Newsfeed: States with the Highest & Lowest Tax Rates

By John S Kiernan via WalletHub

Tax season can be stressful for the millions of Americans who owe money to Uncle Sam. Every year, the average U.S. household pays nearly $11,000 in federal income taxes. And while we’re all faced with that same obligation, there is significant difference when it comes to state and local taxes. Taxpayers in the most tax-expensive states, for instance, pay two times more than those in the cheapest states.

Surprisingly, though, low income taxes don’t always mean low taxes as a whole. For example, while the state of Washington’s citizens don’t pay income tax, they still end up spending over 8% of their annual income on sales and excise taxes. Texas residents also don’t pay income tax, but spend 1.74% of their income on real estate taxes, one of the highest rates in the country. Compare these to California, where residents owe almost 5% of their income in sales and excise taxes, and just 0.75% in real estate tax.

As this year’s tax-filing deadline, April 18, comes closer, it’s fair to wonder which states give their taxpayers more of a break – which is especially helpful during this period of high inflation. WalletHub searched for answers by comparing state and local tax rates in the 50 states and the District of Columbia against national medians. To illustrate, we calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income.

Main Findings

Source: WalletHub

Taxes by State

Overall Rank (1=Lowest)	State	Effective Total State & Local Tax Rates on Median U.S. Household*	Annual State & Local Taxes on Median U.S. Household*	% Difference Between State & U.S. Avg.**	Annual State & Local Taxes on Median State Household***	Adjusted Overall Rank (based on Cost of Living Index)
1	Alaska	6.05%	$4,204	-43.82%	$4,870	4
2	Delaware	6.34%	$4,405	-41.14%	$4,707	1
3	Montana	7.12%	$4,948	-33.88%	$4,773	2
4	Nevada	7.79%	$5,414	-27.64%	$5,636	10
5	Wyoming	8.06%	$5,604	-25.10%	$5,511	9
6	Florida	8.21%	$5,706	-23.74%	$5,355	6
7	Utah	8.23%	$5,719	-23.57%	$6,887	8
8	Idaho	8.29%	$5,765	-22.96%	$5,545	5
9	Colorado	8.53%	$5,930	-20.75%	$7,383	13
10	Tennessee	8.58%	$5,965	-20.29%	$4,964	3
11	Oregon	8.91%	$6,192	-17.25%	$7,329	22
12	California	8.97%	$6,238	-16.64%	$9,612	32
13	South Carolina	9.07%	$6,304	-15.75%	$5,288	11
14	Alabama	9.12%	$6,341	-15.26%	$4,924	7
15	District of Columbia	9.13%	$6,343	-15.23%	$10,357	46
16	Arizona	9.39%	$6,529	-12.75%	$6,452	14
17	West Virginia	9.72%	$6,758	-9.69%	$4,780	12
18	New Hampshire	9.90%	$6,879	-8.06%	$8,061	31
19	North Dakota	10.16%	$7,064	-5.60%	$6,652	25
20	North Carolina	10.51%	$7,307	-2.35%	$6,302	16
21	Georgia	10.55%	$7,335	-1.98%	$6,692	15
22	New Mexico	10.59%	$7,361	-1.63%	$5,698	21
23	Virginia	10.69%	$7,433	-0.66%	$8,578	24
24	Hawaii	10.70%	$7,440	-0.57%	$10,456	50
25	Louisiana	10.75%	$7,469	-0.18%	$5,710	19
26	Massachusetts	10.86%	$7,551	0.92%	$10,870	43
27	South Dakota	11.01%	$7,656	2.31%	$6,597	26
28	Rhode Island	11.24%	$7,816	4.45%	$8,842	44
29	Arkansas	11.30%	$7,852	4.93%	$5,712	18
30	Missouri	11.30%	$7,855	4.97%	$6,578	17
31	Minnesota	11.31%	$7,859	5.03%	$8,511	30
32	Oklahoma	11.51%	$8,002	6.94%	$6,154	23
33	Maryland	11.52%	$8,006	6.99%	$10,729	45
34	Maine	11.62%	$8,075	7.91%	$7,289	39
35	Indiana	11.76%	$8,173	9.23%	$6,851	28
36	Vermont	11.77%	$8,183	9.36%	$8,060	42
37	Mississippi	11.93%	$8,290	10.79%	$5,834	20
38	Washington	11.97%	$8,323	11.22%	$10,915	40
39	Michigan	12.15%	$8,449	12.91%	$6,965	27
40	Kentucky	12.50%	$8,687	16.09%	$6,698	29
41	Texas	12.73%	$8,846	18.21%	$8,006	34
42	Wisconsin	12.95%	$9,004	20.32%	$8,089	35
43	New Jersey	12.98%	$9,023	20.58%	$12,652	48
44	Nebraska	13.15%	$9,142	22.17%	$7,786	37
45	Ohio	13.20%	$9,178	22.66%	$7,306	33
46	Iowa	13.31%	$9,248	23.60%	$7,645	36
47	Kansas	13.57%	$9,433	26.06%	$7,919	38
48	Pennsylvania	13.92%	$9,675	29.30%	$8,820	41
49	New York	14.23%	$9,894	32.22%	$12,047	49
50	Connecticut	14.80%	$10,287	37.47%	$12,120	51
51	Illinois	15.05%	$10,463	39.83%	$9,987	47

