States With the Highest (and Lowest) Taxes

During the 2011 tax season Americans paid an average of 9.8% of their income in state and local taxes — on top of taxes collected by the federal government. This is part of the total tax burden of Americans, according to a report by the Tax Foundation. It was as low as 6.9% in Wyoming and as high as 12.6% in New York.

Generally, tax burdens were highest on the East Coast, while residents of Midwestern and Southern states faced relatively low tax burdens. Residents of New York and New Jersey paid more than 12% of their income in state and local taxes alone, the most in the nation. Wyoming and Alaska residents, on the other hand, paid 7% of their income or less. Based on research conducted by the Tax Foundation, these are the states where taxes were the highest and lowest as a percentage of total income.

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According to Jared Walczak, policy analyst at the Tax Foundation, the report demonstrates the enormous differences both in state tax policies and how tax burdens are experienced in each state. While some states did away with certain taxes altogether, others adopted a wider range of taxes.

Most of the states with the lowest tax burdens either did not have an individual income tax or only taxed income from dividends and interest. Half of the states with the lowest tax burdens did not levy a personal income tax — although nationwide there are seven. And two states, Alaska and New Hampshire, did not have sales taxes at all.

On the other hand, states that had high tax burdens typically utilized a wide range of taxes. Income taxes in particular, however, tended to be the highest in high tax burden states, Walczak said.

New York, the state with the highest tax burden in America, was one of just two states that taxed wealthy individuals the top tax rate on all the income they earned, not just on earnings above the tax bracket’s threshold. California, with the fourth highest tax burden as a percentage of total state income, had the highest top income tax rate, at 13.3% for individuals earning at least $1 million annually.

Many of the states with low tax burdens benefit from having taxable resources such as oil in addition to taxes on incomes, property, and the spending of their residents. In the case of Nevada, gaming is a major source of revenue. In the case of states such as Wyoming and Alaska, severance taxes — charged on businesses producing oil and natural gas — have historically been a large source of revenue. These revenues have kept tax burdens low in these states.

Generally, states with wealthier residents tend to collect more in taxes. Nine of the 10 states with the highest tax burdens had a per capita income greater than the national average of $44,765. The three states with the highest tax burdens — New York, New Jersey, and Connecticut — had among the five highest per capita incomes.

To identify the states with the highest and lowest tax burdens, 24/7 Wall St. reviewed state and local tax burdens as a share of state residents’ income in fiscal 2011 provided by the Tax Foundation. Property, income, general sales, and excise tax rates and collections per capita also came from the Tax Foundation. We also looked at all taxes paid by residents to the state or to various localities, such as their city and school districts, in fiscal 2011, 2012 and 2013. In addition to data from the Tax Foundation, 24/7 Wall St. also reviewed figures from the U.S. Census Bureau and the Bureau of Economic Analysis (BEA) for 2013.

These are the states paying the highest (and lowest) taxes.

The States Paying the Highest Taxes

10. Pennsylvania
> Taxes paid by residents as pct. of income: 10.3%
> Total state taxes collected: $34.0 billion (6th highest)
> Tax burden per capita: $4,374 (12th highest)
> Income per capita: $46,202 (18th highest)

Pennsylvania residents paid about 10.3% of their income in state and local taxes on average in fiscal 2011, the 10th highest tax burden nationwide. The state’s total tax on gasoline of 33 cents per gallon is among the highest in the country, although it is down substantially from the 41.8 cents per gallon 2014 rate. Pennsylvania’s 2014 sales tax rate of 6.0% was also among the higher sales tax rates in the nation. Governor Tom Wolf’s proposed tax overhaul would increase the sales tax rate to 6.6% while reducing property taxes. The governor’s plan would also add a tax on natural-gas drilling and increase the income tax rate to 3.7%.

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9. Vermont
> Taxes paid by residents as pct. of income: 10.5%
> Total state taxes collected: $2.9 billion (5th lowest)
> Tax burden per capita: $4,351 (14th highest)
> Income per capita: $45,483 (20th highest)

Like most states with high tax burdens, Vermont’s median home value of $216,900 was considerably higher than the national median value of $173,900 in 2013. Many of these were likely second homes, as roughly 15% of all housing units in Vermont were vacation homes, nearly the largest share nationwide. Seasonal and recreational housing units are subject to the state’s effective property tax rate of 1.7%, which was one of the highest such rates in the country. Nearly 43% of Vermont’s tax collections came from property taxes in 2012, the fourth highest proportion in the country. Many owners of Vermont’s vacation homes work and live in other states most of the year and do not pay income taxes in the state. Residents paid $4,351 on average in state and local taxes in fiscal 2011, the 14th highest tax burden compared to other states.

