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
Food Tax Rates
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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.


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