Top 10 Tax-Friendly Cities

It's not what you earn, it's what you keep that often dictates your standard of living. With that in mind, take this quick tour of the ten cities in the nation that have the lowest overall tax burden. These cities came out on top (er, at the bottom, really) of the 2007-2008 District of Columbia survey of state and local tax burdens for the largest city in each state, plus D.C.

Tax rankings are based on 2007 tax return computations for a two-income couple earning $75,000 with one school age child. The real property tax is a function of housing values, real estate tax rates, assessment levels, homeowner exemptions and credits. The auto tax figure assumes the couple owns two cars and is based on the estimated registration fees, state and local gasoline taxes, and personal property taxes, if any.

No. 1 Anchorage, Alaska

Income tax: $0
Property tax: $2,572
Sales tax: $0
Auto tax: $165

STATE & LOCAL TAX BURDEN: 3.6%
(National median tax burden: 8.5%)

Urban Facts: Taxes? Residents of Anchorage actually receive an annual "dividend" payment derived from levies on state oil drilling operations.

In sheer geographic size, the city of Anchorage is larger than the state of Rhode Island. It is home to 42% of all Alaskan residents.

No. 2 Manchester, New Hampshire

Income tax: $0
Property tax: $2,349
Sales tax: $0
Auto tax: $493

STATE & LOCAL TAX BURDEN: 3.8%

Urban Facts: New Hampshire's favorable tax structure and Manchester's proximity to Boston makes it an attractive residence for flinty New Englanders.

No. 3 Cheyenne, Wyoming

Income tax: $0
Property tax: $1,326
Sales tax: $1,512
Auto tax: $665

STATE & LOCAL TAX BURDEN: 4.7%

Urban Facts: Levies on mining and oil account for nearly half of the Equality State's tax revenues. Cheyenne is in close proximity to the geographical center of North America.

No. 4 Seattle, Washington

Income tax: $0
Property tax: $1,698
Sales tax: $1,561
Auto tax: $457

STATE & LOCAL TAX BURDEN: 5.0%

Urban Facts: Seattle may be a tax-friendly city, but it also has a high cost of living, well above the national average.

The median home sales price was $375,000 for last quarter of 2008, compared to $200,000 at the national level.

No. 5 Las Vegas, Nevada

Income tax: $0
Property tax: $2,251
Sales tax: $1,072
Auto tax: $486

STATE & LOCAL TAX BURDEN: 5.1%

Urban Facts: Gaming taxes account for 27% of the state's general revenue funds.

The city's rapid growth a few years ago that drew more than 5,000 new residents every month was propped up on subprime lending. Now Las Vegas has the highest foreclosure rate among U.S. cities.

No. 6 Jacksonville, Florida

Income tax: $0
Property tax: $2,456
Sales tax: $1,284
Auto tax: $195

STATE & LOCAL TAX BURDEN: 5.2%

Urban Facts: The state intangibles tax on certain investments was repealed in 2007.

Jacksonville is the third-most populous city on the East Coast, after New York City and Philadelphia. (Other cities such as Boston, Washington, D.C., and Miami have larger metropolitan area populations.)

No. 7 Sioux Falls, South Dakota

Income tax: $0
Property tax: $2,760
Sales tax: $1,518
Auto tax: $294

STATE & LOCAL TAX BURDEN: 6.1%

Urban Facts: In fiscal year 2007, lottery gaming put $110 million in the state till to provide a 30% property-tax relief.

Sioux Falls has the largest shopping center between Minneapolis and Denver.

No. 8 Phoenix, Arizona

Income tax: $1,241
Property tax: $1,401
Sales tax: $1,849
Auto tax: $588

STATE & LOCAL TAX BURDEN: 6.8%

Urban Facts: Tax information for Phoenix includes the entire metropolitan area which extends to cities of Scottsdale, Mesa, Tempe, Mesa, Chandler, Gilbert, Glendale and Peoria. But housing prices and local tax can vary significantly from locality to locality.

No. 9 Billings, Montana

Income tax: $2,559
Property tax: $1,865
Sales tax: $0
Auto tax: $689

STATE & LOCAL TAX BURDEN: 6.8%

Urban Facts: Billings taxpayers with adjusted gross incomes of less than $30,000 can exclude up to $3,600 of their pension income from state taxes.

Dubbed locally as the "Magic City," Billings is supporting growth by dunning its energy, agriculture, and transportation industries.

No. 10 Chicago, Illinois

Income tax: $2,019
Property tax: $1,023
Sales tax: $1,624
Auto tax: $478

STATE & LOCAL TAX BURDEN: 6.9%

Urban Facts: Chicago's effective real-estate tax rate of .70% and various exemption programs keep real property tax low. Just keep in mind that this surprisingly tax-friendly city doesn't offer the same breaks for other cost-of-living expenses.