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8. Rhode Island
> Taxes paid by residents as pct. of income: 10.5%
> Total state taxes collected: $2.9 billion (6th lowest)
> Tax burden per capita: $4,676 (8th highest)
> Income per capita: $46,990 (15th highest)

While Rhode Island’s total gas tax of 16.8 cents per gallon is nearly the lowest compared to other states, its cigarette tax is among the highest. Smokers pay an additional $3.50 per pack in cigarette taxes in Rhode Island, the third highest such rate in the country. The state’s sales tax rate of 7.0% is also tied for the second-highest sales tax compared to other states. Rhode Island collected about $2,234 per capita in state and local property taxes in fiscal 2012, the sixth highest figure compared to other states. One of the reasons for the high tax burden was likely the high property taxes, which accounted for nearly 45% of the state’s tax collections, the third highest such percentage. Although the effective property tax rate of 1.67% was relatively high, high home values in Rhode Island were perhaps a larger driver of property tax collections. A typical home was valued $232,300, well above the national median home value of $173,900.

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7. Maryland
> Taxes paid by residents as pct. of income: 10.6%
> Total state taxes collected: $18.1 billion (15th highest)
> Tax burden per capita: $5,598 (4th highest)
> Income per capita: $53,826 (5th highest)

Maryland’s effective property tax rate of 1.1% in 2013 was slightly lower than the national average rate of 1.2%. However, the high home values in the state are what drove up property tax payments. The median home value in Maryland was more than $280,000, fifth highest nationwide. Residents on the whole were well-off financially with average income per capita of $53,826 in 2013, fifth highest nationwide. The state’s poverty rate of 10.1% was also the third lowest in the nation. With such high incomes, state and local income tax collections totalled nearly $2,000 per capita, the third highest figure. As in most states, individual income tax accounted for most of the residents’ tax burden. In addition, individual income taxes were the largest source of tax collections, making up 38% of the total, the second largest share compared to other states.

6. Minnesota
> Taxes paid by residents as pct. of income: 10.7%
> Total state taxes collected: $21.0 billion (12th highest)
> Tax burden per capita: $4,858 (7th highest)
> Income per capita: $47,500 (13th highest)

As in most states with the largest tax burdens, Minnesota taxpayers had both high incomes and were subject to relatively high income tax rates compared to other states. Minnesota had an income per capita of $47,500 in 2013, one of the higher figures nationwide. The state collected about $1,489 per resident in state and local income taxes on average, the sixth highest income tax collection. The state’s sales tax rate is currently about 6.9%, the seventh highest rate nationwide. Minnesota residents also have relatively strong health insurance coverage rates. Just 8.0% of residents did not have health insurance, the fourth lowest share nationwide.

5. Wisconsin
> Taxes paid by residents as pct. of income: 11.0%
> Total state taxes collected: $16.5 billion (18th highest)
> Tax burden per capita: $4,477 (10th highest)
> Income per capita: $43,243 (25th lowest)

Wisconsin residents earned about $43,243 on average, the only income per capita among high tax burden states to not exceed the national figure of $44,765. State and local income tax collections were still relatively high, at $1,183 per capita. Property taxes accounted for nearly 38% of state and local tax revenue, the largest source compared to other tax types and the 10th highest such contribution nationwide. While home values in the state were below the national average, residents paid an effective property tax rate of nearly 2%, the fifth highest rate in the country. The state’s tax burden shrank under Governor Scott Walker, who has implemented billions in tax cuts since he was elected in 2011.

