Special Report
States Paying the Highest (and Lowest) Taxes
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During the 2012 tax season, Americans paid an average of roughly $1 for every $10 they earned in state and local taxes — on top of taxes paid to the federal government. This is part of Americans’ total tax burden, according to a report by the Tax Foundation. The state and local tax burden was as low as 6.5% in Alaska and as high as 12.7% in New York.
Generally, tax burdens were highest on the East Coast, while residents of Midwestern and Southern states faced relatively low tax burdens. Residents of New York, Connecticut, and New Jersey paid more than 12% of their income in state and local taxes alone, the most in the nation. Alaska residents, on the other hand, paid less than 7% of their income, the only state where this was the case.
Nicole Kaeding, economist at the Tax Foundation and co-author of the State-Local Tax Burden Rankings report, noted in an email that state and local tax burdens tend to change very little year to year. However, “as the nation continues to rebound from the Great Recession, state personal income [has] increased at a faster rate than state tax collections,” Kaeding said.
Click here to see the states paying the highest (and lowest) taxes.
For Connecticut, New Jersey, and New York the high tax burden is due almost entirely to high tax rates, particularly on income earned and in the form of business taxes. Individual income tax collections in these three states were in the top 10 nationwide. The average annual collection from income tax in Connecticut and New York was $2,174 and $2,051 per capita, the two highest in the country and the only states where per capita income tax collections exceeded $2,000.
Residents of states with the highest tax burdens also tend to pay large amounts of taxes to other high-tax states. For example, a relatively large share of Connecticut and New Jersey workers are employed in New York City, where residents pay some of the nation’s highest state and city income taxes. In the Tax Foundation’s model, taxes paid in this way are counted as tax burden of the state’s residents, not where they are employed.
In addition, “these states have residents with high levels of capital gains, compared to other states,” Kaeding said. “This results in their residents paying a higher share of other states’ business taxes.”
On the other end of the spectrum, a similar exchange occurs. States with low tax burdens benefit from collecting taxes from out-of-state residents. Kaeding gave Alaska as an example, where roughly 80% of taxes collected come from severance taxes on oil and natural gas levied on residents of other states.
In the Tax Foundation’s report, co-written by Kaeding, “The burden of Alaskan oil taxes does not fall predominantly on Alaska residents. Ignoring this fact and comparing Alaskan tax collections directly to Alaskan income makes the tax burden of Alaska residents look much higher than it actually is.”
Many of the states with low tax burdens benefit from having taxable resources such as oil in addition to taxes on incomes, property, and residents’ spending. In the case of Nevada, gaming is a major source of revenue. In the case of states such as Wyoming and Alaska, severance taxes — charged on businesses producing oil and natural gas — have historically been a large source of revenue.
Such revenue sources also tend to reflect the types of taxes levied in each state, which for Kaeding reflects the amount of taxes the state is able to collect from out of state residents. For example, “Florida collects a large amount of revenue via taxes on tourists, such as sales taxes on hotels, food, and rental cars.”
Generally, states with wealthier residents tend to collect more in taxes. Eight out of the 10 states with the highest tax burdens had a per capita income greater than the national average of $44,481. The three states with the highest tax burdens — Connecticut, New Jersey, and New York — had among the five highest per capita incomes.
To identify the states with the highest and lowest tax burdens, 24/7 Wall St. reviewed state and local tax burdens as a share of state residents’ income in fiscal 2012 provided by the Tax Foundation. Property, income, general sales, and excise tax rates and collections per capita also came from the Tax Foundation. Taxes paid by a given state’s residents to other state governments was computed by the Tax Foundation as part of its State-Local Tax Burden Rankings FY 2012 report. Combined state and local sales tax rate, average effective property tax rates, and collections from income tax per capita also came from the Tax Foundation but are for fiscal 2013. Federal taxes are not included in any of the estimates.
These are the states paying the highest (and lowest) taxes.
