Benjamin Franklin once said nothing can be said to be certain, except death and taxes. Whether it’s income, sales, property or any other type, taxes are a part of our daily lives. And yet, how much do you actually know about the money you pay to Uncle Sam or why you even do it in the first place? Are you familiar with how your state residency affects the amount you pay?
Tax law can feel like an uncrackable code. It’s intimidating to try to get familiar with the minutia of state tax legislation. Well, don’t worry — we did it for you. Read ahead to learn about the tax restrictions and breaks for each 50 states, which we ranked into three categories in terms of affordability: Thumbs Up, So-So, and Thumbs Down
Alabama — So-So
Alabama is one of the few states which allows you to deduct your federal income taxes and it offers the second lowest property tax in the country. However, these benefits are somewhat offset by an average 9 percent sales tax. Alabama is one of the few states that does not exempt food from sales tax.
Alaska — Thumbs Up
Alaska is one of the best states for whale watching, ice fishing, and, you guessed it, tax breaks. The largest, but third-least-populated state not only offers no state income tax, but residents actually receive a tax stipend merely for residing there. The “Permanent Fund Dividend” pays residents $1,000 a year, thanks to the state’s taxation on energy production.
Arizona — Thumbs Up
It’s very difficult to reach the top tax bracket in Arizona — you won’t break the top threshold as a joint filer unless you bring in at least $300,000. Low income tax, paired with a lack of estate or inheritance tax, makes Arizona one of the most tax-friendly states around. Arizona is also very commuter friendly with a notably low gasoline tax of only $0.19 per gallon.
Arkansas — So-So
Arkansas state tax is especially complicated. Due to multiple rate schedules, the state effectively has 16 tax brackets. Plus, Arkansas has the second-highest sales tax in the country. While the state offers notably low property tax, this perk is far less appealing due to an average 9.3 percent sales tax.
California — Thumbs Down
California is not very tax friendly — especially if you’re a top earner. The most populous state in the country taxes earners of more than $1 million a whopping 13.3 percent. While it might seem hard to be sympathetic to a 7-figure earner, keep in mind that, according to CNBC, California is home to 772,555 millionaires, so that’s a significant tax bite. This, mixed with a notably high gas tax of $0.53 per gallon (in a state that all but necessitates a long commute), California comes out as one of the worst states for tax costs.
Colorado — Thumbs Up
Colorado is one of eight states that charges a flat income tax. Regardless of status, all residents pay 4.63 percent on federally taxable income. The only tax costs that might be of significant note are a rather high sales tax of an average 7.5 percent and a combined 25 percent tax on retail marijuana.
Connecticut — Thumbs Down
Unlike most states, localities within Connecticut cannot add to the standard 6.35 percent sales tax. This might seem appealing at first blush, but in reality Connecticut has some of the most expensive and restrictive tax laws in the country. In addition to having one of the highest real estate tax rates around, Connecticut is also the only state to impose a gift tax, which taxes property exchange starting at 7.2 percent. Due to this and other financial factors, Connecticut is usually too expensive for people to make a living and find housing unless they have high-paying jobs and excellent credit.
Delaware — Thumbs Up
Delaware is an outlier on the east coast, fraught with restrictive tax laws. Delaware has low sales tax, low property tax, and as of this year, no estate tax. The only blemish for this state is the top income tax bracket starts at a mere $60,000.
Florida — Thumbs Up
There’s a reason Florida is one of the most popular states for retirees. There is no state income tax and property tax is notably low. Plus, oddly enough, there is no sin tax on cigars, which for some might make a weekend night on the beach that much more appealing.
Georgia — Thumbs Down
Georgia charges a flat income tax of almost 6 percent. This means that, regardless of status, all residents are affected by a high income tax rate. The higher-than-normal Georgia flat income tax rate is especially detrimental to low-income families. As long as you earn more than $10,000 jointly, you will take a major state income tax hit. Plus, some localities charge sales tax on food, so Uncle Sam will see a cut of your monthly peach bill.
Hawaii — Thumbs Up
High earners will pay the price in this paradise: the top tax bracket of $400,000 or more pay 11 percent in state income taxes. Plus Hawaii has a General Excise Tax, which means virtually all goods and services are accompanied by a 4 percent sales tax.
Idaho — So-So
Idaho has a fairly low sales tax at an average of 6 percent. Plus this tax is offset by a $100 per person tax credit. This, paired with low property tax, makes Idaho a fairly inexpensive tax state. However, middle class families beware because any joint filling worth more than $21,810 pays 7.4 percent in income tax.
