Many Americans feel the burden of taxes weighing them down, much like a heavy backpack. In certain states, this burden is particularly pronounced due to a combination of high income, property, and sales taxes.
The overall tax burden can significantly impact residents’ wallets, leaving them with less of their hard-earned money to spend or save.
Recent data reveals that the ten states with the highest tax burdens not only take a larger slice of residents’ incomes but also face alarming population declines.
Between 2007 and 2016, most of these high-tax states lost residents, as people sought refuge in states with lighter tax loads.
This guide delves into the ten tax-heavy states draining Americans, highlighting the financial pressures they impose and the migration trends that follow.
1: New York
New York imposes some of the highest taxes in the nation, impacting both income and property owners. New York’s state income tax ranges from 4% to 10.9%, depending on income levels.
Also, property taxes average around 1.69%, significantly squeezing homeowners. Sales taxes add another layer, with a state rate of 4% and local rates pushing totals to over 8%.
These burdens prompt many residents to relocate in search of lower taxes and a better financial future.
2: Hawaii
Hawaii’s tax burden is among the highest in the nation. It imposes a state income tax ranging from 1.4% to 11%, the latter applying to high earners.
Property taxes average around 0.27%, lower than many states, yet housing costs are exorbitant. Sales tax stands at 4%, but local counties add on more, leading to a significant overall rate. These factors compel many residents to reconsider their living situation.
3: Maine
Maine imposes a state income tax ranging from 5.8% to 10.15%, creating a significant burden for its residents. Property taxes average about 1.03%, contributing to high housing costs.
Also, Maine’s sales tax sits at 5.5%, with local municipalities able to levy their own taxes. These cumulative tax pressures prompt many Mainers to seek greener pastures in states with lower tax burdens.
4: Vermont
Vermont imposes some of the highest taxes in the U.S. State income tax rates range from 3.55% to 8.75%, significantly impacting residents’ finances.
Property taxes average around 1.90%, while the sales tax stands at 6%. These tax rates often lead Vermonters to reconsider their living situations, prompting many to relocate to states with lower tax burdens in search of financial relief.
5: Connecticut
Connecticut stands out as the only state with a gift tax, which places additional financial pressure on its residents.
Middle-class families here pay over 14% of their income in taxes, considerably higher than many others. Average income taxes reach 6.62%, while median annual property taxes hit $6,153.
Though the state doesn’t tax essentials, it ranks worst for tax-friendliness for the middle class, draining their disposable income.
6: New Jersey
New Jersey’s tax burden is among the highest in the nation, with state income tax rates ranging from 1.4% to 10.75%. Residents face property taxes averaging around 2.21%, the highest in the U.S.
Also, the state sales tax stands at 6.625%, with localities able to increase it further. Consequently, many New Jerseyans find their disposable income severely impacted, prompting them to consider relocating for better financial prospects.
7: Maryland
Maryland ranks high among states draining Americans with its notable tax burdens. State income tax rates range from 2% to 5.75%, while residents face property taxes averaging around 1.1%. Also, the state imposes a sales tax of 6%, which can be compounded by local taxes.
These financial pressures push many Marylanders to seek lower tax states for greater economic relief.
8: Minnesota
Minnesota imposes a state income tax ranging from 5.35% to 9.85%, making it one of the highest in the nation.
Taxpayers also face property tax levels averaging about 1.1%, while the sales tax sits at 6.875%, excluding local surcharges.
High living costs combined with heavy taxation prompt many residents to consider relocating to states with lower tax burdens.
9: Illinois
Illinois imposes one of the heaviest tax burdens in the U.S. State income tax rates sit at a flat 4.95%. Property taxes average around 2.27%, among the highest in the nation.
Sales tax reaches 6.25% but can spike with local surcharges. These significant tax rates force many residents to reconsider their living situations, driving them toward states with lighter tax burdens.
10: Iowa
Iowa imposes a state income tax ranging from 0.33% to 8.53%, creating a considerable financial burden for residents. Property taxes average about 1.29%, adding to the overall tax strain.
Also, Iowa’s sales tax rate is set at 6%, with localities having the option to increase it. These combined tax pressures often push Iowans to seek opportunities in states with lower tax obligations.
Alicia Richards