Tax season is approaching, and for many Americans, this time of year can bring financial stress. Understanding the tax burdens in different states is crucial for financial planning.
A recent study by WalletHub in early 2023 analyzed the portion of total personal income residents allocate to state and local taxes, providing insights into which states have the highest tax burdens.
This blog post will delve into the ten states with the most significant tax burdens, highlighting the specific taxes that contribute to these high costs and offering a comprehensive overview for anyone looking to understand or relocate.
1: New York
New York has the highest tax burden in the U.S. The Empire State has the largest individual income tax burden at 4.72% and the fifth-worst property tax burden at 4.36%.
- Individual Income Tax: 4.72%
- Property Tax: 4.36%
- Total Tax Burden: Highest in the U.S.
2: Hawaii
Hawaii, while a popular tourist destination, presents a significant tax burden for its residents. The Aloha State has the highest sales and excise tax burden in the nation at 6.71%.
- Sales & Excise Tax: 6.71%
- Total Tax Burden: High due to sales and excise taxes
3: Maine
Maine’s total tax burden is 11.14%. The Pine Tree State has the highest property tax burden in the U.S. at 5.33%.
- Property Tax: 5.33%
- Total Tax Burden: 11.14%
4: Vermont
Vermont ranks 27th for individual income tax and total sales & excise tax burden but has the second-highest property tax burden in the nation at 4.98%. This high property tax pulls Vermont up to the fourth-worst state for overall tax burden.
- Property Tax: 4.98%
- Total Tax Burden: High due to property tax
5: Connecticut
Connecticut’s total tax burden is 9.83%. The Nutmeg State ranks sixth and ninth in the nation for property tax and individual income tax burdens, respectively.
- Property Tax: Ranks 6th worst nationally
- Individual Income Tax: Ranks 9th worst nationally
- Total Tax Burden: 9.83%
6: New Jersey
New Jersey has a low total sales & excise tax burden, ranking 43rd lowest in the U.S.. However, its fourth-worst property tax burden makes New Jersey a place residents might want to avoid.
- Property Tax: 4th worst nationally
- Sales & Excise Tax: 43rd lowest nationally
7: Maryland
Maryland has the second-highest individual income tax burden in America at 4.21%. Lower-than-average property tax and total sales & excise tax burdens prevent it from ranking higher on the list.
- Individual Income Tax: 4.21%
- Property Tax: Lower than average
- Sales & Excise Tax: Lower than average
8: Minnesota
Minnesota’s individual income tax burden is 3.11%, ranking it the 6th worst in the nation. The North Star State ranks slightly higher than average for property tax burden and total sales & excise tax.
- Individual Income Tax: 3.11%
- Property Tax: Slightly higher than average
- Sales & Excise Tax: Slightly higher than average
9: Illinois
Illinois does not rank in the single digits for any tax burden category. However, it ranks 10th for property tax, 22nd for individual income tax, and 22nd for total sales & excise tax burdens, making it a less tax-friendly state.
- Property Tax: 10th worst nationally
- Individual Income Tax: 22nd worst nationally
- Sales & Excise Tax: 22nd worst nationally
10: Iowa
Iowa is the 14th-worst state for property tax burden and the 16th-worst for individual income tax burden.
- Property Tax: 14th worst nationally
- Individual Income Tax: 16th worst nationally
Lowest Tax Burden State
Alaska is the best state for those wanting to save on taxes, with a total tax burden of just 5.06%. The Last Frontier has a 0% individual income tax burden, a 1.47% total sales & excise tax burden, and a 3.59% property tax burden.
- Individual Income Tax: 0%
- Sales & Excise Tax: 1.47%
- Property Tax: 3.59%
- Total Tax Burden: 5.06%.
Alicia Richards