Which States Pay the Lowest to Highest Taxes?

Submitted by SadInAmerica on Sat, 12/03/2011 - 11:25am.



Have you wondered which U.S. State may be better to live in regarding taxes and tax burden? While we cannot escape taxes, we can make decisions which will minimize our overall State tax burden, depending on each of our own financial situations and objectives. In this article, we're talking about property tax, income tax, and sales tax.

Let's say you are finished with the "˜rat-race', and are ready to plan a move out of your area or State in search of a new lifestyle. Among the many things that you will consider in your selection process, picking a tax friendly area (or better said - a less "˜bad' tax area), should be a high priority item on your check list.

As the current economy remains stagnant, or worsens, the debt burden of cities, states, and the federal government are rapidly approaching a death-spiral of compounding debt. More are agreeing that inflation will become a bigger problem while the economy remains stagnant (stagflation). There is little doubt that taxes, including State taxes will be on the increase as governments look for more revenues.

If looking to retire, or to leave behind the risks that often accompany a leveraged - higher income lifestyle, or looking to protect yourself from the consequences of a large scale economic downturn or collapse, your new lifestyle will likely be one with a lesser income than before - meaning that the various State taxes will be a concern.

Regarding the various taxes, you may more concerned about one versus another. For example, the income tax of a given State may be less important to you than say, the property tax of the county or town since your income may be relatively low (retirement) but your property taxes will always be there and may continue to rise. In a worst case scenario, high inflation could potentially rapidly balloon your property tax to unmanageable levels, so choose your location carefully.

Here are a few State tax statistics which may be interesting to you, sourced and compiled from a number of places including RetirementLiving.com, Wikipedia, Census.gov/govs/statetax, State Government Tax Collections 2009, and the TaxFoundation.org.

State Sales Tax

Except for large or frequent expensive purchases, State sales tax may be of lesser impact to your overall tax burden or concern, when compared to property taxes and income taxes. For example, you would have to purchase more than $40,000 of taxable products taxed at a 7% sales tax to be equivalent to an annual $3,000 property tax bill.

Rates are rounded to the nearest 0.1 decimal. This sales tax list includes the base rate plus the maximum local surtax that may exist in that State (this surtax inclusion is typically only on certain goods and may slightly skew some State results - but I wanted to include a worst-case scenario). Your sales tax rates may be lower if living outside of the surtaxed area or not purchasing a surtaxed product. This should still provide a good general idea of where each state ranks.

List of State Sales Tax including max local surtax

Delaware (0%)
New Hampshire (0%)
Oregon (0%)
Montana (3%) general sales tax = 0%, a few surtaxes apply at 3%
Hawaii (4.7%)
Maine (5%)
North Dakota (5%)
Virginia (5%)
Wisconsin (5.6%)
Arkansas (6%)
Connecticut (6%)
D.C. (6.0%)
Idaho (6%)
Kentucky (6%)
Maryland (6%)
Michigan (6%)
South Dakota (6%)
West Virginia (6%)
Massachusetts (6.3%)
Alaska (7%)
Iowa (7%)
Nebraska (7%)
New Jersey (7%)
Rhode Island (7%)
Vermont (7%)
Wyoming (7%)
Florida (7.5%)
Ohio (7.8%)
Minnesota (7.8%)
Colorado (8.0%)
Georgia (8%)
Pennsylvania (8%)
Nevada (8.1%)
North Carolina (8.3%)
Texas (8.3%)
Utah (8.4%)
Oklahoma (8.5%)
New Mexico (8.6%)
Kansas (8.7%)
New York (8.9%)
Indiana (9%)
Louisiana (9%)
Mississippi (9%)
South Carolina (9%)
Missouri (9.2%)
Washington (9.5%)
Tennessee (9.8%)
Alabama (10%)
Arizona (10.6%)
California (10.8%)
Illinois (11.5%)

State Personal Income Tax

A total of 41 States impose income taxes. Some States base their income tax on federal returns, typically taking a percentage of your federally adjusted gross income.

States with No Income Tax

South Dakota
New Hampshire (except tax on income from interest and dividends)
Tennessee (except tax on income from interest and dividends)

State Income Tax rates based on $60,000 income

Unless you earn very little, or earn substantially more than $60K, the following State income tax rates probably fit most of the typical folks out there, and will give you an idea of where the states ranked in 2010. Rates are rounded to the nearest 0.1 decimal, and do not include any special deductions or exemptions that may exist.

