As tax season looms, many Americans feel the pinch of state and local taxes. A recent WalletHub study, focusing on the proportion of personal income residents allocate to these taxes, offers a revealing look at which states have the highest tax burdens.
Understanding these burdens is crucial for financial planning and making informed decisions about where to live. This post will dissect the top ten states where taxes take the biggest bite.
1. New York: The Empire State’s Taxing Reality
New York consistently ranks as the state with the highest tax burden in the U.S.. The Empire State’s substantial individual income tax, at 4.72%, coupled with the fifth-highest property tax burden of 4.36%, makes it a challenging place for residents regarding taxes.
These combined factors significantly increase the financial strain on New Yorkers, impacting everything from disposable income to long-term savings.
2. Hawaii: Paradise with a Price – The Aloha State’s Tax Burden
Hawaii, while a dream destination for tourists, presents a taxing reality for its residents. The Aloha State bears the nation’s highest sales and excise tax burden, standing at 6.71%.
This hefty tax burden elevates the cost of living, affecting everyday purchases and financial well-being for those who call Hawaii home.
3. Maine: The Pine Tree State’s Property Tax Predicament
Maine’s total tax burden of 11.14% places it among the most taxing states in the U.S.. The state grapples with the highest property tax burden in America, at 5.33%.
This places a significant strain on homeowners, making Maine a less attractive option for those seeking affordable living. The high property taxes are a primary driver of the overall tax burden in Maine.
4. Vermont: The Green Mountain State’s Property Tax Problem
Vermont’s tax landscape is notably shaped by its high property taxes. Despite ranking 27th for both individual income tax and total sales & excise tax burden, Vermont’s second-worst property tax burden of 4.98% propels it to the fourth-worst state for overall tax burden.
This situation underscores the considerable impact of property taxes on the state’s affordability.
5. Connecticut: The Nutmeg State’s Notable Tax Burden
Connecticut, while not in the top tier, still presents a significant tax burden for its residents. The state’s total tax burden is 9.83%.
Connecticut ranks sixth and ninth nationally for property tax and individual income tax burdens, respectively. These factors contribute to a higher cost of living compared to less-taxed states.
6. New Jersey: The Garden State’s Property Tax Pressure
New Jersey residents face a unique tax situation. While the Garden State enjoys a low total sales & excise tax burden, ranking 43rd lowest in the U.S., its fourth-worst property tax burden offsets this advantage.
This makes New Jersey a potentially less desirable place for homeowners and future residents.
7. Maryland: The Old Line State’s Income Tax Impact
Maryland’s tax burden is significantly influenced by its high individual income tax. As the second-worst state in America for individual income tax burden, at 4.21%, Maryland residents feel the strain on their paychecks.
However, lower-than-average property tax and total sales & excise tax burdens prevent it from ranking even higher on the list.
8. Minnesota: The North Star State’s Mixed Tax Landscape
Minnesota’s tax climate is marked by a combination of factors. The state’s individual income tax burden is considerable, with a 3.11% rate that ranks it the 6th-worst in the nation.
Additionally, Minnesota ranks slightly higher than average for property tax burden and total sales & excise tax.
9. Illinois: The Prairie State’s Consistent Tax Challenge
Illinois presents a consistently challenging tax environment for its residents. While Illinois doesn’t rank in the single digits for any tax burden category, it still holds 10th place for property tax burden and 22nd place for individual income tax and total sales & excise tax burdens. These factors combine to make Illinois a less tax-friendly state.
10. Iowa: The Hawkeye State’s Taxing Combination
Iowa rounds out the top ten states with the highest tax burdens. The Hawkeye State is the 14th-worst state for property tax burden and the 16th-worst state for individual income tax burden. These combined burdens contribute to the financial pressures faced by Iowa residents.
Alicia Richards