Tax Burden by State – Full Overview

30.11.2022
Milena

Tax burden represents the proportion of Americans’ income paid in taxes. In the United States, where you live can heavily affect how much of your annual salary goes to state coffers. That’s why knowing and understanding the tax burden by state is essential. The overall effective tax burden depends on several factors, and these are individual, property, and sales taxes. What state has the highest tax burden? Do the wealthiest Americans have the same tax burden as low-income families? Discover the answers to these questions and more in our in-depth analysis of the overall taxes by state.

Overall Tax Burden by State

A state’s total tax burden is made of three primary taxes – individual, property, and sales, which vary greatly from one place to another. Some states, for example, have no property taxes, while others don’t tax personal income. Then, the tax rates in each state vary. All of this results in fluctuations in the overall tax burden in every US state.

The top 1% of Americans that make over $553,200 a year have an effective tax burden of 7.4%. This US average is 5% lower than the average burden of 12.4% that the top 1% pay in California. It’s also by 5.5% higher than the burden the wealthiest 1% have in Nevada. This destination boasts the lowest tax burden by state for top earners. Those that make between $36,800 and $59,900 represent the middle 20% and have a tax burden of 9.9%. The average effective rate for the lowest 20% (less than $20,800 income) meanwhile stands at 11.4%.

In the table below, you can find the total tax rate by state for all 50 states plus the District of Columbia. You can also check out the state tax burden comparison for people of different income levels. You may be surprised to discover that the wealthiest 1% have the lowest effective tax burden compared to other income groups.

StateTotal Tax BurdenEffective tax burden of bottom 20% (total state and local taxes divided by family income)Effective tax burden of middle 60% (total state and local taxes divided by family income)Effective tax burden top 1% (total state and local taxes divided by family income)
Alabama7.41%8.61%8.6%5%
Alaska5.06%7.65%4.3%2.5%
Arizona8.39%7.65%9.3%5.9%
Arkansas8.77%8.07%10.4%6.9%
California9.72%8.07%8.9%12.4%
Colorado8.52%7.65%8.6%6.5%
Connecticut10.06%10.65%11.6%8.1%
D.C.12.00%6.3%9.8%9.5%
Delaware6.22%9.12%5.8%6.5%
Florida6.64%7.65%7.7%2.3%
Georgia8.01%9.07%9.5%7%
Hawaii12.70%10.08%11.5%8.9%
Idaho7.59%7.65%8.4%7.2%
Illinois9.70%12.60%12.2%7.4%
Indiana8.42%10.88%10.4%6.8%
Iowa9.34%9.11%10.5%7.7%
Kansas9.34%9.14%10.4%7.4%
Kentucky8.77%10.18%10.5%6.7%
Louisiana8.75%9.50%9.8%6.2%
Maine11.42%7.65%9.3%8.6%
Maryland9.47%10.95%10.6%9.0%
Massachusetts8.80%12.65%9.3%6.5%
Michigan8.25%11.9%9.2%6.2%
Minnesota10.20%7.65%9.8%10.1%
Mississippi9.16%7.65%9.8%6.7%
Missouri7.80%7.65%9.1%6.2%
Montana7.39%7.98%6.7%6.5%
Nebraska9.01%7.81%10.2%8.7%
Nevada8.19%7.65%7.1%1.9%
New Hampshire6.41%12.65%7.1%3%
New Jersey10.11%9.05%10.2%9.8%
New Mexico9.37%7.65%10%6%
New York12.75%7.65%12.5%11.3%
North Carolina8.16%7.65%9.1%6.4%
North Dakota8.00%7.65%7.7%4.5%
Ohio8.99%7.65%10.6%6.5%
Oklahoma7.47%7.65%10.3%6.2%
Oregon8.65%11.46%8.8%8.1%
Pennsylvania8.57%10.72%10.8%6%
Rhode Island9.91%7.65%9.3%7.9%
South Carolina7.67%7.65%8.3%6.8%
South Dakota7.12%7.65%8.4%2.5%
Tennessee5.75%7.65%8.1%2.8%
Texas8.22%8.65%9.4%3.1%
Utah9.19%12.60%8.4%6.7%
Vermont11.13%8.14%9.4%10.4%
Virginia8.18%9.14%9.3%7%
Washington8.37%7.65%10.4%3%
West Virginia9.08%10.7%8.8%7.4%
Wisconsin8.92%7.65%10.4%7.7%
Wyoming6.32%7.65%6.9%2.6%

