One of the biggest tax bills most people pay is the federal income tax calculated on IRS form 1040 each April. Three other major taxes come from your state or locality: state income taxes, sales taxes and property taxes. The way each type of tax is calculated is complicated; factors such as your income level, marital status and county of residence affect your tax rates.

Simple, apples-to-apples comparisons of how much total tax you’ll pay living in one state versus another are impossible. And since you pay state income tax on the money you earn, sales tax on the money you spend and property tax on the value of any real estate you might own, you can’t simply add up the average rates in each state and rank them from lowest to highest.

However, if you’re trying to choose where to live or where to locate your business – and taxes are a factor in your decision – the tables we’ve created can give you a big picture to use as the starting point for more research on how taxes in each state would affect your unique situation.

Income Tax: On the Money You Earn

State income tax rates are only simple in the few states that either charge no income tax or charge a flat rate no matter what you earn. In other states, the income tax rate you’ll pay depends on what income bracket you fall into, and each state sets its own brackets at different income levels. In some states, most taxpayers in the lower and middle classes pay the top rate; in others, you have to earn more than $1 million to pay the highest rate.

The charts below simply list the income tax rate you’d pay in each state if you had the median income in 2012 as calculated by the U.S. Census Bureau. Your state tax bill will also depend on any exemptions, deductions and credits you qualify for – and states differ on what tax breaks they offer and who qualifies.

Here are the 10 best (boldface) and 10 worst (italics) states, along with the 30 states that fall in the middle, for paying state income taxes, whether you file as single or married.

STATE

2014 Income Tax Rate – Singles ($26,989 median income)

 

STATE

2014 Income Tax Rate – Families ($62,241 median income)

Alaska

0.00%

 

Alaska

0.00%

Florida

0.00%

 

Florida

0.00%

Nevada

0.00%

 

Nevada

0.00%

New Hampshire

0.00%

 

New Hampshire

0.00%

South Dakota

0.00%

 

South Dakota

0.00%

Texas

0.00%

 

Texas

0.00%

Washington

0.00%

 

Washington

0.00%

Wyoming

0.00%

 

Wyoming

0.00%

North Dakota

1.51%

 

North Dakota

 2.82%

New Jersey

1.75%

 

New Jersey

3.50%

Pennsylvania

3.07%

 

Pennsylvania

3.07%

Arizona

3.36%

 

Arizona

3.36%

Indiana

3.40%

 

Indiana

3.40%

Ohio

3.22%

 

Ohio

3.76%

Vermont

3.55%

 

Vermont

3.55% 

Rhode Island

3.75%

 

Rhode Island

4.75%

Louisiana

4.00%

 

Louisiana

4.00% 

California

4.00%

 

California

6.00% 

Michigan

4.25%

 

Michigan

4.25%

West Virginia

4.50%

 

West Virginia

6.5% 

Colorado

4.63%

 

Colorado

4.63% 

Maryland

4.75%

 

Maryland

4.75% 

Kansas

4.90%

 

Kansas

4.90% 

New Mexico

4.90%

 

New Mexico

4.90% 

Alabama

5.00%

 

Alabama

5.00%

Connecticut

5.00%

 

Connecticut

5.00%

Illinois

5.00%

 

Illinois

5.00%

Mississippi

5.00%

 

Mississippi

5.00% 

Utah

5.00%

 

Utah

5.00% 

Nebraska

5.01%

 

Nebraska

6.84% 

Massachusetts

5.25%

 

Massachusetts

5.25% 

Oklahoma

5.25%

 

Oklahoma

5.25% 

Delaware

5.55%

 

Delaware

6.60%

Virginia

5.75%

 

Virginia

5.75%

Kentucky

5.80%

 

Kentucky

5.80% 

Georgia

6.00%

 

Georgia

6.00%

Missouri

6.00%

 

Missouri

6.00%

Tennessee

6.00%

 

Tennessee

6.00%

Arkansas

6.00%

 

Arkansas

7.00%

New York

6.45%

 

New York

6.45%

Iowa

6.48%

 

Iowa

7.92%

Wisconsin

6.27%

 

Wisconsin

6.27%

Montana

6.90%

 

Montana

6.90%

North Carolina

 5,80%

 

North Carolina

 5.80%

South Carolina

 7.00%

 

South Carolina

 7.00%

Minnesota

7.05%

 

Minnesota

7.05%

Idaho

7.40%

 

Idaho

7.40%

Hawaii

7.60%

 

Hawaii

7.90%

Maine

7.95%

 

Maine

7.95%

Oregon

9.00%

 

Oregon

9.00%

Data source: Tax-Rates.org, “Income Tax Rates by State,” individual pages showing tax brackets for each state linked from http://www.tax-rates.org/taxtables/income-tax-by-state.