State (income tax %)
Alaska (0%)
Florida (0%)
Nevada (0%)
New Hampshire (0%) except tax on income from interest and dividends
South Dakota (0%)
Tennessee (0%) except tax on income from interest and dividends
Texas (0%)
Washington (0%)
Wyoming (0% )
Illinois (3%)
Pennsylvania (3%)
Indiana (3.4%)
North Dakota (3.8%)
Michigan (4.4%)
Arizona (4.5%)
Colorado (4.6%)
Ohio (4.7%)
New Mexico (4.9%)
Alabama (5%)
Connecticut (5%)
Maryland (5%)
Mississippi (5%)
Utah (5%)
Massachusetts (5.3%)
Oklahoma (5.5%)
Kentucky (5.8%)
Virginia (5.8%)
Georgia (6%)
Louisiana (6% )
Missouri (6%)
New Jersey (6.4%)
Kansas (6.5%)
West Virginia (6.5% )
Wisconsin (6.8%)
Nebraska (6.8%)
Maine (6.9%)
Montana (6.9%)
Delaware (7%)
Arkansas (7% )
North Carolina (7%)
South Carolina (7%)
Rhode Island (7.8%)
Idaho (7.8%)
Minnesota ( 7.9%)
New York (7.9%)
Hawaii (8.3%)
Vermont (8.3%)
D.C. ( 8.5%)
Iowa (9%)
California (9.6%)
Oregon (10.8%)

State Property Tax

Taxes on land and the buildings built on it are the largest source of revenue for local governments. Property taxes are not imposed by the States, but by the tens of thousands of cities, townships, counties, school districts and other assessing jurisdictions.

You can't escape property taxes in any state. But you can find significantly low rates in certain parts of the country.

Having sorted through a list of home property taxes, listed by median price per county, and then  averaging the property taxes of all counties in each state, the following list of home property taxes by State should give you a general indication of costs. For finer detail, each individual county would need to be checked as property taxes can vary substantially based on region and the home's assessed value itself.

Data from 2009

Home Property Tax average per State

State ($ avg. per home)
Louisiana ($404)
Alabama ($410)
West Virginia ($615)
Arkansas ($684)
South Carolina ($693)
Mississippi ($787)
New Mexico ($862)
Delaware ($950)
Oklahoma ($968)
Arizona ($986)
Tennessee ($1,041)
Hawaii ($1,047)
Kentucky ($1,059)
Wyoming ($1,084)
Indiana ($1,104)
North Carolina ($1,172)
Idaho ($1,213)
Utah ($1,305)
Georgia ($1,377)
Missouri ($1,443)
Colorado ($1,538)
Florida ($1,619)
Montana ($1,764)
Ohio ($1,834)
Nevada ($1,879)
Iowa ($1,934)
Kansas ($1,957)
Maine ($1,976)
Oregon ($2,045)
D.C. ( $2,057)
Michigan ($2,069)
South Dakota ($2,076)
Pennsylvania ($2,092)
Washington ($2,127)
Texas ($2,141)
Virginia ($2,230)
Minnesota ($2,340)
California ($2,631)
Maryland ($2,637)
North Dakota ($2,638)
Alaska ($2,796)
Nebraska ($2,829)
Wisconsin ($3,041)
Massachusetts ($3,255)
Illinois ($3,272)
Rhode Island ($3,731)
New York ($3,736)
Vermont ($4,168)
Connecticut ($4,437)
New Hampshire ($4,618)
New Jersey ($6,348)

There are many factors that go into one's formula to decide the best place to retire, or the best place to move to, because we each have our own individual notions of what that is.

However, near the top of the list of factors or concerns should be property tax, income tax, and sales tax. Also, nearly just as important, do not forget to research the fiscal situation of the state, city, or town that you are contemplating moving to. There are many of these that are themselves on the verge of bankruptcy. They will be the first to raise your taxes.


February 16, 2011 - ModernSurvivalBlog


More helpful state tax information to help decide which state you may wish to reside:

State Tax Burden

State Income Tax Comparison

Deduct It!: Lower Your Small Business Taxes

Home Business Tax Deductions: Keep What You Earn

Lower Your Taxes - Big Time! : Tax Reduction Secrets from an IRS Insider


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Submitted by SadInAmerica on Sat, 12/03/2011 - 11:25am.