50. Alaska
> Taxes paid by residents as pct. of income: 6.5% (the lowest)
> Income per capita: $49,780 (9th highest)
> State and local taxes paid per capita: $3,229 (7th lowest)
> Collections from income tax per capita: none
> Combined state and local sales tax rate: 1.8% (5th lowest)
> Avg. effective property tax rate: 1.2% (20th highest)
49. South Dakota
> Taxes paid by residents as pct. of income: 7.1% (2nd lowest)
> Income per capita: $46,781 (16th highest)
> State and local taxes paid per capita: $3,318 (10th lowest)
> Collections from income tax per capita: none
> Combined state and local sales tax rate: 5.8% (11th lowest)
> Avg. effective property tax rate: 1.3% (16th highest)
48. Wyoming
> Taxes paid by residents as pct. of income: 7.1% (3rd lowest)
> Income per capita: $61,708 (2nd highest)
> State and local taxes paid per capita: $4,407 (18th highest)
> Collections from income tax per capita: none
> Combined state and local sales tax rate: 5.5% (8th lowest)
> Avg. effective property tax rate: 0.6% (8th lowest)
47. Tennessee
> Taxes paid by residents as pct. of income: 7.3% (4th lowest)
> Income per capita: $38,178 (14th lowest)
> State and local taxes paid per capita: $2,805 (2nd lowest)
> Collections from income tax per capita: $4,100 (8th lowest)
> Combined state and local sales tax rate: 9.5% (the highest)
> Avg. effective property tax rate: 0.8% (13th lowest)
46. Texas
> Taxes paid by residents as pct. of income: 7.6% (5th lowest)
> Income per capita: $44,081 (22nd highest)
> State and local taxes paid per capita: $3,340 (13th lowest)
> Collections from income tax per capita: none
> Combined state and local sales tax rate: 8.1% (12th highest)
> Avg. effective property tax rate: 1.9% (6th highest)
45. Louisiana
> Taxes paid by residents as pct. of income: 7.6% (6th lowest)
> Income per capita: $38,906 (17th lowest)
> State and local taxes paid per capita: $2,950 (4th lowest)
> Collections from income tax per capita: $594 (12th lowest)
> Combined state and local sales tax rate: 8.9% (3rd highest)
> Avg. effective property tax rate: 0.5% (3rd lowest)
44. New Hampshire
> Taxes paid by residents as pct. of income: 7.9% (7th lowest)
> Income per capita: $50,288 (8th highest)
> State and local taxes paid per capita: $3,961 (25th highest)
> Collections from income tax per capita: $75 (9th lowest)
> Combined state and local sales tax rate: none
> Avg. effective property tax rate: 2.1% (3rd highest)
43. Nevada
> Taxes paid by residents as pct. of income: 8.1% (8th lowest)
> Income per capita: $41,297 (23rd lowest)
> State and local taxes paid per capita: $3,349 (14th lowest)
> Collections from income tax per capita: none
> Combined state and local sales tax rate: 7.9% (13th highest)
> Avg. effective property tax rate: 0.9% (23rd lowest)
42. South Carolina
> Taxes paid by residents as pct. of income: 8.4% (9th lowest)
> Income per capita: $34,821 (4th lowest)
> State and local taxes paid per capita: $2,936 (3rd lowest)
> Collections from income tax per capita: $707 (16th lowest)
> Combined state and local sales tax rate: 7.1% (18th highest)
> Avg. effective property tax rate: 0.6% (5th lowest)
41. Mississippi
> Taxes paid by residents as pct. of income: 8.6% (10th lowest)
> Income per capita: $31,847 (the lowest)
> State and local taxes paid per capita: $2,742 (the lowest)
> Collections from income tax per capita: $587 (11th lowest)
> Combined state and local sales tax rate: 7.1% (20th highest)
> Avg. effective property tax rate: 0.8% (16th lowest)
40. Oklahoma
> Taxes paid by residents as pct. of income: 8.6% (11th lowest)
