Lowest to Highest Taxes by State
February 16, 2011, Submitted by: Ken Tweet
Have you wondered which U.S. State may be better to live in regarding taxes and tax burden? While we cannot escape taxes, we can make decisions which will minimize our overall State tax burden, depending on each of our own financial situations and objectives. In this article, we’re talking about property tax, income tax, and sales tax.
Let’s say you are ready to plan a move out of your area or State. Among the many things that you may consider in your selection process may be picking a tax friendlier area (if there is such a place).
As the current economy remains stagnant, or worsens, the debt burden of cities, counties, states, and the federal government are rapidly approaching a death-spiral of compounding debt. More are agreeing that inflation will become a bigger problem while the economy remains stagnant (stagflation). There is little doubt that taxes, including State taxes will be on the increase as governments look for more revenues.
OK, regarding the various categories of State taxes (income, sales, property), your personal situation may weight the effects of one more than the other. For example, if you are retired or soon to retire, the income tax of a given State may be less important to you than say, the property tax of the county or town since your income may be relatively low (retirement) but your property taxes will always be there and may (will) continue to rise.
Here are a few State tax statistics which may be interesting to you, sourced and compiled from a number of sources including RetirementLiving.com, Wikipedia, Census.gov/govs/statetax, State Government Tax Collections 2009, and the TaxFoundation.org.
State Sales Tax
State Tax Policy: A Political Perspective
Except for large or frequent expensive purchases, State sales tax may be of lesser impact to your overall tax burden or concern, when compared to property taxes and income taxes. For example, you would have to purchase more than $40,000 of taxable products taxed at a 7% sales tax to be equivalent to an annual $3,000 property tax bill.
Rates are rounded to the nearest 0.1 decimal. This sales tax list includes the base rate plus the maximum local surtax that may exist in that State (this surtax inclusion is typically only on certain goods and may slightly skew some State results – but I wanted to include a worst-case scenario). Your sales tax rates may be lower if living outside of the surtaxed area or not purchasing a surtaxed product. This should still provide a good general idea of where each state ranks.
List of State Sales Tax including any local surtax
Delaware (0%)
New Hampshire (0%)
Oregon (0%)
Montana (3%) general sales tax = 0%, a few surtaxes apply at 3%
Hawaii (4.7%)
Maine (5%)
North Dakota (5%)
Virginia (5%)
Wisconsin (5.6%)
Arkansas (6%)
Connecticut (6%)
D.C. (6.0%)
Idaho (6%)
Kentucky (6%)
Maryland (6%)
Michigan (6%)
South Dakota (6%)
West Virginia (6%)
Massachusetts (6.3%)
Alaska (7%)
Iowa (7%)
Nebraska (7%)
New Jersey (7%)
Rhode Island (7%)
Vermont (7%)
Wyoming (7%)
Florida (7.5%)
Ohio (7.8%)
Minnesota (7.8%)
Colorado (8.0%)
Georgia (8%)
Pennsylvania (8%)
Nevada (8.1%)
North Carolina (8.3%)
Texas (8.3%)
Utah (8.4%)
Oklahoma (8.5%)
New Mexico (8.6%)
Kansas (8.7%)
New York (8.9%)
Indiana (9%)
Louisiana (9%)
Mississippi (9%)
South Carolina (9%)
Missouri (9.2%)
Washington (9.5%)
Tennessee (9.8%)
Alabama (10%)
Arizona (10.6%)
California (10.8%)
Illinois (11.5%)
State Personal Income Tax
J.K. Lasser’s Your Income Tax 2012: For Preparing Your 2011 Tax Return
A total of 41 States impose income taxes. Some States base their income tax on federal returns, typically taking a percentage of your federally adjusted gross income.
States with No Income Tax
Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming
New Hampshire (except tax on income from interest and dividends)
Tennessee (except tax on income from interest and dividends)
State Income Tax rates based on $60,000 income
Unless you earn very little, or earn substantially more than $60K, the following State income tax rates probably fit most of the typical folks out there, and will give you an idea of where the states ranked in 2010. Rates are rounded to the nearest 0.1 decimal, and do not include any special deductions or exemptions that may exist.
