The States Where Your Tax Dollars Go the Furthest

It seems like Americans like nothing more than complaining about taxes. This would make sense since Americans pay more than other countries in taxes but receive far fewer benefits in return (no universal healthcare, no free public education, no subsidized housing, and few labor protections, just to name a few), but there are some states that are better than others at making use of their tax funds.

We looked at some of the popular measures of a successful state and ranked the states that tend to do better than others at not wasting that money. Here is what we found.

Background on this List

Any kind of list comparing outcomes of tax policy and government spending is going to include a large amount of objective analysis and bias. For this list, we used the data published by Forbes and data provided by state governments themselves. The categories compared are: education, health, safety, and the economy (median incomes and job growth).

Keep in mind that many of the government and welfare programs in every state are extremely heavily subsidized by the federal government. So, a state might rank high on this list, even though its government services are objectively terrible and sub-par because it can keep its taxes low while letting the federal government make up the difference.  

It is for this reason that recent cuts to federal programs, departments, and welfare systems will overwhelmingly harm Republican states because it is these states that rely more heavily on federal funds to subsidize their education, welfare, and other programs. They often receive more in federal funds than they pay for federal services.

#10 Virginia

Virginia has a huge amount of U.S. military veterans who are usually cared for using federal funds, so much of the money that states spend on the elderly or programs for older people can be saved to spend in other areas. Virginia has a comparatively low tax with the wealthy and rich generally benefitting while the majority of the tax burden falls on the working class and poor who have no union protections while corporations are given some of the most favorable tax incentives in the country. Virginia’s teachers are among the worst paid.

#9 Iowa

Iowa made its way onto this list through its progressive tax system, which has the highest marginal corporate tax rate in the country. This means that the state can pay for more services while not placing the burden of taxes on the poor and working class.

Iowa has one of the best school systems in the country and has the #5 best hospital system in the country.

#8 Rhode Island

Rhode Island has some of the highest taxes in the entire country, with the sixth-highest real estate taxes and seventh-highest in local and state taxes. But the people of Rhode Island are definitely getting their money’s worth in return.

It has the highest-paid elementary teachers in the country and is one of only four states to offer high-speed public trains capable of achieving 165 mph.

Rhode Island converted many of the abandoned factories that companies left behind into low-income housing, condos, museums, and more.

In 2009, Rhode Island was ranked as the 9th safest state in the country and Rhode Island has the #3 best hospital system in the country. It is the 5th-most energy-efficient state.

Rhode Island also has the #1 worst quality of roads and bridges in the country.

#7 Nebraska

Even though Nebraska has a progressive income tax, it still highly favors the wealthy over the poor and working class.

Nebraska has the #2 best hospital system in the country and the lowest unemployment rate in the country.

#6 Wisconsin

While Wisconsin is on this list now, it might already be out of date as many of Governor Scott Walker’s policies continue to ravage the state. These reduced collective bargaining power and reduced the benefits and worth of retirement, compensation, health insurance, sick leave, and more. The University of Wisconsin has closed five of its campuses in the state since 2023 alone, showing the downward trend of public services in the state. The overall population of Wisconsin is falling as people leave the state for better places to live.

For now, Wisconsin has the #5 best school system in the country.

#5 Ohio

Ohio ranks highly on this list because its tax burden falls disproportionately on the poor and working class. The bottom 20% of workers in the state pay more than 12.3% of their total income in state taxes while the top 1% only pay 6.5%. This has contributed to one of the worst income inequalities in the country.

Additionally, Ohio is notoriously poor at protecting the rights of its citizens, often engaging in voter suppression and intimidation. So, while residents might get above-average ROI from their taxes, that doesn’t mean that life isn’t difficult in other areas.

#4 Missouri

The reason why Missouri ranks so highly on this list is primarily because it has a very generous corporate tax rate. In fact, it has the 4th-best corporate tax rate in the country.

Since taxes on the wealthy and companies are primarily what fund government operations and help governments pay down their debts, this means Missouri pulls in much fewer taxes while still benefitting from huge amounts of federal programs.

#3 South Dakota

South Dakota takes third place primarily because it charges no state income tax, and it also doesn’t have the large population that it needs to provide services for. This is also made plain by where the state chooses to invest those tax funds: it has the third-highest per-capita state budget for parks and recreation and the fifth-highest per-driver budget for highway spending. Yet, South Dakota has the fifth-worst quality of roads and bridges in the country.

#2 Florida

Floridians might be surprised to see their home state so high on this list, but the main reason is that Florida doesn’t have a state income tax, so it’s easy to have a positive ROI when the investment is zero.

Florida has some of the best public universities in the country, and an above-average public school system. However, that’s where the positive reviews end because the rest of Florida is average or well below average.

#1 New Hampshire

New Hampshire tops the list mostly because it doesn’t have any state income tax. Residents still have to pay sales tax, excise tax, and property taxes, though. New Hampshire does have a good record of reducing crime and lowering air pollution.

It also has a school system that performs above average and an unemployment rate and poverty rate that is lower than the national average. New Hampshire has the #2 best crime rate in the country.

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