Millions of Americans opt for freelance life instead of a standard full-time job. According to Zippia, as of 2022, there were 70.4 million freelancers in the U.S. — that's 36% of the total workforce in the country.
What freelancers may not know is that there are certain states that are more hospitable to freelancers than others. We'll explore those states in this piece.
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Note though that just because some states stand out as particularly beneficial for freelance workers, that doesn't mean living in them enables one to wriggle out of federal fiscal responsibilities. There are also rules and caveats to watch out for.
“Be aware that if you work in one state, whether in person or remote, but live in another state, you may have taxable income in your working state,” said Will Geeslin, a CPA with The Geeslin Group. “Invest in your knowledge and find a CPA or advisor to partner with. You're the boss of your business and educating yourself and have a resource at your disposal can save you significantly at year end.”
One should also consider the strength of the job market for freelancers in every state.
“States like California and New York, despite having higher taxes, often attract freelancers due to their strong job markets and robust creative industries,” said Akpan Ukeme, CFP, Finance4Zoomers.
And now let's explore the eight best states to work in as a freelancer.
New Hampshire is a pretty stellar state for freelancers. This is both because it's an excellent getaway destination (helpful if you want a healthy work/life balance), and because it places basically no tax burdens on its residents.
“With [its] slogan ‘Live free or die,' it's no surprise that New Hampshire is a fantastic destination to get away from pretty much everything,” said Pete Chatfield, a CEO at Household Money Saving. It has one of the lowest tax loads in the country because residents are exempt from paying both state income taxes and sales taxes.”
According to ZipRecruiter, as of May 7, 2023, the average annual pay for a freelancer in New Hampshire is $63,430 a year.
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Massachusetts is a wonderful place to get an education; it's also a great place to be a freelance worker.
“In terms of top states where freelancers can command higher rates, the highest-earning contractors are based in Massachusetts (at $49 an hour),” said Tom Bowen, economist at Gusto.
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California is a very expensive state to live in, but it has vital opportunities in terms of pay for freelancers. Bowen said that the average independent contractor makes $44 an hour in The Golden State. “This is likely driven by more contractors working in higher-paid industries like tech and finance.”
Also hardly a cheap state to live in, Washington is a happening hub for freelancers, where decent pay is on the table. Plus, Washington has no state income tax.
“With no state income tax and a relatively high average hourly rate, Washington ($42 per hour) is an attractive option for contractors,” Bowen said.
Texas is another great choice for freelancers based in the U.S.
“The state boasts many benefits such as no corporate income tax, low unemployment rate and a low cost of living,” said Georgia McKenzie, founder and CEO at Switch on Business. “Texas is also home to some of the most innovative companies in the world, such as Dell and AT&T, offering plenty of job opportunities for freelancers.”
All this said, the average pay for freelancers in Texas is on the lower end –$26.21, according to Indeed.
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Off the bat, Oregon may not seem like a great place for freelancers: It's expensive and it boasts state income tax.
“[But] it has no sales tax,” said Lauren Mendoza, CPA, founder Bank Standard. “Its strong creative and tech scenes provide opportunities for freelancers in these fields.”
Plus, independent contractors can make some serious money in Oregon — an average of $118,972 a year, according to Indeed.
Because Wyoming has no individual income tax and a low cost of living, Mendoza highlights it as a great state for freelancers. Additionally, “its natural beauty can be a draw for freelancers seeking a balance between work and life,” Mendoza said.
The average pay for a freelancer reflects the state's comparatively low cost of living: $56,769, or $27 per hour, according to ZipRecruiter.
People often think of Nevada as a place to gamble their way into a fortune (because of Las Vegas), but it's also a rich location for freelancers.
“Nevada is often hailed as one of the top states for freelancers to thrive due to its favorable business environment and lack of personal income tax,” said Kimberley Tyler-Smith, an executive at the career tech platform Resume Worded. “Freelancers can hold onto a larger portion of their earnings, allowing them to invest back into their business or enjoy a higher quality of life. Moreover, Nevada boasts a relatively low cost of living compared to many other states, allowing freelancers to stretch their income further and maintain a comfortable lifestyle.”
Those in marketing may find Nevada an especially auspicious place to reside. According to Salary.com, the average base pay for a freelance marketer in Nevada is $91,590.
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This article originally appeared on GOBankingRates.com: 8 Best States for Freelancers To Work