(WalletHub, Tax Foundation, GOBankingRates, ITEP)

Best and Worst States for Taxes

If we rank the jurisdictions based on their total tax burden by state, Alaska has the best ranking with only 5.06%. That’s 0.69% lower than Tennessee’s 5.75%. Next comes Delaware with its tax burden of 6.22%. Wyoming (6.32%) and New Hampshire (6.41%) round up the list of top five states with the lowest overall taxes.

At the other end of the spectrum, we have New York and its tax burden of 12.75%. New Yorkers have a tax burden higher by 7.69% than that of Alaska residents. This state is among the worst for taxes of any kind, boasting the highest cigarette prices by state, for example. Hawaii, D.C, Maine, and Vermont. and are the other states with the highest tax burden. Their tax burdens are 12.7%, 12.00%, 11.42%, and 11.13%, respectively.

Total Taxes by State by Income Groups

The level of income that goes toward taxes is another way to define the best and worst states for taxes. In most states, the top 1% have a lower effective tax burden than the 20% who earn the least money. In Connecticut, for example, the top 1% have a tax burden of 8.1% of their income. The 20% with the lowest income, however, have a tax burden of 10.65%. The situation is even more drastic in Ohio, where the tax burdens of the top 1% and the bottom 20% are 6.5% and 7.65%, respectively. Meaning, the list of states ranked by tax burden drastically differs when the focus shifts on different income groups.

In New Hampshire (12.65%), Massachusetts (12.65%), and Illinois (12.60%), the bottom 20% have the highest tax burden. D.C. (6.3%), by contrast, is the best place for those who earn the least money. California (12.4%), New York (11.3%), and Vermont (10.4%) are the worst destinations for the wealthiest 1%. The jurisdictions with the lowest overall tax rate by state for the top earners are Nevada (1.9%), Florida (2.3%), and Alaska (2.5%).

Finally, New York, Illinois, and Connecticut are the states with the highest tax burden for the middle 60% by family income. The effective tax burdens in these states are 12.5%, 12.2%, and 11.6%. We have Alaska, Delaware, and Montana at the opposite end. Their effective tax rates by state for the middle 60% of earners are 4.3%, 5.8%, and 6.7%.

State and Local Sales Tax by State

State and local sales taxes play a significant role in determining the total taxes by state. That’s why in the table below, we have the state ranking by taxes imposed on sales. Tennessee, Louisiana, and Arkansas have the highest tax burden by state in this category. Their tax burdens in this category are 9.55%, 9.52%, and 9.51%, respectively.

The lowest state and local tax burdens in 2022 were seen in Alaska, Hawaii, and Wyoming. Residents in these states have a combined sales and local tax burden of 1.76%, 4.44%, and 5.33%. Oregon, New Hampshire, Montana, and Delaware meanwhile have no such taxes at all.

The difference in the sales tax burden between Tennessee and the states without such taxation is 9.55%. Yet, Tennessee is among the 10 states with the lowest tax burden thanks to its exceptionally low property and individual income taxes. Hawaii, similarly, is one of the worst states for taxes despite having a low sales tax burden.