State (income tax %)
Alaska (0%)
Florida (0%)
Nevada (0%)
New Hampshire (0%) except tax on income from interest and dividends
South Dakota (0%)
Tennessee (0%) except tax on income from interest and dividends
Texas (0%)
Washington (0%)
Wyoming (0% )
Illinois (3%)
Pennsylvania (3%)
Indiana (3.4%)
North Dakota (3.8%)
Michigan (4.4%)
Arizona (4.5%)
Colorado (4.6%)
Ohio (4.7%)
New Mexico (4.9%)
Alabama (5%)
Connecticut (5%)
Maryland (5%)
Mississippi (5%)
Utah (5%)
Massachusetts (5.3%)
Oklahoma (5.5%)
Kentucky (5.8%)
Virginia (5.8%)
Georgia (6%)
Louisiana (6% )
Missouri (6%)
New Jersey (6.4%)
Kansas (6.5%)
West Virginia (6.5% )
Wisconsin (6.8%)
Nebraska (6.8%)
Maine (6.9%)
Montana (6.9%)
Delaware (7%)
Arkansas (7% )
North Carolina (7%)
South Carolina (7%)
Rhode Island (7.8%)
Idaho (7.8%)
Minnesota ( 7.9%)
New York (7.9%)
Hawaii (8.3%)
Vermont (8.3%)
D.C. ( 8.5%)
Iowa (9%)
California (9.6%)
Oregon (10.8%)
State Property Tax
Are You Getting Screwed On Your Property Taxes?:
Taxes on land and the buildings built on it are the largest source of revenue for local governments. Property taxes are not imposed by the States, but by the tens of thousands of cities, townships, counties, school districts and other assessing jurisdictions.
You can’t escape property taxes in any state. But you can find significantly low rates in certain parts of the country.
Having sorted through a list of home property taxes, listed by median price per county, and then averaging the property taxes of all combined counties in each state, the following list of home property taxes by State should give you a general indication of costs. For finer detail, each individual county would need to be checked as property taxes can vary substantially based on region and the home’s assessed value itself.
Data from 2009
Home Property Tax average per State
State ($ avg. per home)
Louisiana ($404)
Alabama ($410)
West Virginia ($615)
Arkansas ($684)
South Carolina ($693)
Mississippi ($787)
New Mexico ($862)
Delaware ($950)
Oklahoma ($968)
Arizona ($986)
Tennessee ($1,041)
Hawaii ($1,047)
Kentucky ($1,059)
Wyoming ($1,084)
Indiana ($1,104)
North Carolina ($1,172)
Idaho ($1,213)
Utah ($1,305)
Georgia ($1,377)
Missouri ($1,443)
Colorado ($1,538)
Florida ($1,619)
Montana ($1,764)
Ohio ($1,834)
Nevada ($1,879)
Iowa ($1,934)
Kansas ($1,957)
Maine ($1,976)
Oregon ($2,045)
D.C. ( $2,057)
Michigan ($2,069)
South Dakota ($2,076)
Pennsylvania ($2,092)
Washington ($2,127)
Texas ($2,141)
Virginia ($2,230)
Minnesota ($2,340)
California ($2,631)
Maryland ($2,637)
North Dakota ($2,638)
Alaska ($2,796)
Nebraska ($2,829)
Wisconsin ($3,041)
Massachusetts ($3,255)
Illinois ($3,272)
Rhode Island ($3,731)
New York ($3,736)
Vermont ($4,168)
Connecticut ($4,437)
New Hampshire ($4,618)
New Jersey ($6,348)
There are many factors that go into one’s formula to decide the best place to retire, or the best place to move to, because we each have our own individual notions of what that is.
However, near the top of the list of factors or concerns should be property tax, income tax, and sales tax. Also, nearly just as important, do not forget to research the fiscal situation of the state, city, or town that you are contemplating moving to. There are many of these that are themselves on the verge of bankruptcy. They will be the first to raise your taxes.
More helpful state tax information to help decide which state you may wish to reside:
State Tax Burden
State Income Tax Comparison
Deduct It!: Lower Your Small Business Taxes
Home Business Tax Deductions: Keep What You Earn
Lower Your Taxes – Big Time! : Tax Reduction Secrets from an IRS Insider
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The trick is to live and work in a no income tax state right across the state line from a no sales tax state.
Can you tell me where that is????????You see I am planning to win the lottery real soon ….And of course I need to live tax free lol??????? No seriously WHERE COULD THAT BE????Thank You Joam
Another article that I wrote, http://modernsurvivalblog.com/retreat-living/state-tax-burden/ may help you answer that question.
It’s called Vancouver, Washington (Or anywhere else on the WA side of the OR-WA border
Live in Washington state near the border to Oregon. No state income tax in Washington state and no sales tax in Oregon. But you have to like rain!
Washington / Oregon
yes, like Washington and Oregon. Especially since the nice little city of Vancouver WA is right across the Columbia from Portland. I live in Nebraska and this so called conservative state taxes everything. Income tax, sales tax, property tax and licence fees. We are no where near the low end of any of them. Makes you wonder how they define conservative. My husband and I are trying to figure out where they spend the money since the state ranks 50th in support for public eduacation.
The last I heard, the Tax Freedom Day (the date which all the money you earn goes into YOUR pocket and not the tax man——-in America it is mid-April.
