Highest Taxed States in the US in 2024
Welcome to the wallet-biting safari of America’s highest taxed states, where we explore the fiscal fauna in the wilderness of income, property, and sales taxes.
Beware, this journey may lead you to eye-opening revelations about the governmental giants in our backyards. But fret not, we’ve got your back in this labyrinth of levies. Ready your fiscal binoculars, dust off your sense of curiosity, and let’s embark on this intriguing investigation into the territories where Uncle Sam is seen most frequently, not with an apple pie, but with a tax bill in hand.
3 Main Types of Taxes in the US
Income Tax: 42 states, plus D.C., have personal income taxes. California leads the pack with the steepest rates, followed by Hawaii and New Jersey. Ten states adopt a single-rate tax approach, while 32 use graduated-rate brackets based on factors such as income and marital status. Meanwhile, eight states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming—and partially New Hampshire, bypass income taxes altogether.
Sales Tax: This consumption tax imposed on goods and services varies across states, from 0% to a hefty 7.25%. While five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—skirt sales taxes, California presents the highest state sales tax. However, when local taxes are factored in, Tennessee takes the crown for the highest combined sales tax.
Property Tax: An unavoidable aspect of homeownership, property taxes exist across all states. New Jersey demands the highest rate, whereas Hawaii, Alabama, and Colorado offer the most lenient property tax rates. Although some states boast low rates, additional high taxes in other areas often balance the fiscal scale.
20 Highest Taxed States in the US
The table below showcases the 20 highest taxed states in the US.
Rank | State | Local Tax Burden Per Capita | Taxes Paid to Own State Per Capita | Taxes Paid to Other States Per Capita | Effective State Local Tax Rate |
20 | Oregon | 6,572 | 5,191 | 1,381 | 10.8% |
19 | Wisconsin | 6,231 | 4,911 | 1,320 | 10.9% |
18 | Kansas | 6,353 | 4,971 | 1,382 | 11.2% |
17 | Iowa | 6,086 | 4,812 | 1,274 | 11.2% |
16 | Maryland | 7,680 | 5,940 | 1,740 | 11.3% |
15 | Rhode Island | 6,948 | 5,273 | 1,675 | 11.4% |
14 | Nebraska | 6,720 | 5,327 | 1,393 | 11.5% |
13 | Massachusetts | 9,405 | 7,565 | 1,840 | 11.5% |
12 | Utah | 6,750 | 5,346 | 1,404 | 12.1% |
11 | Minnesota | 7,763 | 6,316 | 1,448 | 12.1% |
10 | Maine | 6,906 | 5,712 | 1,194 | 12.4% |
9 | Delaware | 7,170 | 5,580 | 1,591 | 12.4% |
8 | Virginia | 7,979 | 6,367 | 1,612 | 12.5% |
7 | Illinois | 8,390 | 6,866 | 1,523 | 12.9% |
6 | New Jersey | 9,648 | 7,696 | 1,952 | 13.2% |
5 | California | 10,167 | 8,711 | 1,457 | 13.5% |
4 | Vermont | 7,958 | 6,532 | 1,426 | 13.6% |
3 | Hawaii | 8,410 | 7,082 | 1,328 | 14.1% |
2 | Connecticut | 12,151 | 9,883 | 2,268 | 15.4% |
1 | New York | 12,083 | 10,380 | 1,702 | 15.9% |
🧮 Unraveling the Ingredients of High State Taxes
🏢 Economic Prosperity: States with strong economies often have high taxes. The reason? More businesses and wealthy individuals equate to a larger tax base.
💼 High Income Levels: The richer the residents, the more taxes they typically pay. States with a higher average income often have higher tax rates.
🏫 Expensive Public Services: High-quality education, health, and public safety services require funding. States that invest heavily in these areas tend to have higher taxes.
🚊 Infrastructure Development: Maintaining roads, bridges, and public transportation isn’t cheap. States with significant infrastructure spending often need higher taxes to foot the bill.
🏞️ Environmental Initiatives: States with ambitious sustainability and conservation programs often rely on tax dollars to fund these initiatives.
👵 Aging Populations: States with higher proportions of older residents may face increased healthcare and social service costs, leading to higher taxes.
💰 Debt Levels: States with significant debts might impose higher taxes to meet their financial obligations and avoid a budget crisis.
10 Lowest Taxed States in the US
Rank | State | Local Tax Burden Per Capita | Taxes Paid to Own State Per Capita | Taxes Paid to Other States Per Capita | Effectives State Local Tax Rate |
10 | Oklahoma | 4,527 | 3,380 | 1,148 | 9% |
9 | Georgia | 4,862 | 3,711 | 1,151 | 8.9% |
8 | South Carolina | 4,596 | 3,365 | 1,231 | 8.9% |
7 | North Dakota | 5,403 | 3,800 | 1,603 | 8.8% |
6 | Michigan | 4,720 | 3,595 | 1,125 | 8.6% |
5 | Texas | 4,994 | 3,849 | 1,146 | 8.6% |
4 | South Dakota | 5,196 | 3,526 | 1,670 | 8.4% |
3 | Tennessee | 4,036 | 3,082 | 954 | 7.6% |
2 | Wyoming | 4,691 | 2,647 | 2,045 | 7.5% |
1 | Alaska | 2,943 | 1,527 | 1,416 | 4.6% |
Highest Taxed States: Conclusion
In wrapping up, understanding the dynamics of taxation across various states offers valuable insights into the economic mechanics that keep our communities functioning. It’s not just about percentages and dollar signs; it’s about the narratives behind them.
Whether we’re discussing income, sales, or property tax, each state crafts its unique equation to balance its revenue needs with the economic realities of its residents. Some states lean heavily on one form of tax, while others spread the burden more evenly. It’s all part of the delicate equilibrium between public services and the citizens’ ability to fund them. As we move forward, let’s remember that these taxes, though often dreaded, play a vital role in shaping our neighborhoods, cities, and states into places we’re proud to call home.
FAQs
What is the most heavily taxed state?
New York tops the list, as per data from the Tax Foundation. This state's significant tax burden is largely due to its substantial effective state and local tax rate.
What are the top 5 tax-friendly states?
If tax relief is what you're after, consider Alaska, Wyoming, Tennessee, South Dakota, and Texas. These states stand out for their minimal or non-existent income tax and relatively low property and sales tax rates, resulting in a lighter tax burden for their inhabitants.
What are the top 3 most taxed states?
The laurel for the three states bearing the heaviest tax burden goes to New York, Connecticut, and Hawaii. The Tax Foundation's ranking attributes this to their hefty tax rates across income, sales, and property tax.
What is the best state to live in financially?
This largely depends on personal circumstances, but Tennessee often ranks favorably due to its low total tax burden, encompassing both property and sales taxes.
What is the most profitable state in the US?
Despite having one of the higher tax rates, California frequently emerges as the most profitable state, buoyed by a thriving economy and substantial income tax revenue.
What are the 5 most common taxes Americans pay?
Americans typically pay income tax, sales tax, property tax, excise taxes (on certain goods like gasoline), and payroll taxes for Social Security and Medicare.
Who pays the most US taxes?
Generally, higher-income individuals shoulder a larger portion of US taxes. Especially in states with the highest income tax rates, these earners often contribute more to local and federal taxes.
What is the highest type of tax in the US?
The federal income tax typically ranks highest. However, in high tax states, the combined burden of state and local taxes can surpass even federal obligations.