Best States for Freelancers & Self-Employed Workers (2026)
Freelancers face the double hit of self-employment tax (15.3% FICA) plus federal and state income taxes. Where you live dramatically affects your total tax burden and real purchasing power. This guide ranks states by cost of living to identify where freelance income stretches furthest.
- Mississippi ranks #1 with the lowest cost of living at 83.3.
- Hawaii ranks last at 193.3 — the highest among all states.
- The top 5 states are Mississippi, West Virginia, Kansas, Oklahoma, Alabama.
- All data is sourced from verified government databases and updated for 2026.
Top 3 States
All 50 States Ranked
Lowest to highest by cost of living
| # | State | Cost of Living | Top Tax Rate | Tax Type | Calculator |
|---|---|---|---|---|---|
| 1 | Mississippi | 83.3 | 5.00% | progressive | Freelance Tax Calculator |
| 2 | West Virginia | 84.1 | 5.12% | progressive | Freelance Tax Calculator |
| 3 | Kansas | 86.3 | 5.70% | progressive | Freelance Tax Calculator |
| 4 | Oklahoma | 86.6 | 4.75% | progressive | Freelance Tax Calculator |
| 5 | Alabama | 88.1 | 5.00% | progressive | Freelance Tax Calculator |
| 6 | Arkansas | 89 | 4.40% | progressive | Freelance Tax Calculator |
| 7 | Tennessee | 89.7 | 0.00% | none | Freelance Tax Calculator |
| 8 | Missouri | 89.8 | 4.80% | progressive | Freelance Tax Calculator |
| 9 | Iowa | 90.1 | 3.80% | flat | Freelance Tax Calculator |
| 10 | Kentucky | 90.3 | 4.00% | flat | Freelance Tax Calculator |
| 11 | Indiana | 90.5 | 3.05% | flat | Freelance Tax Calculator |
| 12 | Nebraska | 90.8 | 5.84% | progressive | Freelance Tax Calculator |
| 13 | Ohio | 90.8 | 3.50% | progressive | Freelance Tax Calculator |
| 14 | Louisiana | 91.1 | 4.25% | progressive | Freelance Tax Calculator |
| 15 | Michigan | 91.4 | 4.25% | flat | Freelance Tax Calculator |
| 16 | North Dakota | 92.5 | 1.95% | flat | Freelance Tax Calculator |
| 17 | South Dakota | 92.6 | 0.00% | none | Freelance Tax Calculator |
| 18 | Wisconsin | 93.3 | 7.65% | progressive | Freelance Tax Calculator |
| 19 | Georgia | 93.4 | 5.49% | progressive | Freelance Tax Calculator |
| 20 | Texas | 93.9 | 0.00% | none | Freelance Tax Calculator |
| 21 | New Mexico | 94.6 | 5.90% | progressive | Freelance Tax Calculator |
| 22 | South Carolina | 95 | 6.40% | progressive | Freelance Tax Calculator |
| 23 | North Carolina | 95.1 | 4.50% | flat | Freelance Tax Calculator |
| 24 | Wyoming | 95.2 | 0.00% | none | Freelance Tax Calculator |
| 25 | Illinois | 96.4 | 4.95% | flat | Freelance Tax Calculator |
| 26 | Minnesota | 96.8 | 9.85% | progressive | Freelance Tax Calculator |
| 27 | Idaho | 97.7 | 5.80% | flat | Freelance Tax Calculator |
| 28 | Pennsylvania | 98.7 | 3.07% | flat | Freelance Tax Calculator |
| 29 | Utah | 101.3 | 4.65% | flat | Freelance Tax Calculator |
| 30 | Delaware | 101.5 | 6.60% | progressive | Freelance Tax Calculator |
| 31 | Montana | 101.6 | 5.90% | progressive | Freelance Tax Calculator |
| 32 | Arizona | 102.2 | 2.50% | flat | Freelance Tax Calculator |
| 33 | Florida | 102.8 | 0.00% | none | Freelance Tax Calculator |
| 34 | Virginia | 103.7 | 5.75% | progressive | Freelance Tax Calculator |
| 35 | Nevada | 104.2 | 0.00% | none | Freelance Tax Calculator |
| 36 | Colorado | 105.1 | 4.40% | flat | Freelance Tax Calculator |
| 37 | Rhode Island | 107.8 | 5.99% | progressive | Freelance Tax Calculator |
| 38 | Maine | 109.4 | 7.15% | progressive | Freelance Tax Calculator |
| 39 | Washington | 110.7 | 0.00% | none | Freelance Tax Calculator |
| 40 | New Hampshire | 112.6 | 0.00% | none | Freelance Tax Calculator |
| 41 | Connecticut | 112.8 | 6.99% | progressive | Freelance Tax Calculator |
| 42 | Oregon | 113.1 | 9.90% | progressive | Freelance Tax Calculator |
| 43 | Vermont | 114.5 | 8.75% | progressive | Freelance Tax Calculator |
| 44 | New Jersey | 115.2 | 10.75% | progressive | Freelance Tax Calculator |
| 45 | Maryland | 115.4 | 5.75% | progressive | Freelance Tax Calculator |
| 46 | New York | 123.8 | 10.90% | progressive | Freelance Tax Calculator |
| 47 | Alaska | 125.9 | 0.00% | none | Freelance Tax Calculator |
| 48 | Massachusetts | 135 | 9.00% | flat | Freelance Tax Calculator |
| 49 | California | 142.2 | 13.30% | progressive | Freelance Tax Calculator |
| 50 | Hawaii | 193.3 | 11.00% | progressive | Freelance Tax Calculator |
Methodology
How we collected and ranked the data
States are ranked by cost of living index (ascending) — lower cost of living means freelance income goes further. We include tax data to show the full picture: state income tax rates determine withholding burden, while cost of living determines purchasing power. States with no income tax AND low cost of living are optimal for freelancers. Data from BLS, Tax Foundation, and Census Bureau, updated 2026.
Frequently Asked Questions
Which states are best for freelancers?
States with no income tax AND low cost of living are ideal: Texas, Florida, Tennessee, and Wyoming combine zero state tax with affordable living. A freelancer earning $100K saves $5,000-$8,000/year in state taxes alone versus California or New York.
How much tax do freelancers pay?
Freelancers pay self-employment tax of 15.3% (12.4% Social Security + 2.9% Medicare) on net earnings, plus federal income tax (10-37%), plus state income tax (0-13.3%). Total effective rates typically range from 25-45% depending on income and location.
Can freelancers deduct home office expenses?
Yes. Self-employed workers can deduct home office expenses using either the simplified method ($5/sq ft, up to 300 sq ft = $1,500 max) or actual expenses method (proportional share of mortgage/rent, utilities, insurance). Other deductions include health insurance premiums, retirement contributions, and half of self-employment tax.