> Income per capita: $40,762 (22nd lowest)
> State and local taxes paid per capita: $3,515 (17th lowest)
> Collections from income tax per capita: $761 (18th lowest)
> Combined state and local sales tax rate: 8.8% (6th highest)
> Avg. effective property tax rate: 0.9% (23rd lowest)
39. Alabama
> Taxes paid by residents as pct. of income: 8.7% (12th lowest)
> Income per capita: $35,337 (6th lowest)
> State and local taxes paid per capita: $3,067 (5th lowest)
> Collections from income tax per capita: $664 (15th lowest)
> Combined state and local sales tax rate: 8.9% (3rd highest)
> Avg. effective property tax rate: 0.4% (2nd lowest)
38. Montana
> Taxes paid by residents as pct. of income: 8.7% (13th lowest)
> Income per capita: $38,980 (18th lowest)
> State and local taxes paid per capita: $3,389 (15th lowest)
> Collections from income tax per capita: $1,035 (20th highest)
> Combined state and local sales tax rate: none
> Avg. effective property tax rate: 0.9% (23rd lowest)
37. New Mexico
> Taxes paid by residents as pct. of income: 8.7% (14th lowest)
> Income per capita: $36,051 (8th lowest)
> State and local taxes paid per capita: $3,141 (6th lowest)
> Collections from income tax per capita: $595 (13th lowest)
> Combined state and local sales tax rate: 7.4% (16th highest)
> Avg. effective property tax rate: 0.7% (11th lowest)
36. Arizona
> Taxes paid by residents as pct. of income: 8.8% (15th lowest)
> Income per capita: $37,012 (10th lowest)
> State and local taxes paid per capita: $3,276 (8th lowest)
> Collections from income tax per capita: $516 (10th lowest)
> Combined state and local sales tax rate: 8.2% (11th highest)
> Avg. effective property tax rate: 0.8% (16th lowest)
35. Colorado
> Taxes paid by residents as pct. of income: 8.9% (16th lowest)
> Income per capita: $48,313 (12th highest)
> State and local taxes paid per capita: $4,304 (19th highest)
> Collections from income tax per capita: $612 (14th lowest)
> Combined state and local sales tax rate: 7.4% (15th highest)
> Avg. effective property tax rate: 0.6% (8th lowest)
34. Florida
> Taxes paid by residents as pct. of income: 8.9% (17th lowest)
> Income per capita: $41,848 (24th lowest)
> State and local taxes paid per capita: $3,738 (24th lowest)
> Collections from income tax per capita: none
> Combined state and local sales tax rate: 6.7% (22nd lowest)
> Avg. effective property tax rate: 1.1% (25th highest)
33. North Dakota
> Taxes paid by residents as pct. of income: 9.0% (18th lowest)
> Income per capita: $53,953 (7th highest)
> State and local taxes paid per capita: $4,867 (10th highest)
> Collections from income tax per capita: $901 (24th highest)
> Combined state and local sales tax rate: 6.6% (21st lowest)
> Avg. effective property tax rate: 1.1% (21st highest)
32. Georgia
> Taxes paid by residents as pct. of income: 9.1% (19th lowest)
> Income per capita: $37,478 (11th lowest)
> State and local taxes paid per capita: $3,426 (16th lowest)
> Collections from income tax per capita: $881 (24th lowest)
> Combined state and local sales tax rate: 7.0% (24th highest)
> Avg. effective property tax rate: 0.9% (24th lowest)
31. Iowa
> Taxes paid by residents as pct. of income: 9.2% (20th lowest)
> Income per capita: $43,878 (23rd highest)
> State and local taxes paid per capita: $4,037 (23rd highest)
> Collections from income tax per capita: $1,115 (17th highest)
> Combined state and local sales tax rate: 6.8% (24th lowest)
> Avg. effective property tax rate: 1.5% (14th highest)
30. Nebraska
> Taxes paid by residents as pct. of income: 9.2% (21st lowest)
> Income per capita: $45,485 (18th highest)