Sales Tax: On the Money You Spend

Determining which states have the worst sales tax burden is a little tricky, because the actual sales tax rate you’ll pay depends on what city you live in. Still, cities build their sales tax rates on top of state sales tax rates, so it’s useful to know the base rate you’ll pay to make purchases anywhere in the state.

The chart below ranks the states from lowest to highest in terms of their sales tax burdens, with the 10 best in boldface, the 10 worst in italics, and the 30 middle states in regular type. It also shows what sales tax rate you’ll pay in each state’s most populous city and how much higher that rate is than the state sales tax rate.

STATE

2014 State Sales Tax %

State’s Most Populous City, from 2010 U.S. Census

2014 State + Local Sales Tax % in Most Populous City

Percentage-Point Difference betw. State and Local Sales Tax Rate

Alaska

0.000

Anchorage

0.000

0.000

Delaware

0.000

Wilmington

0.000

0.000

Montana

0.000

Billings

0.000

0.000

New Hampshire

0.000

Manchester

0.000

0.000

Oregon

0.000

Portland

0.000

0.000

Colorado

2.900

Denver

7.620

4.720

Hawaii

4.000

Honolulu

4.500

0.500

South Dakota

4.000

Sioux Falls

6.000

2.000

Wyoming

4.000

Cheyenne

6.000

2.000

Georgia

4.000

Atlanta

8.000

4.000

New York

4.000

New York City

8.880

4.880

Alabama

4.000

Birmingham

9.000

5.000

Louisiana

4.000

New Orleans

9.000

5.000

Missouri

4.225

Kansas City

8.780

4.555

Virginia

4.300

Virginia Beach

6.000

1.700

Oklahoma

4.500

Oklahoma City

8.380

3.880

Utah

4.700

Salt Lake City

6.850

2.150

North Carolina

4.750

Charlotte

7.250

2.500

Wisconsin

5.000

Milwaukee

5.600

0.600

North Dakota

5.000

Fargo

7.500

2.500

New Mexico

5.125

Albuquerque

7.000

1.875

Maine

5.500

Portland

5.500

0.000

Nebraska

5.500

Omaha

7.000

1.500

Ohio

5.750

Columbus

7.500

1.750

Idaho

6.000

Boise

6.000

0.000

Iowa

6.000

Des Moines

6.000

0.000

Kentucky

6.000

Louisville

6.000

0.000

Maryland

6.000

Baltimore

6.000

0.000

Michigan

6.000

Detroit

6.000

0.000

West Virginia

6.000

Charleston

6.500

0.500

Florida

6.000

Jacksonville

7.000

1.000

Vermont

6.000

Burlington

7.000

1.000

Pennsylvania

6.000

Philadelphia

8.000

2.000

South Carolina

6.000

Columbia

8.000

2.000

Massachusetts

6.250

Boston

6.250

0.000

Texas

6.250

Houston

8.250

2.000

Illinois

6.250

Chicago

9.250

3.000

Kansas

6.150

Wichita

7.150

1.000

Connecticut

6.350

Bridgeport

6.350

0.000

Arkansas

6.500

Little Rock

9.000

2.500

Washington

6.500

Seattle

9.500

3.000

California

7.500

Los Angeles

9.750

2.250

Arizona

5.600

Phoenix

8.300

2.700

Nevada

6.850

Las Vegas

8.100

1.250

Minnesota

6.875

Minneapolis

7.780

0.905

Indiana

7.000

Indianapolis

7.000

0.000

New Jersey

7.000

Newark

7.000

0.000

Rhode Island

7.000

Providence

7.000

0.000

Mississippi

7.000

Jackson

8.000

1.000

Tennessee

7.000

Memphis

9.250

2.250

Data sources:  Retirement Living Information Center, “Taxes by State,” http://www.retirementliving.com/taxes-by-state; US Census Bureau, United States Census 2010 Population Totals, press releases for each state, various months, 2011, https://www.census.gov/newsroom/releases/archives/2010_census/; Sale-Tax.com, “State Sales Tax Rates,” http://www.sale-tax.com/.

