999. That means much of Alaska's infrastructure is paid for by federal funds, not state funds. If you don't have much in the way of expenses, you don't need much in the way of additional revenue. As a result, the tax burden stays pretty low.
But wait! The Last Frontier's tax perks get even better: The completion of the federally-funded Trans-Alaska pipeline and the establishment of Alaska as an energy center for gas and oil has proven to be a boon for residents. After the pipeline was completed, the state created a program called the Alaska Permanent Fund, that invests and distributes royalties from oil companies doing business in Alaska to residents. In 2008, the check was a record $3,269 per eligible resident. Eligible residents are those (including children) who have lived in Alaska for a full calendar year.
(iStock Photo)
