KEY POINTS
You may have a wildly different tax bill depending on where you live.
That’s because your tax burden — individual income, property, sales,
and excise taxes as a share of total personal income — varies by
state.
You can expect to spend the most in New York, Hawaii, Maine, Vermont,
and Minnesota, according to a WalletHub report.
As this year’s tax deadline approaches, you may have a wildly
different bill depending on where you live, according to a WalletHub
report ranking how much residents pay by state.
The report compares total tax burdens — individual income, property,
sales, and excise taxes — as a share of total personal income.
“Tax burden is a simpler ratio and helps cut through a lot of the
confusion, especially when you’re looking to relocate,” WalletHub
analyst Jill Gonzalez said.
While it’s easy to focus solely on income taxes, other levies can have
a significant effect on your family’s budget.
Here are the states with the highest and lowest tax burdens, according
to WalletHub.
States with the highest tax burdens
New York (12.75%)
Hawaii (12.70%)
Maine (11.42%)
Vermont (11.13%)
Minnesota (10.20%)
New Jersey (10.11%)
Connecticut (10.06%)
Rhode Island (9.91%)
California (9.72%)
Illinois (9.70%)
States with the lowest tax burdens
Alaska (5.06%)
Tennessee (5.75%)
Delaware (6.22%)
Wyoming (6.32%)
New Hampshire (6.41%)
Florida (6.64%)
South Dakota (7.12%)
Montana (7.39%)
Alabama (7.41%)
Oklahoma (7.47%)
“States without income tax or with very low-income tax tend to be less
burdensome overall,” Gonzalez said.
However, it’s important to consider how tax burdens affect Americans
by income level, she said. That’s because low-income tax states may
charge more for property or sales tax, which typically hits lower
earners harder.
The WalletHub findings come as bipartisan lawmakers from cash-rich
states are cutting taxes to offer relief from rising prices, including
income, corporate, grocery, gas, and property taxes.
In 2022, Idaho, Indiana, Iowa, and Utah have enacted income tax cuts,
and similar legislation awaits the governor’s signature in
Mississippi, as of March 29, according to the Tax Foundation.
And there are proposals to cut levies on income in Colorado, Missouri,
Nebraska, New York, Oklahoma, and South Carolina.
There’s a list of each state’s tax proposals and relief here.
Migration from high-tax states
Several high-tax states have lost residents during the pandemic.
The $10,000 cap on the federal deduction for state and local levies
for Americans who itemize, known as SALT, has been a pain point for
areas with steep income and property taxes.
From April 2020 to July 2021, California, Hawaii, Illinois, New York,
and the District of Columbia were the top five jurisdictions to shed
residents, according to a Tax Foundation report.