4. California
> Taxes paid by residents as pct. of income: 11.4%
> Total state taxes collected: $133.2 billion (the highest)
> Tax burden per capita: $5,136 (6th highest)
> Income per capita: $48,434 (11th highest)

Due to California’s relatively large population, the state collected $133.2 billion in fiscal 2013, the largest total state tax collection by far. California also has some of the highest tax rates in the nation. The state’s sales tax rate of 7.5% is higher than any other state. In 2014, gasoline was taxed at a nation-leading 52.5 cents per gallon. The gas tax fell to 22 cents per gallon this year, however, relatively low compared to other states. The decline comes primarily from excise tax reductions implemented this year. Based on a 2014 study, California has by far the most concentrated population of ultra-high net worth individuals, people reporting incomes of at least $30 million annually. California’s wealthiest residents, who fall into the $1 million plus tax bracket, pay an income tax rate of 13.3%, the highest top state income tax rate nationwide. The state’s median home value of $373,100 was also the second highest in the country.

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3. Connecticut
> Taxes paid by residents as pct. of income: 11.9%
> Total state taxes collected: $16.2 billion (19th highest)
> Tax burden per capita: $7,150 (the highest)
> Income per capita: $60,658 (the highest)

Connecticut taxpayers each paid $7,150 in state and local taxes on average in fiscal 2011, the highest such tax burden nationwide. While residents might be able to afford such a burden given their nation leading per capita income of $60,658, their burden as a percentage of their income was only third highest after New Jersey and New York. State and local governments collected $2,053 in income taxes from each resident on average, the second highest income tax collection per capita compared to other states. Property tax collections per capita were slightly higher, at $2,626, the second highest figure. Connecticut homes, which were some of the most valuable in the nation, were taxed at an effective rate of nearly 2%, the fourth highest such rate. As a result, property taxes accounted for nearly 38% of state tax revenue, the largest share compared to contributions from other tax types.

2. New Jersey
> Taxes paid by residents as pct. of income: 12.3%
> Total state taxes collected: $29.2 billion (7th highest)
> Tax burden per capita: $6,675 (2nd highest)
> Income per capita: $55,386 (3rd highest)

New Jersey state and local governments collected $2,924 per capita in property taxes at an effective rate of about 2.4%, both the highest figures nationwide. Property taxes accounted for more than 48% of the state’s tax revenue in fiscal 2012, the second highest such contribution nationwide and by far the largest revenue source of revenue compared to other tax types. New Jersey homes are among the nation’s most valuable properties. The median home value was $307,700 in 2013, fourth highest in the country. As in other states with high tax burdens, New Jersey had a relatively high debt burden of $11,623 per capita, the fifth highest in the country. State residents are also subject to a relatively high sales tax of 7.0%, tied for second highest in the nation.

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1. New York
> Taxes paid by residents as pct. of income: 12.6%
> Total state taxes collected: $73.7 billion (2nd highest)
> Tax burden per capita: $6,622 (3rd highest)
> Income per capita: $54,462 (4th highest)

New York governments collected $73.7 billion in state and local taxes in the 2013 fiscal year, second highest in the nation behind California’s $133.2 billion. As a percent of income, however, New Yorkers shouldered the highest tax burden of any state in the nation. New Yorkers had the highest cigarette tax in the country at $4.35 per pack compared with a national average of just over $1 per pack. New Yorkers shelled out 37.5 cents per gallon in gasoline excise taxes, also the highest in the country. The state’s sales tax rate of 4.0% is relatively low, especially compared with high tax burden states. When combined with local sales tax rates, however, the total sales tax rate is 8.48%, vaulting New York’s sales tax rate to seventh highest in the country. About 31.3% of state tax collections came from individual income taxes, higher than all but three other states. New York residents earned incomes of $54,462 on average in 2013, the fourth highest in the nation.

The States Paying the Lowest Taxes

10. Alabama
> Taxes paid by residents as pct. of income: 8.3%
> Total state taxes collected: $9.3 billion (25th highest)
> Tax burden per capita: $2,886 (5th lowest)
> Income per capita: $36,481 (7th lowest)

Alabama taxpayers paid 8.3% of their income in state and local taxes, the 10th lowest tax burden as a percentage of income nationwide. This is due primarily to a low effective property tax rate. Property owners paid just 0.43% of their home’s value in property taxes, the second lowest such rate. With the low rate and below-average home values, Alabama collected just $531 per capita in property taxes, less than all other states. As in most states with low tax burdens, Alabama’s income tax collections of $648 per capita were far lower than the national average of about $1,000. While property and income taxes — traditionally the largest contributors to a state’s tax revenue — were quite low, other tax types were relatively high. For example, excise taxes on spirits and beer are $18.22 and $1.05 per gallon, respectively, both among the highest such rates.