*Assumes “Median U.S. Household” has an annual income of $69,508 (mean third quintile U.S. income); owns a home valued at $244,900 (median U.S. home value); owns a car valued at $26,220 (the highest-selling car of 2022); and spends annually an amount equal to the spending of a household earning the median U.S. income.
**National Average of State and Local Tax Rates = 10.79%

Gas Taxes (per gallon)

Lowest

1. Alaska
2. Mississippi
3. New Mexico
4. Arizona
5. Missouri

Highest

47. New Jersey
48. Hawaii
49. Pennsylvania
50. Illinois
51. California

**State Cigarette Tax Rates* (per pack of 20 cigarettes)**

Lowest

1. Missouri
2. Georgia
3. North Dakota
4. North Carolina
T-5. Idaho
T-5. South Carolina

Highest

47. Maryland
48. Rhode Island
T-49. Connecticut
T-49. New York
51. District of Columbia

Food Tax Rates

States with No Food Tax

T-1. Alaska
T-1. California
T-1. Florida
T-1. District of Columbia
T-1. Illinois

Worst

47. Missouri
48. Idaho
49. Kansas
50. Tennessee
51. Mississippi

*Note: Local Taxes are not included and can be substantial.

Blue vs. Red States

blue vs red image tax rates

State & Local Tax Breakdown

All effective tax rates shown below were calculated as a percentage of the mean third quintile U.S. income of $69,508 and based on the characteristics of the Median U.S. Household*.