> State and local taxes paid per capita: $4,197 (20th highest)
> Collections from income tax per capita: $1,129 (16th highest)
> Combined state and local sales tax rate: 6.8% (25th lowest)
> Avg. effective property tax rate: 1.8% (7th highest)
29. Missouri
> Taxes paid by residents as pct. of income: 9.3% (22nd lowest)
> Income per capita: $38,825 (16th lowest)
> State and local taxes paid per capita: $3,591 (21st lowest)
> Collections from income tax per capita: $892 (25th lowest)
> Combined state and local sales tax rate: 7.8% (14th highest)
> Avg. effective property tax rate: 1.0% (25th lowest)
28. Washington
> Taxes paid by residents as pct. of income: 9.3% (23rd lowest)
> Income per capita: $48,999 (11th highest)
> State and local taxes paid per capita: $4,541 (16th highest)
> Collections from income tax per capita: none
> Combined state and local sales tax rate: 8.9% (5th highest)
> Avg. effective property tax rate: 1.1% (23rd highest)
27. Virginia
> Taxes paid by residents as pct. of income: 9.3% (24th lowest)
> Income per capita: $49,541 (10th highest)
> State and local taxes paid per capita: $4,623 (12th highest)
> Collections from income tax per capita: $1,326 (8th highest)
> Combined state and local sales tax rate: 5.6% (10th lowest)
> Avg. effective property tax rate: 0.8% (14th lowest)
26. Idaho
> Taxes paid by residents as pct. of income: 9.3% (25th lowest)
> Income per capita: $35,496 (7th lowest)
> State and local taxes paid per capita: $3,318 (11th lowest)
> Collections from income tax per capita: $806 (19th lowest)
> Combined state and local sales tax rate: 6.0% (15th lowest)
> Avg. effective property tax rate: 0.8% (13th lowest)
25. Michigan
> Taxes paid by residents as pct. of income: 9.4% (25th highest)
> Income per capita: $38,636 (15th lowest)
> State and local taxes paid per capita: $3,631 (22nd lowest)
> Collections from income tax per capita: $833 (20th lowest)
> Combined state and local sales tax rate: 6.0% (14th lowest)
> Avg. effective property tax rate: 1.8% (8th highest)
24. Kentucky
> Taxes paid by residents as pct. of income: 9.5% (24th highest)
> Income per capita: $34,782 (3rd lowest)
> State and local taxes paid per capita: $3,298 (9th lowest)
> Collections from income tax per capita: $849 (22nd lowest)
> Combined state and local sales tax rate: 6.0% (14th lowest)
> Avg. effective property tax rate: 0.9% (19th lowest)
23. Kansas
> Taxes paid by residents as pct. of income: 9.5% (23rd highest)
> Income per capita: $43,490 (24th highest)
> State and local taxes paid per capita: $4,131 (21st highest)
> Collections from income tax per capita: $1,023 (21st highest)
> Combined state and local sales tax rate: 8.2% (9th highest)
> Avg. effective property tax rate: 1.4% (15th highest)
22. Indiana
> Taxes paid by residents as pct. of income: 9.5% (22nd highest)
> Income per capita: $37,580 (13th lowest)
> State and local taxes paid per capita: $3,585 (20th lowest)
> Collections from income tax per capita: $759 (17th lowest)
> Combined state and local sales tax rate: 7.0% (21st highest)
> Avg. effective property tax rate: 0.9% (23rd lowest)
21. Utah
> Taxes paid by residents as pct. of income: 9.6% (21st highest)
> Income per capita: $36,989 (9th lowest)
> State and local taxes paid per capita: $3,556 (19th lowest)
> Collections from income tax per capita: $991 (22nd highest)
> Combined state and local sales tax rate: 6.7% (23rd lowest)
> Avg. effective property tax rate: 0.7% (10th lowest)
20. North Carolina
> Taxes paid by residents as pct. of income: 9.8% (20th highest)
> Income per capita: $37,523 (12th lowest)