StateState Sales Tax Rate 2022Average Local Tax Rate 2022Combined State & Local Sales Tax 2022
Alabama4.00%5.14%9.14%
Alaska0.00%1.43%1.43%
Arizona5.60%2.77%8.37%
Arkansas6.50%2.93%9.43%
California7.25%1.31%8.56%
Colorado2.90%4.73%7.63%
Connecticut6.35%0.00%6.35%
D.C.6.00%0.00%6.00%
Delaware0.00%0.00%0.00%
Florida6.00%1.05%7.05%
Georgia4.00%3.29%7.29%
Hawaii4.00%0.41%4.41%
Idaho6.00%0.03%6.03%
Illinois6.25%2.49%8.74%
Indiana7.00%0.00%7.00%
Iowa6.00%0.82%6.82%
Kansas6.50%2.17%8.67%
Kentucky6.00%0.00%6.00%
Louisiana4.45%5.00%9.45%
Maine5.50%0.00%5.50%
Maryland6.00%0.00%6.00%
Massachusetts6.25%0.00%6.25%
Michigan6.00%0.00%6.00%
Minnesota6.88%0.55%7.43%
Mississippi7.00%0.07%7.07%
Missouri4.23%3.90%8.13%
Montana0.00%0.00%0.00%
Nebraska5.50%1.35%6.85%
Nevada6.85%1.29%8.14%
New Hampshire0.00%0.00%0.00%
New Jersey6.63%-0.03%6.60%
New Mexico5.13%2.69%7.82%
New York4.00%4.49%8.49%
North Carolina4.75%2.22%6.97%
North Dakota5.00%1.85%6.85%
Ohio5.75%1.42%7.17%
Oklahoma4.50%4.42%8.92%
Oregon0.00%0.00%0.00%
Pennsylvania6.00%0.34%6.34%
Rhode Island7.00%0.00%7.00%
South Carolina6.00%1.43%7.43%
South Dakota4.50%1.90%6.40%
Tennessee7.00%2.47%9.47%
Texas6.25%1.94%8.19%
Utah5.95%0.99%6.94%
Vermont6.00%0.18%6.18%
Virginia5.30%0.35%5.65%
Washington6.50%2.67%9.17%
West Virginia6.00%0.39%6.39%
Wisconsin5.00%0.44%5.44%
Wyoming4.00%1.36%5.36%

(World Population Review)

Income Tax by State

Another essential factor that affects the state tax burden rankings is the income tax. Before analyzing the states with the highest taxes in this category, we must mention the nine states without income tax whatsoever — Washington, Nevada, Texas, Florida, South Dakota, Wyoming, and Alaska. Tennessee and New Hampshire also belong here as their income taxation is minimal. So, most residents there end up paying no income tax.

North Dakota (0.95%), Arizona (1.60%), and Mississippi (1.70%) have the lowest income tax by state. New York (4.90%), D.C. (4.88%), and Ohio (4.39%) impose the highest taxation burden on individual income. So, it makes sense that New York and D.C. are among the 10 jurisdictions with the worst tax burden by state.

In the table below, you can also see the state and local income tax collections per capita for 2018. Families in North Dakota paid the lowest average of $485, while those in New York paid the highest average of $3,407.

StateIndividual Income Tax BurdenState & Local Income Tax Collections per Capita
Alabama2.00%$827
Alaska0.00%/
Arizona1.60%$635
Arkansas2.24%$952
California3.80%$2,411
Colorado2.32%$1,320
Connecticut3.07%$2,725
D.C.4.88%$2,946
Delaware3.28%$1,711
Florida0.00%/
Georgia2.38%$1,108
Hawaii3.18%$1,711
Idaho2.03%$1,049
Illinois2.22%$1,202
Indiana2.17%$965
Iowa2.57%$1,271
Kansas2.43%$1,173
Kentucky3.16%$1,347
Louisiana1.74%$697
Maine2.51%$1,199
Maryland4.07%$2,470
Massachusetts3.35%$2,365
Michigan2.19%$1,082
Minnesota3.74%$2,135
Mississippi1.70%$622
Missouri2.36%$1,132
Montana2.66%$1,226
Nebraska2.41%$1,226
Nevada0.00%/
New Hampshire0.14%$78
New Jersey2.54%$1,692
New Mexico1.75%$599
New York4.90%$3,407
North Carolina2.65%$1,215
North Dakota0.95%$485
Ohio4.39%$1,238
Oklahoma1.90%$887
Oregon4.05%$2,123
Pennsylvania2.57%$1,416
Rhode Island2.31%$1,256
South Carolina2.03%$872
South Dakota0.00%/
Tennessee0.06%$36
Texas0.00%/
Utah3.17%$1,266
Vermont2.49%$1,312
Virginia2.92%$1,659
Washington0.00%/
West Virginia2.76%$1,081
Wisconsin2.92%$1,404
Wyoming0.00%/

(WalletHub, Tax Foundation)

Property Tax Rates by State

When calculating the overall tax burden of a destination, it is vital to analyze the taxation on property. Again, the property taxes by state vary depending on local regulations. It is interesting to note how Hawaii has the lowest taxation on median owner-occupied homes of 0.31%. This US destination is among the ones with the worst tax burden by state. New Jersey has the highest property tax rates on owner-occupied homes of 2.13%. Still, residents of D.C. pay the highest property taxes per capita of $3,740. This amount is significantly larger than the $598 paid in property taxes per capita in Alabama.