State	Effective Real-Estate Tax Rate	Real-Estate Tax Rank ($)	Effective Vehicle Property Tax Rate	Vehicle Property Tax Rank ($)	Effective Income Tax Rate	Income Tax Rank ($)	Effective Sales & Excise Tax Rate	Sales & Excise Tax Rank ($)	Effective Total State & Local Tax Rates on Median U.S. Household*
Alaska	4.32%	34 ($3,000)	0.00%	1 ($0)	0.00%	1 ($0)	1.73%	5 ($1,204)	6.05%
Delaware	2.05%	9 ($1,426)	0.00%	1 ($0)	2.89%	38 ($2,010)	1.39%	4 ($969)	6.34%
Montana	2.92%	22 ($2,033)	0.45%	33 ($316)	2.58%	31 ($1,794)	1.16%	2 ($806)	7.12%
Nevada	1.94%	4 ($1,346)	0.70%	43 ($487)	1.00%	11 ($697)	4.15%	20 ($2,885)	7.79%
Wyoming	2.14%	11 ($1,484)	0.68%	41 ($472)	0.00%	1 ($0)	5.25%	39 ($3,648)	8.06%
Florida	3.04%	24 ($2,110)	0.00%	1 ($0)	0.00%	1 ($0)	5.17%	38 ($3,596)	8.21%
Utah	2.04%	8 ($1,418)	0.00%	1 ($0)	2.44%	27 ($1,695)	3.75%	10 ($2,606)	8.23%
Idaho	2.22%	14 ($1,546)	0.00%	1 ($0)	1.84%	17 ($1,281)	4.23%	24 ($2,938)	8.29%
Colorado	1.79%	3 ($1,243)	0.67%	40 ($468)	1.92%	18 ($1,333)	4.15%	21 ($2,886)	8.53%
Tennessee	2.31%	15 ($1,606)	0.00%	1 ($0)	0.10%	7 ($70)	6.17%	45 ($4,289)	8.58%
Oregon	3.26%	27 ($2,266)	0.00%	1 ($0)	4.55%	50 ($3,162)	1.10%	1 ($763)	8.91%
California	2.63%	16 ($1,828)	0.25%	28 ($170)	1.36%	13 ($947)	4.74%	33 ($3,292)	8.97%
South Carolina	1.98%	5 ($1,379)	0.99%	48 ($690)	2.29%	23 ($1,593)	3.80%	13 ($2,641)	9.07%
Alabama	1.45%	2 ($1,007)	0.26%	29 ($181)	2.49%	30 ($1,730)	4.93%	36 ($3,424)	9.12%
District of Columbia	2.02%	7 ($1,402)	0.00%	1 ($0)	2.45%	28 ($1,701)	4.66%	31 ($3,240)	9.13%
Arizona	2.19%	13 ($1,520)	0.63%	39 ($440)	1.46%	14 ($1,017)	5.11%	37 ($3,551)	9.39%
West Virginia	2.07%	10 ($1,437)	0.63%	38 ($440)	3.04%	43 ($2,113)	3.98%	16 ($2,768)	9.72%
New Hampshire	7.37%	48 ($5,120)	0.68%	41 ($472)	0.50%	8 ($349)	1.35%	3 ($939)	9.90%
North Dakota	3.51%	30 ($2,441)	0.00%	1 ($0)	0.59%	9 ($411)	6.06%	43 ($4,212)	10.16%
North Carolina	2.82%	19 ($1,963)	0.45%	32 ($314)	2.87%	36 ($1,998)	4.36%	27 ($3,032)	10.51%
Georgia	3.15%	25 ($2,192)	0.00%	1 ($0)	3.00%	42 ($2,088)	4.39%	28 ($3,054)	10.55%
New Mexico	2.80%	18 ($1,948)	0.00%	1 ($0)	1.56%	15 ($1,082)	6.23%	46 ($4,331)	10.59%
Virginia	2.89%	20 ($2,006)	1.49%	51 ($1,039)	2.77%	34 ($1,928)	3.54%	8 ($2,461)	10.69%
Hawaii	1.01%	1 ($700)	0.00%	1 ($0)	3.74%	47 ($2,598)	5.96%	42 ($4,142)	10.70%
Louisiana	1.99%	6 ($1,384)	0.04%	26 ($26)	2.10%	20 ($1,463)	6.61%	49 ($4,597)	10.75%
Massachusetts	4.22%	33 ($2,936)	0.85%	46 ($590)	2.83%	35 ($1,970)	2.96%	6 ($2,056)	10.86%
South Dakota	4.37%	35 ($3,040)	0.00%	1 ($0)	0.00%	1 ($0)	6.64%	50 ($4,616)	11.01%
Rhode Island	5.40%	41 ($3,752)	0.00%	1 ($0)	1.83%	16 ($1,271)	4.02%	17 ($2,793)	11.24%
Arkansas	2.18%	12 ($1,513)	0.38%	31 ($267)	2.44%	26 ($1,694)	6.30%	47 ($4,378)	11.30%
Missouri	3.44%	29 ($2,389)	0.99%	49 ($690)	2.71%	32 ($1,883)	4.16%	22 ($2,893)	11.30%
Minnesota	3.90%	32 ($2,708)	0.48%	34 ($337)	2.75%	33 ($1,913)	4.17%	23 ($2,901)	11.31%
Oklahoma	3.16%	26 ($2,194)	0.00%	1 ($0)	2.28%	22 ($1,588)	6.07%	44 ($4,220)	11.51%
Maryland	3.78%	31 ($2,628)	0.00%	1 ($0)	4.05%	48 ($2,812)	3.69%	9 ($2,566)	11.52%
Maine	4.52%	36 ($3,143)	0.91%	47 ($629)	2.13%	21 ($1,483)	4.06%	18 ($2,820)	11.62%
Indiana	2.91%	21 ($2,021)	0.50%	35 ($350)	3.56%	46 ($2,476)	4.78%	34 ($3,326)	11.76%
Vermont	6.69%	47 ($4,652)	0.00%	1 ($0)	1.32%	12 ($916)	3.76%	12 ($2,616)	11.77%
Mississippi	2.79%	17 ($1,937)	1.32%	50 ($917)	2.47%	29 ($1,719)	5.35%	40 ($3,717)	11.93%
Washington	3.32%	28 ($2,311)	0.00%	1 ($0)	0.00%	1 ($0)	8.65%	51 ($6,012)	11.97%
Michigan	5.22%	38 ($3,630)	0.23%	27 ($160)	2.95%	40 ($2,050)	3.75%	11 ($2,608)	12.15%
Kentucky	3.00%	23 ($2,084)	0.55%	36 ($379)	5.01%	51 ($3,483)	3.94%	15 ($2,740)	12.50%
Texas	6.12%	46 ($4,255)	0.00%	1 ($0)	0.00%	1 ($0)	6.60%	48 ($4,591)	12.73%
Wisconsin	6.10%	45 ($4,243)	0.00%	1 ($0)	2.96%	41 ($2,061)	3.88%	14 ($2,700)	12.95%
New Jersey	8.71%	51 ($6,057)	0.00%	1 ($0)	0.78%	10 ($545)	3.48%	7 ($2,421)	12.98%
Nebraska	5.90%	43 ($4,102)	0.55%	37 ($384)	2.08%	19 ($1,446)	4.62%	30 ($3,209)	13.15%
Ohio	5.39%	39 ($3,748)	0.00%	1 ($0)	3.14%	44 ($2,181)	4.67%	32 ($3,249)	13.20%
Iowa	5.53%	42 ($3,843)	0.38%	30 ($262)	2.89%	37 ($2,010)	4.51%	29 ($3,133)	13.31%
Kansas	5.03%	37 ($3,500)	0.72%	44 ($500)	2.33%	25 ($1,617)	5.49%	41 ($3,817)	13.57%
Pennsylvania	5.40%	40 ($3,751)	0.00%	1 ($0)	4.21%	49 ($2,928)	4.31%	26 ($2,996)	13.92%
New York	6.09%	44 ($4,231)	0.00%	1 ($0)	3.33%	45 ($2,317)	4.81%	35 ($3,347)	14.23%
Connecticut	7.56%	49 ($5,256)	0.80%	45 ($555)	2.30%	24 ($1,595)	4.14%	19 ($2,880)	14.80%
Illinois	7.86%	50 ($5,465)	0.00%	1 ($0)	2.90%	39 ($2,016)	4.29%	25 ($2,982)	15.05%

