Right now, many Americans are busy preparing two different tax returns and feeling the burn as they send a bundle of cash to both federal and state governments. But not all of them. Some workers have no state taxes at all.
Many of those workers can also boast other work perks in their state of choice, from lightning-fast Zoom calls to sky-high spending power.
We wanted to know where the benefits for remote workers were greatest, so we analyzed the Remote Obligations and Mobility (ROAM) index of taxation — which gauges how every state’s tax and regulatory rules treat remote workers — alongside broadband access, electricity costs, worker salaries, and the size of the remote work community.
So if you’re already nervous about next year’s taxes and considering a move, which states offer you the best tax environment as a remote worker?
Key Takeaways
- #1 Washington is the best state for remote workers to score a tax break. It combines no state income tax with the #2 highest salaries and #3 rate of remote workers in the country.
- For remote worker tax burden alone, head to 4 states with a perfect score: Florida, Alaska, Wyoming, and South Dakota.
- The West Won. States in the region scored better on average — about 3.58% — compared to all other areas.
- New Jersey has shored up broadband access: 97.8% of its residents can surf the internet at the speed of work.
- Need co-workers? Colorado supports more existing remote workers than any other state.
- Head to North Dakota for the cheapest electricity, where kilowatt-hours cost about 10 cents apiece (that’s 4x less than Hawaii, the most expensive state to fire up your laptop).
- For a top salary, head to New York, but beware: the state ranks #46 in tax-friendliness for remote workers.
Top States Combine Tax-Friendliness with Other Remote Benefits
Western States are Remote and Tax-Friendliest
There’s no getting out of federal tax obligations, but when it comes to filing state returns remote workers can find remote-work havens from the rainy Pacific Northwest to the Sunshine State. That’s likely due to the overwhelming advantages of working in one of the diverse states that doesn’t tax income: 8 of the 9 no-income tax states (all but Alaska) make the top ten list for remote workers.
Yet while state income tax havens and top overall states span multiple regions, states in the West have the highest average scores overall (averaging an overall score of .577), outpacing the Northeast (.557), Midwest (.540), and South (.517).
Why?
Much of the discrepancy is due to higher rates of remote work and competitive salaries in places like #1 Washington and California. And a high income that’s not taxed prevails over a low one, so states with huge salary advantages heavily outweighed those with lower salaries like many in the U.S. South; for example, Florida and Texas’s low salaries offset both states’ tax benefits, hurting their rankings.
New Jersey Remote Workers Have the Best Broadband Access
Little states like New Jersey shine for remote working set-ups as they’re more likely to have wired their entire states for the economic future. Number one in broadband access, New Jersey enables 98.4% of its population to reach the high-speed internet.
Broadband advantages are apparent in other small states like New Hampshire, where federal grants bring broadband to rural areas more effectively than in larger states with bigger geographic barriers.
Take Alaska, where poor broadband access has likely contributed to fewer remote workers, rendering moot any tax and salary offerings that might otherwise entice remote workers to the Last Frontier. The state’s connectivity is impacted by areas that are only accessible by air and sea, inclement weather, and sometimes, even volcanic eruptions.
Whether broadband access has served as the chicken or the egg, Alaska’s remote worker community is also small, ranking #34 among all states.
With Wyoming, which also offers big-time tax advantages and cheap electricity but ranks among the lowest states for broadband access, remote workers aren’t forming communities here.
Colorado Workers Are Most Likely to be Remote
Where are they going instead?
Colorado supports the highest percentage of at-home workers, edging out Massachusetts and Washington. Perhaps the remote zeitgeist here stems from aerospace and tech dominance, which were remote-friendly even before pandemic-era remote workers flooded the Rocky Mountains. Today, more than 20% of Colorado residents work remotely.
That’s not true in southern states like Mississippi, which, along with Alabama and Arkansas, are home to the lowest number of remote workers. With less than half that of Colorado’s remote workforce, Mississippi may be victim to low broadband rates (just 5 states rank lower).
Average Salaries are Higher in New York, but Workers Find Overall Wins in Washington
Head to New York to score a high salary. However, remote workers won’t find a tax-friendly climate. The state ranks 46th in its tax-friendliness score for remote workers, with some of the country’s highest rates, a city income tax in the nation’s biggest metro, and a “convenience of the employer” rule, which obligates remote workers of New York companies to pay New York taxes, no matter where they live and work.
Overall, Washington, Nevada, and New Hampshire take top spots where tax advantages combine with competitive salaries, solid broadband coverage, and reasonable electricity costs.
Balancing the benefits of tax-friendliness with conditions that are conducive to daily remote work is key to attracting and keeping remote workers, and states that want to nurture their remote workforces will need both.
Here are the states pulling it off best:
#1 Washington
With no income tax, the #2 highest average salaries in the country, and ranking #3 for remote workers already handling their tasks from home (and #1 in the top 10), Washington ticks a lot of remote worker boxes. Washington also wins points in the ROAM index with zero added burden for remote working taxpayers, like withholding thresholds and “convenience of the employer” rules for newly remote employees.