Maine, Vermont, and New Hampshire are the states with the highest property taxes as a percentage of the personal income. The share from the residents’ personal income that goes to tax on property in the states is 5.48%, 5.31%, and 5.11%, respectively. Alabama, Tennessee, and Oklahoma have the lowest property tax burden by state. In these states, taxes on properties represent 1.41%, 1.71%, and 1.74% of the individual income.

Four out of the five states with the lowest property tax burden are among the 10 best states ranked by taxes. Besides Alabama and Oklahoma, Delaware and Tennessee belong in this group, too.

StateEffective tax rate, median owner-occupied homeProperty tax percentage of personal incomePer capita property tax in USD
Alabama0.37%1.41%598
Alaska0.98%3.54%2,195
Arizona0.60%2.50%1,125
Arkansas0.61%1.77%776
California0.70%2.76%1,680
Colorado0.52%2.97%1,616
Connecticut1.73%4.16%3,107
D.C.0.58%4.43%3,740
Delaware0.59%1.77%931
Florida0.86%2.77%1,377
Georgia0.87%2.68%1,205
Hawaii0.31%2.55%1,358
Idaho0.65%2.39%1,022
Illinois1.97%3.98%2,277
Indiana0.81%2.34%1,033
Iowa1.43%3.42%1,702
Kansas1.28%3.11%1,605
Kentucky0.78%1.99%845
Louisiana0.51%1.95%894
Maine1.20%5.48%2,249
Maryland1.01%2.61%1,693
Massachusetts1.08%3.49%2,565
Michigan1.31%3.09%1,465
Minnesota1.05%2.93%1,649
Mississippi0.63%2.84%1,061
Missouri0.96%2.30%1,073
Montana0.74%3.45%1,711
Nebraska1.54%3.69%2,010
Nevada0.56%2.03%1,044
New Hampshire1.89%5.11%3,362
New Jersey2.13%4.98%3,378
New Mexico0.59%2.04%832
New York1.30%4.43%3,205
North Carolina0.78%2.19%993
North Dakota0.88%2.77%1,649
Ohio1.52%2.78%1,356
Oklahoma0.83%1.74%771
Oregon0.91%3.14%1,557
Pennsylvania1.43%2.81%1,584
Rhode Island1.37%4.48%2,431
South Carolina0.53%2.80%1,211
South Dakota1.14%2.84%1,586
Tennessee0.63%1.71%799
Texas1.60%3.97%1,973
Utah0.56%2.36%1,070
Vermont1.76%5.31%2,738
Virginia0.84%2.97%1,699
Washington0.84%2.63%1,645
West Virginia0.53%2.28%950
Wisconsin1.53%3.17%1,680
Wyoming0.51%3.32%2,012

(WalletHub, Tax Foundation)

Red vs. Blue States Taxes Ranked

Blue states have a higher average effective total tax burden than red states. The average among the Democrat states is 9.38%, while Republican states have an average tax burden of 7.97%. The five destinations with the highest taxes by state are all blue states. Those are New York, Hawaii, D.C., Maine, and Vermont. Among the five states with the lowest overall taxes, three are red (Alaska, Tennessee, Wyoming) and two are blue (Delaware, New Hampshire).

The Bottom Line

With the tax burden by state drastically varying, your place of residence significantly affects your finances. Residents in New York and Hawaii have it the worst when it comes to the total state tax burden. People living in Alaska, Delaware, and Tennessee, by contrast, deal with the lowest overall tax burden in the USA. Meaning, those who are looking for tax-friendly states should consider moving to one of these jurisdictions. After all, the difference in the tax burden between the worst and the best state is nearly 8%, which can make or break a business or a household.

References: WalletHub, Tax Foundation, GOBankingRates, ITEP, World Population Review, Tax Foundation, Tax Foundation, Tax Foundation

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