Tax season can be anxiety-inducing – so much so that according to a recent TaxSlayer survey, 28% of Americans think it would be easier to live without a cell phone for a week than tackle their tax return. Approximately 40% of Americans believe that they end up paying more than their fair share in taxes to Uncle Sam

Knowing that the money you’re paying into the tax system is being put to good use can ease some of the frustration you may feel about having to file. WalletHub recently conducted a study to determine which states offer the best return on investment (ROI) for taxpayer dollars. Surprisingly, states that tend to vote Republican seemed to be better at making the most of the taxes they collect. (See: 10 Steps to Tax Preparation.)

The Best and Worst States for Taxpayer ROI

To determine which states offered the best and worst return for taxpayers, the WalletHub team compared the quality of government services in each state to the total amount of state and local taxes paid. Specifically, the study was focused on five key metrics:

Those metrics were broken down into 23 submetrics, each of which was assigned its own score. The rankings were determined by comparing each state’s overall score to the total taxes paid per capita for adults ages 18 and older. The following table illustrates the top 10 and bottom 10 states in the study: 

Best Taxpayer ROI

Worst Taxpayer ROI

1. New Hampshire

41. Vermont

2. South Dakota

42. Nevada

3. Florida

43. Wyoming

4. Virginia

44. Delaware

5. Alaska

45. Arkansas

6. Colorado

46. New York

7. Utah

47. California

8. Missouri

48. New Mexico

9. Texas

49. Hawaii

10. Nebraska

50. North Dakota

Source: 1

Source: WalletHub

When you compare the top and bottom states, an interesting trend emerges. Based on the 2016 presidential election results, seven of the top 10 states – South Dakota, Florida, Alaska, Utah, Missouri, Texas and Nebraska – voted Republican. At the same time, seven of the bottom 10 states – Vermont, Nevada, Delaware, New York, California, New Mexico and Hawaii – went for the Democratic candidate. (See: Is It Better to Retire in a Red State or a Blue State?)

Red states in the study had an average rank of 21.7, compared to an average rank of 32.15 for blue states, with a smaller number representing a better ROI. When you dig into the numbers a bit further, you get a better sense of how the states compare. Nebraska, for example, which is a red state, had the lowest proportion of major roads in poor condition, while Connecticut, a blue state, had the highest. In terms of crime, Vermont, a blue state, rated the best for having the lowest violent crime rate; Alaska, a red state, had the most violent crime.

When it comes to schools, four of the top five states that rated best were blue states, while four of the bottom five states were red. For hospital systems, four of the top five best states were red, while four of the bottom five states were blue. Similar trends continued with regard to roadways and water quality. For poverty rates, blue states dominated in the top five for having the lowest percentage of residents living in poverty while red states fared the worst.

Source: WalletHub

So, what do the numbers mean? One possible explanation is that the states with a higher taxpayer ROI are more efficient in managing the tax revenue they collect. Higher individual tax rates could also be a driving factor. Half of the top 10 states overall ranked in the top 10 for total taxes paid per capita. If these states are collecting a higher share of tax revenue, they may simply have more money to work with than the states with less in taxes paid per capita. 

The Bottom Line

If you’re wondering where you’ll get the most bang for your taxpayer buck, this study sheds some light on which states rate the best and worst. One thing to keep in mind is that some states may receive more federal funding than others, which can influence ROI. While you can’t change the way states spend your tax dollars, checking your withholding to make sure you’re not overpaying taxes and taking advantage of all the tax credits and deductions you’re eligible for can help you hold on to more of your hard-earned dollars when tax season rolls around.

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