Comparing Taxes: Which State is the Most Tax-Friendly?

When choosing where to live, comparing taxes can play a significant role in the decision-making process. Some states offer tax advantages that can save residents thousands of dollars each year. In this article, I am comparing taxes and the differences between Colorado (with a specific look at Grand Junction), Arizona, Nevada, Texas, and Florida to determine which state is the most tax friendly.

State Income Tax

One of the biggest tax considerations is state income tax. Here’s how these five states compare:

• Colorado: Flat income tax rate of 4.4%
• Arizona: Flat income tax rate of 2.5% (one of the lowest in the nation)
• Nevada: No state income tax
• Texas: No state income tax
• Florida: No state income tax

Property Taxes

Property taxes can vary significantly depending on the state and local government rates.

• Colorado: Low property tax rate at 0.49% of home value (one of the lowest in the country)
  • Grand Junction, CO: Property tax rates are consistent with the state average, making it an attractive option for homeowners.
• Arizona: Moderate property tax rate at 0.51%
• Nevada: Moderate property tax rate at 0.55%
• Texas: High property tax rate at 1.68% (one of the highest in the country)
• Florida: Higher than average property tax rate at 0.83%

While Texas and Florida have no state income tax, their higher property taxes can offset some of the savings.

Sales Tax

Sales tax impacts everyday purchases and varies widely across these states:

• Colorado: State base sales tax of 2.9%, but local taxes push the average to 7.8%
• Arizona: State base sales tax of 5.6%, but local rates bring the average to 8.4%
• Nevada: State base sales tax of 6.85%, with an average combined rate of 8.2%
• Texas: State base sales tax of 6.25%, with local taxes leading to an average of 8.2%
• Florida: State base sales tax of 6%, with local taxes pushing the average to 7.0%

Florida has the lowest average sales tax burden, while Arizona has the highest.

Other Taxes to Consider

• Gas Tax:
  • Colorado: 23.9 cents per gallon
  • Arizona: 18 cents per gallon
  • Nevada: 33.78 cents per gallon
  • Texas: 20 cents per gallon
  • Florida: 43.5 cents per gallon (highest of the group)
• Estate & Inheritance Taxes: None of these states impose an estate or inheritance tax, making them attractive for wealth transfer planning.

Insurance Costs: Auto & Home

Insurance rates can significantly impact cost of living, especially for homeowners and drivers. Here’s how these states compare:

• Auto Insurance (Average Annual Premiums):
  • Colorado: $1,750
    • Grand Junction, CO: Auto insurance rates tend to be slightly lower than the state average due to smaller population density and lower accident rates.
  • Arizona: $1,480
  • Nevada: $1,900
  • Texas: $1,750
  • Florida: $2,560 (highest due to high accident rates and severe weather risks)
• Home Insurance (Average Annual Premiums):
  • Colorado: $1,800
    • Grand Junction, CO: Home insurance costs are generally lower than Denver and other metro areas, averaging closer to $1,600-$1,700. You should also know that more rural mountain properties (far away from fire departments) can have increased premiums due to wildfire exposure.
  • Arizona: $1,250
  • Nevada: $950 (lowest due to fewer natural disaster risks)
  • Texas: $2,400 (high due to hurricane and tornado risks)
  • Florida: $4,000+ (highest in the nation due to hurricanes and flooding risks)

While Florida and Texas have favorable tax structures, their high insurance costs can impact affordability.

“Go West” my friend! Here’s an I-70 overhead sign as you leave Denver, CO. Michelle took this on our way back from a road trip to Michigan and Minnesota to see family. Move to Grand Junction! Let me show you around!

A little known “non-tax” benefit of living in Grand Junction

Considering tax implications can be an important part of any financial plan, especially in retirement. But one thing no one talks about is utility costs. Utility costs overall in Grand Junction are well below what I was used to paying in my former home state of Minnesota. Here in Grand Junction, we enjoy ultra-low utility bills in the shoulder season months.

What is a shoulder season month? This is a period where you rarely need to heat or cool your home. With the low humidity and perfect overnight sleeping temps, we’ve experienced up to 2 months on either side of the change of seasons where our gas and electric bills are laughable, they are so low. Most Irrigation water is also charged annually not monthly, so there will be savings found on that bill as well. I would guess we are saving around $2400+ a year from what we were paying (obviously in a much colder climate and a larger home) on our combined utilities. Just one more thing people don’t always take into consideration, but they should. I have lots of energy saving tips you can implement in your new home, just ask me!

Colorado TABOR Surplus Refunds

TABOR stands for Taxpayer’s Bill of Rights. The Colorado Department of Revenue website shows which type of refunds have been issued to Colorado residents since 2018. Refunds can be for property taxes, income taxes, or sales taxes. Learn more about potential surplus refunds at https://tax.colorado.gov/TABOR

Bottom Line

For those prioritizing a low tax burden, Florida and Texas stand out as the most tax-friendly states. However, high home and auto insurance costs, particularly in Florida and Texas, can offset some of the tax benefits. Each state balances taxation and cost of living differently, so choosing the right one depends on personal financial circumstances, lifestyle, and risk tolerance for insurance expenses. Knowing these differences can help guide your decision when considering a move.

Always consult a tax professional for the most up to date information. The information above was current as of July 2025. Please check with each taxing authority or state government for additional information as tax rates can and do change.

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PAUL ASPELIN, REALTOR®
GRI, SRES®, CNE

Grand Junction Real Estate Expert
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