Idaho Ranks 42nd Nationally for Tax Burden, Study Finds
Why It Matters
For Idaho residents and businesses weighing the cost of living and doing business in the Gem State, a new national tax burden study offers useful context. Idaho’s relatively low overall tax rate places it among the more taxpayer-friendly states in the country, a factor that continues to attract families and employers to the region.
The findings come as Idaho’s economy remains comparatively stable. Idaho’s unemployment rate held steady at 3.7% in February, running below the national average — a sign that the state’s economic fundamentals, including its lighter tax footprint, may be contributing to workforce and business confidence.
What Happened
Financial research firm WalletHub released a new study ranking all 50 states by their total tax burden on residents, measuring property, income, and sales and excise tax rates combined. Idaho ranked 42nd nationally, meaning it carries the ninth-lowest overall tax burden in the country.
The study found that Hawaii imposes the heaviest tax burden on its residents at 13.3%, while Alaska ranked as the most tax-friendly state in the nation at just 4.92%. Idaho’s total combined burden landed at 7.04%.
By the Numbers
- 7.04% — Idaho’s total combined state tax burden
- 1.92% — Idaho’s property tax rate
- 1.84% — Idaho’s individual income tax burden
- 3.29% — Idaho’s sales and excise tax burden
- 42nd — Idaho’s overall ranking out of 50 states (lower rank means lower burden)
What Happened: The National Picture
At the other end of the spectrum, New York (12.39%) and Vermont (11.1%) joined Hawaii as the three most heavily taxed states in the country. New Mexico (10.75%) and Maine (10.01%) were the only other states to reach a double-digit tax burden.
California, often cited as a high-tax state, ranked 11th with a 9.24% total burden. However, the Golden State still imposes the nation’s single-highest marginal income tax rate of 13.3% on its top earners.
Seven states — Alaska, Tennessee, Florida, South Dakota, Wyoming, Texas, and Nevada — charge zero state income tax, giving residents in those states a significant advantage over higher-burden neighbors. Oregon, meanwhile, posted the highest income tax rate among all states at 4.76%.
The five least-taxed states rounding out the bottom of the burden list alongside Alaska were New Hampshire (5.38%), Tennessee (6.21%), Florida (6.27%), and Delaware (6.28%).
What Analysts Are Saying
“It’s easy to be dismayed at tax time when you see just how much of your income you lose,” said Chip Lupo, a WalletHub analyst. “Living in a state with a low tax burden can alleviate some of that stress.”
The data reinforces what many fiscal conservatives have long argued: states that keep taxes low tend to create more favorable conditions for residents and businesses alike. Idaho’s position in the lower tier of the national tax burden ranking reflects the state’s historically restrained approach to government spending and taxation.
Zoom Out
Across the Mountain West, Idaho’s tax burden compares favorably to neighboring states. Wyoming, with no state income tax, ranks among the very lowest nationally, while states like Oregon and Montana carry heavier income tax obligations on residents. As high-tax states such as California and New York continue to see population outflows, lower-burden states in the region — including Idaho — have benefited from an influx of new residents and businesses.
However, that growth comes with pressures of its own. Rising housing costs and demand for public services in fast-growing Idaho communities have prompted ongoing debates about how the state balances its taxpayer-friendly posture with infrastructure and workforce needs. Separately, economic disruptions like the abrupt closure of an Idaho Falls beef and bison processing plant that left 150 workers without jobs underscore that a low tax environment alone does not insulate workers from economic volatility.
What’s Next
WalletHub’s annual tax burden study is widely used by residents, businesses, and policymakers to benchmark state-level fiscal competitiveness. Idaho lawmakers and economic development officials are expected to continue pointing to the state’s favorable tax ranking as a key selling point for business recruitment and relocation efforts heading into the remainder of 2026.
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