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9. South Carolina
> Taxes paid by residents as pct. of income: 8.3%
> Total state taxes collected: $8.7 billion (22nd lowest)
> Tax burden per capita: $2,784 (3rd lowest)
> Income per capita: $35,831 (3rd lowest)

South Carolina’s effective property tax rate of 0.57% was among the lowest in the country and less than half the national average rate of 1.2%. A typical home in the state was worth about $139,200, lower than the national median home value of $173,900. Still, property taxes accounted for more than a third of state tax revenue, the largest source compared to other tax types and among the larger contributions nationwide. South Carolina residents earned $35,831 on average in 2013, nearly the lowest income per capita compared to other states. Total taxes on gasoline in South Carolina increased from 16.8 cents per gallon last year to 22 cents per gallon this year, still much lower than in most states. In April, the South Carolina senate approved a bill that would provide a three month amnesty free of financial penalties and criminal investigation for taxpayers with overdue tax bills.

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8. Nevada
> Taxes paid by residents as pct. of income: 8.1%
> Total state taxes collected: $7.0 billion (17th lowest)
> Tax burden per capita: $3,221 (15th lowest)
> Income per capita: $39,235 (15th lowest)

Nevada is one of a few states with no individual income tax, which traditionally accounts for the bulk of a state’s tax burden. State residents earned $39,235 in 2013, one of the lower incomes per capita in the country. A significant share of Nevada’s revenue comes from activity in the state’s gaming industry, which drives the tourism industry as well. This partially explains the state’s eighth highest sales tax rate of 6.85%. Overall, Nevadans have a very low tax burden, paying about 8.1% of the state’s income per capita.

7. New Hampshire
> Taxes paid by residents as pct. of income: 8.0%
> Total state taxes collected: $2.3 billion (3rd lowest)
> Tax burden per capita: $3,769 (23rd highest)
> Income per capita: $51,013 (8th highest)

Unlike most states with low tax burdens, New Hampshire residents are wealthier than most Americans. People in the state earned $51,013 on average, the eighth highest income per capita in the country. The higher incomes helped raise home values. The state’s median home value of $233,000 was 12th highest compared to other states. New Hampshire does not levy an individual income tax nor do residents pay taxes on sales. Instead, relatively high property taxes help make up for the lost sales and income tax revenues. At an effective rate of 2.15%, state and local governments collected $2,585 per capita in property taxes, the third highest figure nationwide. Property taxes accounted for nearly 65% of New Hampshire’s tax collections, by far the highest such contribution nationwide.

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6. Tennessee
> Taxes paid by residents as pct. of income: 7.6%
> Total state taxes collected: $12.4 billion (21st highest)
> Tax burden per capita: $2,777 (2nd lowest)
> Income per capita: $39,558 (17th lowest)

At 9.45%, Tennessee residents pay the highest combined sales tax rate in the country, but nonetheless had one of the lowest tax burdens. Tennessee residents had a tax burden of $2,777 per person in state and local taxes in 2011, the second-lowest amount in the nation that year. One reason for the low tax burden was the state’s miniscule income tax. Instead, residents paid a 6% tax on dividends and interest payments. As a result, the state receives less than 1% of its tax revenues from income taxes. Tennessee residents paid $799 per capita in property taxes in 2012, the ninth lowest amount of all states. For 2015, Tennessee also reduced its gasoline tax from 21.4 cents per gallon to 20.0 cents per gallon. With the reduction, Tennessee’s gasoline tax is now the ninth lowest in the country, compared with 14th lowest last year.

5. Louisiana
> Taxes paid by residents as pct. of income: 7.6%
> Total state taxes collected: $9.2 billion (25th lowest)
> Tax burden per capita: $2,872 (4th lowest)
> Income per capita: $41,204 (22nd lowest)

Pelican State residents paid one of the lowest property tax rates in the country in 2013, at 0.51% of the home value, an increase of 0.02 percentage points from 2012. Only Hawaii and Alabama had lower property tax rates at 0.28% and 0.43%, respectively. Louisiana’s gasoline taxes went from 20 cents per gallon in 2014 to 30 cents per gallon in 2015, as the state’s ranking for gasoline taxes went from 11th lowest to 18th highest. By contrast, the national average gasoline tax was unchanged at 18.4 cents per gallon. The state’s tax on spirits in 2015 is unchanged from the 2014 rate of $2.50 per gallon, remaining eighth lowest of all states. Louisiana also did not change its cigarette tax of 36 cents per pack, which remains third lowest in the nation.