Illinois — Thumbs Down
Last year Illinois raised its flat tax rate by more than 1 percent culminating 4.95 percent. Not to mention the state has an average 8.64 percent sales tax and the second-highest property tax in the entire country.
Indiana — So-So
Indiana imposes a flat income tax, and while it was lowered to 3.23 percent last year, income tax can be increased according to the county you reside in. In some cases, income tax can more than double due to county legislation. This, combined with a high sales tax of 7 percent makes Indiana average in terms of tax friendliness.
Iowa — So-So
If you make more than $69,000 in the Hawkeye state you will experience a significant tax bite. The top tax bracket is charged a hefty 9 percent. However, Iowa allows residents to deduct federal income tax from state income tax.
Kansas — Thumbs Down
Due to a significant state deficit, Kansas tax laws have been volatile for awhile and ultimately unsustainable for many residents. The high tax bracket is very low at only $30,000 for single filers, and charges individuals 5.2 percent. Plus, Kansas has a high average sales tax of 8.62 percent.
Kentucky — So-So
The greatest drawback to Kentucky taxes is the income tax. Earners who bankroll more than a mere $8,000 are responsible for 5.8 percent in taxes. This means low earners are susceptible to high tax rates despite their income. However, Kentucky has a fairly low sales tax, which is not affected by localities and low property tax.
Louisiana — So-So
If you have a high credit score, and you’re looking to buy property, the Creole State might be your best bet. Louisiana has one of the lowest property tax rates in the country. However, the average combined sales tax rate is 9.98 percent which is the highest in the country.
Maine — Thumbs Down
The biggest tax issue in Maine is high income tax rates. Single earners who bring in more than $50,000 owe 7.15 percent in income tax. Even low-income individuals are affected — single filers who earn more than $21,100 pay 5.8 percent in income tax. That’s as much as some state’s high earner rate.
Maryland — Thumbs Down
Consistent with the trend of high income tax rates on the east coast, Maryland is particularly costly for high earners. Maryland is unique in that localities can tack on additional income tax depending on where you live in the state. So, while the base income tax for Maryland is 5.75 percent, an additional 1-3 percent could be added depending on your locality.
Massachusetts — So-So
Massachusetts is an outlier of the east coast because its tax costs are not extremely high. Instead, they are only moderately high. Massachusetts has a flat sales tax of 6.25 percent and a flat property tax of 5.1 percent.
Michigan — So-So
Michigan is one of the few states that has a flat income tax rate of 4.25 percent. As far as flat taxes go, this is pretty low. Otherwise, sales tax and property taxes are more or less on par with other states.
Minnesota — Thumbs Down
Minnesota income tax is especially harmful for top earners. Any single filer who earns more than $155,911 pays 9.85 percent in income tax. Not to mention, the other side of the tax bracket spectrum is heavily taxed too. Low earners who make a mere $25,390 or more will still be taxed 5.53 percent.
Mississippi — Thumbs Up
Much like its neighbor to the west Louisiana, Mississippi offers exceptionally low property taxes. On top of that, the highest income tax rate is only 5 percent.
Missouri — So-So
Missouri has 10 tax brackets, but you only have to make $9,000 to reach the top, which comes at a cost of 6 percent. However, what you pay in high income tax you can make up in low gas tax and average sales tax.
Montana — Thumbs Up
Montana is one of the rare states that does no charge any form of sales tax. This coveted financial perk, plus low property taxes more than make up for the near 7 percent income tax, which affects any single filer who makes more than $17,400.
Nebraska — Thumbs Down
High income taxes, high property taxes, inheritance tax and high sales tax. For all its agricultural utility, Nebraska taxes is one commodity that will continue to grow.
Nevada — Thumbs Up
Put all your chips on Nevada because this state is another rarity where there is no income tax. Even though sales tax is a little higher than average at 7.98 percent, Sin City is still offers a sensational tax situation.
New Hampshire — Thumbs Up
Hidden among expensive east coast states, New Hampshire offers a small respite from expensive taxes. New Hampshire has no income tax or sales tax. Yeah, you read that right. Now, before you leave everything and move out to the Granite State, keep in mind that New Hampshire has above average property tax.
New Jersey — Thumbs Down
New Jersey has one of the highest income tax rates for high earners in the country. Granted, few people will earn the $500,000 necessary to pay that rate, but that doesn’t mean New Jersey is off the hook. New Jersey has the highest property tax rate with 2.31 percent.
New Mexico — Thumbs Up
Thanks to low income tax of only 4.9 percent and a low property tax rate, New Mexico is a great place to pinch a penny. The downside is sales tax can be as high as 7.55 percent, but the upside is if you live to 100 and have no dependents you are completely exempt from income tax.
