New York may be known for its iconic skyline, world-class culture, and economic influence, but it also holds another, less glamorous title: the highest tax burden in the United States.
According to a WalletHub study, New Yorkers hand over 12.02% of their income to state and local taxes, more than any other state.
This includes 4.63% in income tax, 4.36% in property tax, and 3.03% in sales and excise taxes. But what drives these numbers so high?
Below, we break down the top three reasons why New York’s tax burden ranks as the worst in the nation.
1. Extensive Public Services and Progressive Agenda
One major contributor to New York’s high tax burden is its commitment to delivering comprehensive public services.
The state embraces a progressive political agenda, which often translates to robust funding for programs such as public education, healthcare access, social services, and mass transit.
While these services offer widespread benefits to residents, they come at a high cost. To sustain these programs, New York collects significantly more revenue from taxpayers than most other states.
Residents essentially pay a premium for the state’s extensive infrastructure and social safety net, which in turn raises the overall tax percentage.
2. High Cost of Living Drives Up Property Taxes
Another key factor behind New York’s tax load is its notoriously high cost of living, especially in cities like New York City, where housing prices have soared for decades.
High real estate values lead directly to higher property taxes, which account for a hefty 4.36% of the total tax burden.
Even middle-class families often find themselves paying property taxes that far exceed the national average.
In addition, daily expenses in New York tend to be higher than in most other states, causing sales and excise taxes to take a bigger bite out of residents’ wallets. It’s a double whammy of expensive living and higher taxation.
3. A Shrinking Tax Base from Outmigration
New York is facing a population shift that further exacerbates its tax challenges. The state has been seeing a steady stream of residents leaving for lower-tax states like Florida and Texas.
This outward migration erodes the state’s tax base, reducing the number of taxpayers contributing to essential services.
As a result, the financial burden increases for those who remain. Ironically, high taxes are often cited as one of the main reasons people move out in the first place.
This creates a vicious cycle: as more people leave, taxes rise for everyone left behind, fueling even more departures.
Conclusion
New York’s status as the state with the highest tax burden in the U.S. is not without cause. Its expansive social programs, high property values, and ongoing migration issues all contribute to a perfect storm of rising taxes.
While many residents benefit from the services these taxes fund, the financial strain is real, and it’s driving some to seek relief elsewhere.
Whether you’re a longtime resident or considering a move, understanding the roots of New York’s tax structure is essential for planning your financial future.
Alicia Richards