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4. Texas
> Taxes paid by residents as pct. of income: 7.5%
> Total state taxes collected: $51.7 billion (3rd highest)
> Tax burden per capita: $3,088 (8st lowest)
> Income per capita: $43,862 (25th highest)

Texas is one of seven states in the country with no personal income tax and one of only four with no corporate income tax. Instead, Texas had the sixth highest effective property tax rates in the country, at 1.90% in fiscal 2013. As a result, property taxes made up more than 41% of Texas’ tax collections. Local and state sales taxes accounted for another 31.3% of tax revenues. At 8.05%, Texas’ state and local combined sales tax rate is the 12th highest in the country. The Lone Star state taxed gasoline and beer at 20 cents per gallon in 2014, but in 2015 the gasoline tax was bumped up to 24.5 cents per gallon. The tax on beer was unchanged.

3. South Dakota
> Taxes paid by residents as pct. of income: 7.1%
> Total state taxes collected: $1.5 billion (the lowest)
> Tax burden per capita: $3,052 (7th lowest)
> Income per capita: $46,039 (19th highest)

In fiscal 2013, South Dakota collected about $1.5 billion in total taxes, the least compared to other states. The state is one of a few not to levy an individual income tax, which usually accounts for the bulk of a state’s tax burden. South Dakota’s sales tax rate of 4.0% is lower than in most states. However, without an income tax, sales taxes accounted for nearly 40% of the state’s tax revenue, a larger share than any other tax type as well as the second-highest such contribution in the nation. South Dakota residents pay a state gas tax of 21.4 cents per gallon of gasoline. While this is one of the lower rates, lawmakers recently passed a proposal to increase the fuel tax by about 6 cents. The additional revenue is intended to bolster the state’s road and bridge fund.

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2. Alaska
> Taxes paid by residents as pct. of income: 7.0%
> Total state taxes collected: $5.1 billion (11th lowest)
> Tax burden per capita: $3,319 (18th lowest)
> Income per capita: $50,150 (9th highest)

Alaska collected more than $10,000 per capita in taxes in fiscal 2011, the highest in the nation at the time. However, due to high incomes, relatively high taxes on corporations, and relatively low tax rates for individuals, state residents paid just 7.0% of their incomes in taxes — the second-lowest tax burden nationwide. Alaskans earned $50,150 on average in 2013, the ninth highest income per capita compared to other states. Alaska is also among only a handful of states to levy no personal income tax and virtually no sales tax. The vast majority of the state’s tax revenue comes from its severance tax levied on petroleum production. With oil prices falling in recent years, however, the state may soon reconsider its tax code. Total tax collections in the state dropped to $7,005 per capita in fiscal 2013, lower than in previous years but still second to North Dakota.

1. Wyoming
> Taxes paid by residents as pct. of income: 6.9%
> Total state taxes collected: $2.2 billion (2nd lowest)
> Tax burden per capita: $3,500 (22nd lowest)
> Income per capita: $52,825 (7th highest)

Wyoming, one of seven states without an individual income tax and one of only four states without a corporate income tax, had the lowest tax burden in the country. Like Alaska, Wyoming actually had among the highest total state and local tax collections per capita, much of which came from severance taxes levied on energy production. A significant portion of these collections were not felt by most Wyoming residents, who not only had relatively high incomes but also were subject to relatively low tax rates. Per capita income in Wyoming in fiscal 2013 was $52,825, seventh highest in the country. Wyoming has a 2 cents per gallon excise tax on beer but does not tax other alcoholic beverages. It also has one of the lowest cigarettes tax rates in the nation at 60 cents per pack. Only six states in the country had a lower effective property tax rate in 2013 than Wyoming’s 0.61% of a home’s value. Despite the low property tax rate, Wyoming collected $2,308 per capita in property taxes, fifth highest of any state. Property taxes accounted for about 34.3% of the total, sales taxes for about 31.3%, and other taxes provided the balance.

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