Property Tax: On the Real Estate You Own

If you plan to own a home, you’ll want to know what the property tax rate is in the places you’re considering living. But property taxes are established at the local level, not the state level. In some areas, you can cross the street into a different town and pay a dramatically different rate despite living in the same general area with similar amenities and quality of life.

Property taxes are influenced by factors such as homeowners' exemptions, how often property values are reassessed and annual caps on property tax increases, such as California’s 2% annual cap under Proposition 13.  Also, in some jurisdictions, homeowners' exemptions are only available to taxpayers who fall below an income threshold and/or who qualify as senior citizens; others give these exemptions to any owner who occupies the property as his or her primary residence. 

Again, the 10 states with the lowest average property taxes are in boldface; the 10 with the highest are in italics.

STATE

Average Property Tax Rate on State Median Home Value, 2014

Louisiana

0.18%

Hawaii

0.26%

Alabama

0.33%

Delaware

0.43%

West Virginia

0.49%

South Carolina

0.50%

Arkansas

0.52%

Mississippi

0.52%

New Mexico

0.55%

Wyoming

0.58%

Colorado

0.60%

Utah

0.60%

Tennessee

0.68%

Idaho

0.69%

Arizona

0.72%

Kentucky

0.72%

California

0.74%

Oklahoma

0.74%

Virginia

0.74%

North Carolina

0.78%

Georgia

0.83%

Montana

0.83%

Nevada

0.84%

Indiana

0.85%

Maryland

0.87%

Oregon

0.87%

Missouri

0.91%

Washington

0.92%

Florida

0.97%

Massachusetts

1.04%

Minnesota

1.05%

Maine

1.09%

New York

1.23%

South Dakota

1.28%

Iowa

1.29%

Kansas

1.29%

Pennsylvania

1.35%

Rhode Island

1.35%

Ohio

1.36%

Alaska

1.04%

North Dakota

1.42%

Vermont

1.59%

Michigan

1.62%

Connecticut

1.63%

Illinois

1.73%

Nebraska

1.76%

Wisconsin

1.76%

Texas

1.81%

New Hampshire

 1.86%

New Jersey

1.89%

Data source: Tax-Rates.org, “Property Taxes by State,” individual pages showing average percentage of home value for each state linked from http://www.tax-rates.org/taxtables/property-tax-by-state.

Other Factors

These charts don’t account for the significant percentage of taxes that many people pay to states other than their state of residence. We pay these taxes when we travel or when we earn income in another state. Another factor to consider is that while you might pay higher taxes in one state compared with another, you might also be able to earn more in the higher-taxed state. The question is whether you’ll earn enough extra to make up for, or exceed, the cost of the higher tax burden.

Also, while you might initially be drawn to a state that has no income tax or no sales tax, it’s important to look at the big picture: States often compensate for lower taxes in one area with higher taxes in another. Government-provided services have to be funded somehow.

Are Low Tax Rates Always a Good Thing?

You might assume that while higher taxes are a pain, they mean you’re getting more and better public services for your dollars – smoother roads, higher-ranking public schools and more beautiful parks. But just because government officials have lots of tax dollars at their disposal doesn’t mean they’re spending them wisely. Similarly, low tax rates don’t necessarily mean that public services are lacking. Politicians might be spending tax dollars carefully in those jurisdictions, and they might have turned over to the private sector certain services that the government normally provides.

As with any other purchase, you have to do more research to see what you’re actually getting for your money because a higher price (or in this case, a higher tax bill) doesn’t always mean better quality, and a lower price doesn’t always mean inferior quality.

The Bottom Line

Many states impose similar tax burdens on their residents; if you’re considering living in these states, taxes are unlikely to be a deciding factor. But at the high and low ends, there are large differences in tax burdens that could have a real impact on your ability to make ends meet in the short run and to save for the long run.

While tax rates may not be your first or even fifth consideration, sometimes they’re the tiebreaker in a close decision. For more details on how to interpret these numbers and use them to make decisions, see States With The Biggest (And Smallest) Tax Burden.

 

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