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The Tax Burden in 10 States, From Best to Worst

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When you’re comparing taxes in different states, checking out their income tax rates is a good place to start. Be sure to look at the big picture, though—sales and property taxes also affect the amount of taxes you’d owe each year if you lived there.

The best way to compare states is to consider each one’s tax burden, or the total amount of taxes charged. In this type of analysis, a state with a high income tax rate might end up charging a low total amount, while a state with a low income tax rate may charge more for other taxes. We’ve analyzed the taxes of states across the country to determine the five best and five worst states to live based on their overall tax burden.

Calculating a State’s Tax Burden

We only looked at state taxes for this comparison. Depending on exactly where in a state you live, you could owe local taxes as well. For income taxes, we ranked states by their highest income tax bracket. For sales taxes, we only looked at state sales tax rates, forgoing local ones. For property taxes, we looked at the average property tax rate paid in the state, because exact rates depend on where property is located. According to these conditions, here are the top five states:

The 5 Best States

Alaska

Income tax = 0 percent (tied for 1st place)

Sales tax = 0 percent (tied for 1st place)

Property tax = 1.04 percent (40th place)

Delaware

Income tax = 6.6 percent (34th place)

Sales tax = 0 percent (tied for 1st place)

Property tax = 0.43 percent (4th place)

Wyoming

Income tax = 0 percent (tied for 1st place)

Sales tax = 4 percent (tied for 7th place)

Property tax = 0.58 percent (10th place)

New Hampshire

Income tax = 0 percent (tied for 1st place)

Sales tax = 0 percent (tied for 1st place)

Property tax = 1.86 percent (49th place)

South Dakota

Income tax = 0 percent (tied for 1st place)

Sales tax = 4 percent (tied for 7th place)

Property tax = 1.28 percent (34th place)

The 5 Worst States

New Jersey

Income tax = 8.97 percent (45th place)

Sales tax = 7 percent (tied for 45th place)

Property tax = 1.89 percent (50th place)

California

Income tax = 13.3 percent (50th place)

Sales tax = 7.5 percent (50th place)

Property tax = 0.74 percent (tied for 17th place)

Wisconsin

Income tax= 7.65 percent (41st place)

Sales tax = 5 percent (tied for 19th place)

Property tax = 1.76 percent (47th place)

Connecticut

Income tax = 6.7 percent (35th place)

Sales tax = 6.35 percent (39th place)

Property tax = 1.63 percent (44th place)

New York

Income tax = 8.82 percent (43rd place)

Sales tax = 4 percent (tied for 7th place)

Property tax = 1.23 percent (33rd place)

As you can see, no state is perfect when it comes to its tax burden. Because states need to raise revenue, even the best states have one weak category. For example, Alaska is great for income and sales taxes, but has a relatively high property tax rate.

The best state for you depends on your situation. For example, if you plan on buying an expensive property, a low property tax rate may be a bigger priority for your search. But if you’re concerned about the amount you take home in each paycheck, you’ll probably focus more on income taxes. Just make sure to always look at the full tax burden whenever you compare states so that you’ll get the complete picture.

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I am a professional freelance writer from the United States that specializes in making insurance, investing, and retirement planning understandable. Having worked as a financial adviser, I add a layer of expertise to my writing that is simply impossible for someone without a financial background. During my career, I have worked with clients in nearly every financial field. Please see my website for writing samples, client reviews, and other information: www.davidrodeck.com