When the United States hunkered down in 2020 because of the pandemic, it wasn’t just retail sales that suffered a major blow. States also saw overall tax revenues decline. The Tax Foundation reports state tax collections dropped 5.5% nationwide in fiscal 2020, driven mostly by a “dismal” final quarter (April through June).
State tax revenues include not only individual income taxes but also corporate taxes, state property taxes, general sales taxes and other taxes (excise taxes on gas, cigarettes, gaming and alcohol, to name a few). Individual state income taxes plunged 10.1% year over year between fiscal 2019 and fiscal 2020, and 38.7% when compared to the previous final quarter.
However, the foundation points out the 10.1% drop may be “dramatically overstated” because most states postponed the tax filing deadline from April to July, meaning a good chunk of tax revenues will show up in the next fiscal year, which begins July 1.
How much you pay in state income taxes depends on where you live. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming levy none. Revenues in those states come from either property taxes or a general sales tax.
Meanwhile, residents in some states pay a hefty amount to their governments. New York (no surprise) collects the most in state income taxes at $2,791 per capita. California (again, no surprise) follows at $2,533. The Golden State’s high taxes and high cost of living are likely among the main reasons Californians are fleeing the state. (California recorded a decrease of 0.46% in population from January 2020 to January 2021).
To identify the state collecting the most income tax per person, 24/7 Wall St. reviewed the Tax Foundation’s Facts and Figures dataset for 2021. Income per capita and the state’s top source for tax revenue also were taken from that data.
As mentioned, New York had the highest state income tax collections per capita in 2019 at $2,791. The state’s income per capita that year was $71,717, the third highest of any state. New York’s top source of tax revenue was its individual income tax.
Click here to see all the states collecting the most income tax per person.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