> State and local taxes paid per capita: $3,659 (23rd lowest)
> Collections from income tax per capita: $1,130 (15th highest)
> Combined state and local sales tax rate: 6.9% (25th highest)
> Avg. effective property tax rate: 0.9% (19th lowest)
19. Ohio
> Taxes paid by residents as pct. of income: 9.8% (19th highest)
> Income per capita: $40,111 (21st lowest)
> State and local taxes paid per capita: $3,924 (25th lowest)
> Collections from income tax per capita: $854 (23rd lowest)
> Combined state and local sales tax rate: 7.1% (19th highest)
> Avg. effective property tax rate: 1.6% (12th highest)
18. West Virginia
> Taxes paid by residents as pct. of income: 9.8% (18th highest)
> Income per capita: $34,016 (2nd lowest)
> State and local taxes paid per capita: $3,331 (12th lowest)
> Collections from income tax per capita: $968 (23rd highest)
> Combined state and local sales tax rate: 6.1% (16th lowest)
> Avg. effective property tax rate: 0.6% (6th lowest)
17. Arkansas
> Taxes paid by residents as pct. of income: 10.1% (17th highest)
> Income per capita: $34,862 (5th lowest)
> State and local taxes paid per capita: $3,519 (18th lowest)
> Collections from income tax per capita: $897 (25th highest)
> Combined state and local sales tax rate: 9.3% (2nd highest)
> Avg. effective property tax rate: 0.6% (9th lowest)
16. Delaware
> Taxes paid by residents as pct. of income: 10.2% (16th highest)
> Income per capita: $43,437 (25th highest)
> State and local taxes paid per capita: $4,412 (17th highest)
> Collections from income tax per capita: $1,227 (13th highest)
> Combined state and local sales tax rate: none
> Avg. effective property tax rate: 0.6% (4th lowest)
15. Pennsylvania
> Taxes paid by residents as pct. of income: 10.2% (15th highest)
> Income per capita: $45,046 (19th highest)
> State and local taxes paid per capita: $4,589 (13th highest)
> Collections from income tax per capita: $844 (21st lowest)
> Combined state and local sales tax rate: 6.3% (19th lowest)
> Avg. effective property tax rate: 1.5% (13th highest)
14. Hawaii
> Taxes paid by residents as pct. of income: 10.2% (14th highest)
> Income per capita: $44,920 (20th highest)
> State and local taxes paid per capita: $4,576 (14th highest)
> Collections from income tax per capita: $1,242 (12th highest)
> Combined state and local sales tax rate: 4.3% (6th lowest)
> Avg. effective property tax rate: 0.3% (the lowest)
13. Maine
> Taxes paid by residents as pct. of income: 10.2% (13th highest)
> Income per capita: $39,062 (19th lowest)
> State and local taxes paid per capita: $3,997 (24th highest)
> Collections from income tax per capita: $1,153 (14th highest)
> Combined state and local sales tax rate: 5.5% (9th lowest)
> Avg. effective property tax rate: 1.3% (17th highest)
12. Massachusetts
> Taxes paid by residents as pct. of income: 10.3% (12th highest)
> Income per capita: $57,180 (3rd highest)
> State and local taxes paid per capita: $5,872 (5th highest)
> Collections from income tax per capita: $1,931 (3rd highest)
> Combined state and local sales tax rate: 6.3% (18th lowest)
> Avg. effective property tax rate: 1.2% (18th highest)
11. Vermont
> Taxes paid by residents as pct. of income: 10.3% (11th highest)
> Income per capita: $44,337 (21st highest)
> State and local taxes paid per capita: $4,557 (15th highest)
> Collections from income tax per capita: $1,059 (18th highest)
> Combined state and local sales tax rate: 6.1% (17th lowest)
> Avg. effective property tax rate: 1.7% (9th highest)
10. Oregon
> Taxes paid by residents as pct. of income: 10.3% (10th highest)