#2 Nevada
More Nevadans have access to broadband than any other state in the top ten, with federal Broadband, Equity, and Deployment (BEAD) grants helping connect outlying regions while large population hubs in Reno and Las Vegas benefit from the digital infrastructure that undergirds gaming and data center industries. Those strong urban economies support the country’s 5th-highest salaries, and workers won’t see their earnings taxed at all.
#3 New Hampshire
A remote working New Hampshire life comes with no state income taxes and top-10 broadband access and salaries. But there’s no reciprocity agreement with nearby Massachusetts. During the COVID-19 pandemic, that led to tax withholding in Massachusetts for workers living and completing tasks in New Hampshire. Getting farther afield from a Massachusetts firm doesn’t come with a perfect remote work tax solution, but for those working for employers in other states, the White Mountains may be calling.
#4 Tennessee
Tennessee, with its low cost of living, sports the #7 highest salaries in the US. It also has the country’s 6th top tax benefits for remote workers, who might find the absence of a state income tax plus the state’s salary perks combine to make this Smoky Mountain state a place to save big.
#5 Texas
Texas ranks just below Tennessee for its tax-friendliness to remote workers. With no income tax, residents can keep more of their earnings. However, those earnings may not be overwhelming; Texas is 11th-to-last in average salaries. Remote workers outside major tech hubs can also struggle with middling broadband access. If they can find it, their tax savings can combine with low electricity costs to make an attractive remote work landing pad.
#6 South Dakota
Only 4 states have fewer remote workers, but South Dakota may have more to offer remote workers than they get credit for. After all, the state comes with the top remote worker tax score and levies no tax on wages, capital gains, interest, or dividends. And with low electricity costs, remote workers here can fire up a second (or third) screen without worrying their tax savings will disappear by the end of the workday.
#7 Florida
If Florida offered the nation’s average salary of $59,423 instead of its current #46-ranked salary of $50,443, it would have ranked #4 overall instead of #7. So, while the state offers outstanding tax breaks and solid broadband for remote workers, it may not help get workers ahead if their employers and clients pay them at Florida’s market rates.
#8 Indiana
Indiana’s consistently solid on multiple criteria, with high tax savings, good broadband, and affordable electricity. Though its residents do pay state income taxes, Its ROAM score vaulted 17 points over last year as Indiana implemented “more than 30-day” filing withholding thresholds, so workers don’t need to file in Indiana until they work a significant period of time in the state. Indiana also has reciprocity agreements with many neighboring states, covering more than 60% of incoming commuters (though not from Illinois).
#9 Wyoming
With a perfect ROAM tax score and the lowest electricity prices in the top 10 (and #9 overall), Wyoming beckons remote workers to its wallet-friendly wide open spaces (though many lack broadband coverage). Wyoming lags behind all but 6 states in its remote work community, but that could be changing: a pandemic surge accelerated remote work in places like Jackson, and even following restrictions lifted, the state continued to boast a high percentage of remote job postings.
#10 Maryland
Maryland’s #2 national rank for broadband access means there are plenty of Chesapeake-view front porches in the Old Bay State where remote workers can check messages while enjoying relatively high salaries and plenty of remote working compatriots — the state ranks #4 overall in the number of residents already working from home. While Maryland residents pay state income tax, they won’t be subject to the convenience rule, so non-resident workers aren’t taxed in Maryland, and the state maintains reciprocity agreements with many of its neighbors, including Washington, D.C.
What Really Makes a State Remote-Friendly?
Remote work freedom isn’t all about the taxes, but friendly policies do help. So while states like Florida, South Dakota, and Wyoming offer a perfect tax score for remote workers, they aren’t places where every worker, or every business, can thrive.
For the best overall experience, remote workers must combine tax savings with solid infrastructure — and places like Washington, Nevada, and Tennessee lead the way. Meanwhile, states like California and New York offer high pay but penalize remote workers with steep taxes and employer-based tax traps.
So if you’re feeling stuck at tax time, try one of these remote work winners that aren’t just welcoming workers, but helping them stay and save long-term.
Methodology
To find the tax-friendliest states for remote workers, we weighted scores in several categories, looking at:
- 30% Broadband Access & Speed
- 30% ROAM Index of Taxation
- From the Remote Obligations and Mobility (ROAM) Index, developed by the National Taxpayers Union Foundation (NTUF)
- 15% Electricity Price
- 15% Average Remote Worker Salary
- 10% Workforce Already Working Remotely
- From the Bureau of Labor Statistics, 2023
From our initial datasets, we normalized scores from 0 to 1, creating scaled rankings that account for differences in population and size. For final scores, we weighted composite scores in each category, combining broadband, taxes, remote worker prevalence, salary, and electricity price, and arriving at a final overall score.