New York — Thumbs Down
The Big Apple has some of the biggest tax costs in the country. Whether it’s income tax, sales tax, estate tax, or property tax, New York is anything but tax-friendly. On the plus side, The Empire State has the priciest cigarette taxes, which might be enough sticker shock to drop a bad habit.
North Carolina — Thumbs Up
Recently North Carolina adopted a flat income tax rate, which dropped to 5.49 percent just last year. The state has an average 6.9 percent sales tax, which is not applied to food.
North Dakota — Thumbs Up
North Dakota delivers a rare one-two savings punch: not only is income tax as low as 2.9 percent for high earners, sales tax is also lower than average. North Dakota also has one of the lowest sin taxes on items like alcohol and tobacco.
Ohio — So-So
In Ohio, your tax burden really depends on your locality. In this state municipalities can tack on additional income tax on top of the standard, albeit low, 5 percent. Other items such as sales and property taxes are mostly average.
Oklahoma — So-So
Oklahoma is a mixed bag. The Sooner State has one of the highest sales tax rates in the country at just over 8 percent, plus most professionals will fall into the high-earner bracket and pay 5 percent in income taxes. However, these costs are balanced out thanks to low property taxes.
Oregon — Thumbs Down
Oregon has the highest income tax rate for high earners in the country. Those that make $125,000 or more will pay 9.9 percent in income tax. Even low- and medium-income individuals are subject to high income tax — the lowest tax bracket is still responsible for 5 percent. This is a significant cost even in light of the the lack of Oregon state sales tax.
Pennsylvania — Thumbs Up
Pennsylvania is another east coast state that stands as a exception to the high income tax trend. Pennsylvania has a low flat income tax of only 3 percent. So even though property tax rates are a little higher than average, Pennsylvania offers income tax relief.
Rhode Island — So-So
Even though Rhode Island is the smallest U.S. state, it has one of the highest property tax rates at 1.64 percent. Otherwise, income tax and sales tax are average.
South Carolina — So-So
Most South Carolina residents will find themselves in the high tax bracket — a pretty lofty 7 percent tax — and this status only necessitates $14,600 in taxable income. However, South Carolina is in the top 10 for lowest property taxes in the country.
South Dakota — Thumbs Up
Like their neighbors to the north, South Dakota has a relatively low sales tax. The combined average sales tax is only 6.39 percent, which is below the national average. As if that weren’t enough, what makes South Dakota even more appealing is there is no income tax.
Tennessee — So-So
Tennessee has no state income tax, but the state does have Hall Tax, which means stock interest and dividends are still taxed at 4 percent. However, a lack of income tax doesn’t come free in the Volunteer State — Tennessee has the highest combined average sales tax in the country weighing in at 9.46 percent.
Texas — So-So
You don’t mess with Texas, and in return you don’t have to mess with income taxes. While Texas might be one of the rare states that doesn’t collect income tax, it does compensate with high sales tax and property tax.
Utah — Thumbs Up
Not only does Utah offer a modest 5 percent flat income tax rate, but sales and property taxes are also low. The state also has no statewide lodging tax. U-got-ah be kidding me!
Vermont — Thumbs Down
While Vermont is not the most tax-heavy state in the east, it is still pretty expensive. The highest tax bracket comes with a 8.95 tax. Plus, Vermont is in the top 10 states with the most expensive property tax rates, at 2.02 percent.
Virginia — Thumbs Up
When it comes to taxes, Virginia’s greatest asset is being average. Income tax is middle of the road at 5.75 percent and so is sales tax at 5.3 percent. The only thing out of the ordinary about Virginia taxes is that vehicles are subject to a personal property tax, but this depends on the locality.
Washington — Thumbs Up
Washington is one of the few states that doesn’t charge income tax. However, nothing in life is free — the lack of income tax is compensated for with a higher-than-average sales tax of a combined average 8.92 percent.
West Virginia — Thumbs Up
Like its namesake Virginia, West Virginia offers refreshingly average tax rates. However, unlike its eastern relative, West Virginia has some of the lowest real estate taxes in the country.
Wisconsin — So-So
Income taxes in Wisconsin are higher than average, but thanks to ongoing reform they have lowered slightly. Also, property taxes are high in the Badger State, but this can be offset thanks to state tax credits for Wisconsin homeowners.
Wyoming — Thumbs Up
It’s a shame that Wyoming is the least-populated state in America because it also offers some of the cheapest taxes in the entire country. There is no sales tax, as well as low property tax and low income tax. Plus, Wyoming offers the lowest sin tax on beer. Uncle Sam barely has any handle on the Wild West, and Wyoming is the final frontier for affordable taxes.
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