Which States Have the Highest Tax Burdens?

Which States Have the Highest Tax Burdens?

Home » Money Management » Economic News » Which States Have the Highest Tax Burdens?

Which States Have the Highest Tax Burdens?

It’s almost here — in just one week, 2017 tax returns will officially be due. Naturally this time of year causes many to ponder the taxes they pay, including what their money goes towards and the various ways they’re taxed beyond the income taxes they report each April. Tax Time 2018 also got researchers at WalletHub thinking about which states have the highest tax burden, leading them to compile a new study.

To determine “tax burden,” WalletHub first looked at each state’s property taxes, individual income taxes, and sales and excise taxes. From there they compared these various amounts to resident income in each state. As they explain, “Unlike tax rates, which vary widely based on an individual’s circumstances, tax burden measures the proportion of total personal income that residents pay toward state and local taxes.”

Source: WalletHub

In terms of the highest tax burden overall, New York state came out on top with 13.04%. Coming in second was Hawaii with 11.57% followed by Maine’s 11.02%. Behind those, Vermont, Minnesota, and Connecticut, Rhode Island, Illinois, and New Jersey were all found to have tax burden rates north of 10%.

Standing in contrast to the 50th state, state #49 — A.K.A. Alaska — was discovered to have the lowest tax burden at just 4.94%. Joining Alaska at the bottom of the list were Delaware (5.68%), Tennesee (6.47%), Florida (6.64%), and New Hampshire (7.07%). However, even though New Hampshire make the bottom five in terms of overall tax burden, it actually came in first for property tax burden at 5.60%. Of course this was offset by their relatively low income tax (0.13%) as well as sales and excise tax (1.34%) burdens.

As for some of the other taxes, Hawaii residents are subjected to the highest sales tax burden at 6.52%. By contrast, Oregon’s 1.11% burden was the lowest — likely because the state does not collect sales tax. Speaking of not collecting taxes, Alaska, Florida, South Dakota, Wyoming, Washington, and Texas do not have state income taxes, causing a six-way tie at the bottom of that tax burden category. Meanwhile New York was tops once again with its 4.78% individual income tax burden.

While most of us typically only think about the taxes we’re paying once a year, this latest WalletHub study makes an excellent point in highlighting that not all the states are equal when it comes to taxes paid. In fact, if you’re considering downsizing and relocating, this report could come in handy for identifying a new place to set up shop. For the rest of us, it’s just another opportunity to grit our teeth as we prepare to pay up — Happy (Almost) Tax Day!

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Chase Introduces New Checkless Accounts with Lower Fees

It may be surprising to some but, according to a 2017 Federal Deposit Insurance Corporation (FDIC) report, 6.5% of households in the United States don’t have a traditional bank account. There are many reasons why Americans are unbanked but, anecdotally, rising fees are among the biggest reasons for what's keeping...

Despite Recent Dip, Housing Market Looks for Spring Uptick

Winter has never been a popular time to buy to home but a recent dip did have some economists concerned. In January home sales fell 1.2% from the prior month, leading some to ponder whether it was a sign of a larger slowdown. However, as CNN Business reports, analysts have...

Tally Introducing Free Automated Savings Service

Something that often gets lost in all the talk and controversy surrounding FinTech is that many of the companies wearing that label aim to improve the financial lives of their users, not hurt them. From making investing more accessible to giving consumers more effective tools for getting out of debt,...