Where you live has a major impact on your ability to build wealth. Some states provide low taxes, strong job markets, and affordable living costs that make it easier to save and invest. Others, however, drain your income through high taxes, expensive housing, and limited job opportunities. While some people assume high-income states are the best for financial success, wealth-building depends on how much of your earnings you can keep. Whether you’re looking to move or just want to know where your state stands, here are the seven best and worst states for building wealth.
1. Best: Texas | Worst: California
Texas consistently ranks as one of the best states for financial growth, thanks to its lack of state income tax and a thriving economy. Cities like Austin, Dallas, and Houston offer numerous job opportunities in tech, healthcare, and energy. The cost of living remains lower than in many other economically strong states, allowing residents to save and invest more effectively. Additionally, Texas has no estate tax, making it an attractive option for long-term wealth accumulation. While property taxes are high, the absence of a state income tax helps offset this cost. According to Business Insider, Texas has seen significant economic growth and corporate relocations from California.
On the other hand, California is often viewed as one of the worst states for building wealth due to its high tax burden and exorbitant living expenses. The state has one of the highest income tax rates in the country, reaching up to 13.3% for top earners. Housing prices in cities like Los Angeles and San Francisco make homeownership nearly impossible for many residents. Even those with high salaries struggle to save after covering rent and daily necessities. Many Californians are relocating to lower-cost states like Texas in search of better financial opportunities.
2. Best: Florida | Worst: New York
Florida is considered a wealth-friendly state with no state income tax, making it appealing to both workers and retirees. The cost of living in many areas remains affordable compared to high-tax states. Florida’s tourism-driven economy provides job opportunities across various industries, including healthcare, finance, and hospitality. Homeownership is still achievable in many parts of Florida, contributing to long-term financial stability. Additionally, Florida has no estate tax, making it a smart choice for wealth preservation.
According to Mercy Quinonez, Florida’s overall cost of living is typically lower than New York’s, allowing residents to allocate more income toward savings or investments. Conversely, New York is one of the toughest states for wealth-building due to its high taxes and cost of living. New York City has exorbitant housing prices, with rent consuming a large portion of residents’ income. The state income tax rate can reach 10.9%, and property taxes are among the highest in the nation. Everyday expenses are significantly higher than in most other states, making it difficult to save and grow wealth.
3. Best: Tennessee | Worst: New Jersey
Tennessee has emerged as a great state for financial success due to its low taxes and strong job market. The absence of an income tax allows residents to keep more of their earnings. Cities like Nashville and Chattanooga have thriving job markets in healthcare, technology, and manufacturing. Housing remains relatively affordable compared to high-tax states, making Tennessee an attractive option for workers and entrepreneurs. Tennessee ranks favorably in terms of tax competitiveness, which contributes to its economic growth.
In contrast, New Jersey is one of the worst states for building wealth due to its extreme property taxes and high cost of living. The state has the highest property tax rates in the U.S., making homeownership very expensive. Even those with solid incomes struggle with living costs. New Jersey also imposes high state income taxes that further reduce take-home pay. According to MoverDB, New Jersey’s tax burden significantly impacts residents’ ability to accumulate wealth compared to states like Tennessee.
4. Best: Nevada | Worst: Illinois
Nevada is recognized as one of the most tax-friendly states, making it an excellent choice for wealth-building. With no state income tax, residents retain more of their earnings, particularly those in higher income brackets. The economy is diversifying beyond tourism into the technology and logistics sectors. Home prices are still lower than in neighboring California, allowing more people to afford property.
Illinois ranks as one of the worst states for financial growth due to its heavy tax burden and economic instability. The state has some of the highest property taxes in the country alongside a flat income tax rate that adds financial strain on residents. While Chicago offers strong job opportunities, its high cost of living makes it difficult for many to save. According to Henley & Partners, many residents are leaving Illinois in search of states with lower taxes and better economic prospects, highlighting the challenges faced by those living in high-tax environments.
5. Best: North Carolina | Worst: Rhode Island
North Carolina has become a top destination for professionals and families looking to build wealth. The state offers a low cost of living, affordable housing, and a strong job market, particularly in cities like Charlotte and Raleigh. The Research Triangle Park has attracted major tech and pharmaceutical companies, providing solid employment opportunities. North Carolina’s flat income tax rate of 4.75% is lower than in many other states, helping residents keep more of their earnings. With a strong economy and business-friendly policies, North Carolina is a smart choice for wealth accumulation.
Rhode Island, on the other hand, has struggled with slow job growth and high taxes, making it difficult to build wealth. Property taxes are among the highest in the nation, increasing the financial burden on homeowners. The job market is smaller compared to neighboring states, limiting career opportunities. Additionally, Rhode Island has a high cost of goods and services, further reducing disposable income. Many professionals seek better-paying jobs in Massachusetts or Connecticut to escape the financial strain.
6. Best: Utah | Worst: Vermont
Utah is one of the best states for financial growth, thanks to its booming economy and reasonable cost of living. The state has a low unemployment rate and a rapidly growing tech industry, making it a hub for job seekers. Home prices, while rising, are still affordable compared to other tech-heavy states. Utah’s flat income tax rate of 4.85% is manageable, and its business-friendly policies attract entrepreneurs. With strong economic growth and a high quality of life, Utah is a great place to build wealth.
Vermont, however, ranks as one of the worst states for wealth accumulation due to high taxes and limited job opportunities. The state has a high personal income tax rate, reducing take-home pay for workers. Property taxes are also steep, making homeownership expensive. The job market is smaller, with fewer high-paying opportunities compared to other states. Additionally, Vermont’s harsh winters lead to high heating costs, further increasing living expenses.
7. Best: Washington | Worst: Hawaii
Washington is one of the best states for building wealth due to its lack of state income tax and high-paying job opportunities. Seattle is home to major companies like Amazon, Microsoft, and Boeing, offering lucrative salaries. The state’s thriving economy allows residents to earn substantial incomes while avoiding state tax burdens. Washington also has a strong entrepreneurial scene, with many new businesses benefiting from the state’s economic growth. For those in high-income industries, Washington provides excellent financial opportunities.
Hawaii, however, is one of the worst states for financial stability due to its extreme cost of living. The state has the highest housing prices in the U.S., making homeownership nearly impossible for many residents. Necessities like groceries, gas, and utilities are significantly more expensive due to the state’s remote location. Even though salaries are higher in some industries, the high cost of daily living offsets financial gains. Many residents struggle to save money, making wealth accumulation difficult in paradise.
Choosing the right state can make a huge difference in your ability to build wealth. States like Texas, Florida, and Utah offer low taxes, strong job markets, and affordable living, making it easier to save and invest. Meanwhile, high-tax states like California, New York, and Hawaii make financial success more challenging by draining income through excessive costs. While career opportunities exist in every state, the ability to grow wealth depends on how much of your earnings you can keep. Relocating to a wealth-friendly state could be the key to long-term financial success.