> Income per capita: $39,578 (20th lowest)
> State and local taxes paid per capita: $4,095 (22nd highest)
> Collections from income tax per capita: $1,599 (6th highest)
> Combined state and local sales tax rate: none
> Avg. effective property tax rate: 1.1% (23rd highest)
9. Rhode Island
> Taxes paid by residents as pct. of income: 10.8% (9th highest)
> Income per capita: $46,359 (17th highest)
> State and local taxes paid per capita: $4,998 (9th highest)
> Collections from income tax per capita: $1,036 (19th highest)
> Combined state and local sales tax rate: 7.0% (21st highest)
> Avg. effective property tax rate: 1.7% (10th highest)
8. Minnesota
> Taxes paid by residents as pct. of income: 10.8% (8th highest)
> Income per capita: $47,806 (14th highest)
> State and local taxes paid per capita: $5,185 (8th highest)
> Collections from income tax per capita: $1,658 (5th highest)
> Combined state and local sales tax rate: 7.2% (17th highest)
> Avg. effective property tax rate: 1.2% (19th highest)
7. Maryland
> Taxes paid by residents as pct. of income: 10.9% (7th highest)
> Income per capita: $54,266 (6th highest)
> State and local taxes paid per capita: $5,920 (4th highest)
> Collections from income tax per capita: $1,302 (9th highest)
> Combined state and local sales tax rate: 6.0% (14th lowest)
> Avg. effective property tax rate: 1.1% (22nd highest)
6. California
> Taxes paid by residents as pct. of income: 11.0% (6th highest)
> Income per capita: $47,808 (13th highest)
> State and local taxes paid per capita: $5,237 (6th highest)
> Collections from income tax per capita: $1,750 (4th highest)
> Combined state and local sales tax rate: 8.4% (8th highest)
> Avg. effective property tax rate: 0.8% (17th lowest)
5. Illinois
> Taxes paid by residents as pct. of income: 11.0% (5th highest)
> Income per capita: $47,656 (15th highest)
> State and local taxes paid per capita: $5,235 (7th highest)
> Collections from income tax per capita: $1,285 (10th highest)
> Combined state and local sales tax rate: 8.2% (10th highest)
> Avg. effective property tax rate: 2.3% (2nd highest)
4. Wisconsin
> Taxes paid by residents as pct. of income: 11.0% (4th highest)
> Income per capita: $42,990 (25th lowest)
> State and local taxes paid per capita: $4,734 (11th highest)
> Collections from income tax per capita: $1,261 (11th highest)
> Combined state and local sales tax rate: 5.4% (7th lowest)
> Avg. effective property tax rate: 2.0% (5th highest)
3. New Jersey
> Taxes paid by residents as pct. of income: 12.2% (3rd highest)
> Income per capita: $56,731 (4th highest)
> State and local taxes paid per capita: $6,926 (3rd highest)
> Collections from income tax per capita: $1,363 (7th highest)
> Combined state and local sales tax rate: 7.0% (23rd highest)
> Avg. effective property tax rate: 2.4% (the highest)
2. Connecticut
> Taxes paid by residents as pct. of income: 12.6% (2nd highest)
> Income per capita: $62,374 (the highest)
> State and local taxes paid per capita: $7,869 (the highest)
> Collections from income tax per capita: $2,174 (the highest)
> Combined state and local sales tax rate: 6.4% (20th lowest)
> Avg. effective property tax rate: 2.0% (4th highest)
1. New York
> Taxes paid by residents as pct. of income: 12.7% (the highest)
> Income per capita: $55,047 (5th highest)
> State and local taxes paid per capita: $6,993 (2nd highest)
> Collections from income tax per capita: $2,051 (2nd highest)
> Combined state and local sales tax rate: 8.5% (7th highest)
> Avg. effective property tax rate: 1.6% (11th highest)
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