*Assumes “Median U.S. Household” has an income equal to $69,508 (mean third quintile U.S. income); owns a home valued at $244,900 (median U.S. home value); owns a car valued at $26,220 (the highest-selling car of 2022); and spends annually an amount equal to the spending of a household earning the median U.S. income.

Methodology

In order to identify the states with the highest and lowest tax rates, WalletHub compared the 50 states and the District of Columbia across four types of taxation:

Real-Estate Tax: We first divided the “Median Real-Estate Tax Amount Paid” by the “Median Home Price” in each state. We then applied the resulting rates to a house worth $244,900, the median value for a home in the U.S., in order to obtain the dollar amount paid as real-estate tax per household.
Vehicle Property Tax: We examined data for cities and counties collectively accounting for at least 50 percent of the state’s population and extrapolated this to the state level using weighted averages based on population size. For each state, we assumed all residents own the same car: a Toyota Camry LE four-door sedan, 2022’s highest-selling car, valued at $26,220, as of February 2023.
Income Tax: We used the percentage of income (middle income rate) spent on income tax from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $69,508.
Sales & Excise Tax: We used the percentage of income (middle income rate) spent on sales and excise taxes from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $69,508.

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Tax Foundation, Federation of Tax Administrators, American Petroleum Institute, Campaign for Tobacco-Free Kids, National Automobile Dealers Association, each state’s Department of Motor Vehicles and WalletHub research.