Here in Canada it is mid to late June.
Count your blessings.
Signed,
Tapped Out Canuck
But we in the US pay a lot more for health care, from what I understand.
Tax wise, Canadians are probably better off in the long run if health care is covered by taxes.
Sadie, there’s a difference between being ‘covered’by gov’t health care plan and recieving adequate treatment. The number of Canadians travelling to the North-Eastern USA for treatment indicates their ‘national health system is as screwed up as ours in Australia. You’re better off with low taxes and private health insurance, believe me.
Sadie,
I’ve lived in Canada for over 20 years pretty much in every province, and I can say this that the health care in Canada its in deep jeopardy. It wont be too long that it will go bankrupt expect maybe only two provinces British Colombia and Alberta. I can say that the system we have here in US its much better than Canada or even EU which I have also lived you can control your own expenses and make your own personal choices not the government. I hope this can help
You should recheck your sources. As a lifetime resident of the great state of Montana I can assure you that we do not have nor have we ever had a state sales tax. There are a few scattered high traffic tourist areas like the town of West Yellowstone with a local resort tax but this is only in the tourist shops even there. Knowing this I question the accuracy of the rest of the information presented here.
@George D, The state sales tax list includes maximum local surtax (as indicated in the header title of that section). Evidently there are some items that are taxed in Montana. However, for all intents and purposes, Montana has no general sales tax.
(I will edit and clarify the post to reflect this however – thanks for the heads-up)
@ George D, If you read this carefully you will see as you mention the Yellowstone area of Montana does have the afore mentioned 3% surtax and the state has now passed a 4% tax on camp grounds..http://revenue.mt.gov/default.mcpx
The property tax comparison is all but useless due to the complexity of each individual taxing entity. I live in Texas and know first hand that the figure given in this and all other articles on the subject does not give an accurate assessment of the property tax burden. It is based on the median home value which is very low in Texas except for the major metro areas. Unless you plan to be living in a trailer, better be prepared to pay through the (fill in the orifice of choice). Plus, the rate keeps going up and can be legally raised as much as 8% per year until 65, but there is no cap on the assessment. Not to mention the fact that it is so corruptly administered, nobody trusts any part of it.
@Don’t trust it, I wouildn’t say ‘don’t trust it’, but I would say the data gives a general indication when painting very broad brush strokes while discovering tax differences from State to State. The article clearly states that the property tax data is sourced from TaxFoundation.org, and is compiled from averaging the median property tax of each and all counties within the State. It is also clearly stated that property taxes can vary widely within each state due to it’s region and assessed home value.
Having said that, it’s common sense for most who understand even a little about real estate, that property taxes will vary. However, for most, it may also be common sense to know that generally speaking, property taxes in say, Arkansas, are going to be a heck of a lot less then say, New York State, generally speaking… (That was the point of the article… to provide a general notion from State to State)
Mississippi does NOT i repeat DOES NOT have a 9% sale tax it is 7%, trust me i should know just bought lunch in Meridian 4 hours ago from this post date, God the internet would be really great if it were not for all the mis-information !!!!!
@Assashii, The title of the sales tax list reads, “List of State Sales Tax including max local surtax” (emphasis on “including max local surtax”).
Sales tax often varies throughout a given state and also varies on product type. For example, where I live, the general sales tax is 0.5% different from the city only 10 miles away. Some states use an additional surtax on particular products – often things like cigarettes and liquor.
So, what I did was, list the state sales tax of each state (2010 data) and included the worst case scenario of local surtax.
So, in fact, my article is not misinformation. Unfortunately you just misread the heading of the list.
No doubt though that there is plenty of misinformation out there
In Mobile, Alabama one side of the city has 8.5% sales tax and when you cross the interstate it goes up to 10%. I think that’s crazy to have different sales tax for each side of town. The shopping malls are on the side of the 10% sales tax, LOL
I agree… the entire tax system is messed up. If there must be taxes, I’ve always preferred the idea of equal and flat taxes.
well if O’Malley get’s his way in Maryland we will have the highest taxes around!!!!
Maryland is out of control on taxes. The Gov. and all his democrates seem to be able to raise taxes with almost no opposition. The GOP is almost non-existant in Maryland. Do not move to Maryland. Its a bad place to live-and if you like shooting sports or firearms for self-protecting-MD is not the place to be.
Not all of Illinois sales tax is at 11.5% I live in Southern Illinois which is part of the state even if chicago doesn’t want us any more than we want them. Our county sales tax is 6.25% The City tax is 7.5%.
It sounds like the further from Chicago, the better
It is amazing the differences in taxes from county to county or city to city…
I would say this is good for general info. In New York the state says tax is 4 % and then counties add their own. Where I live it totals 8 %. Nearby counties pay more or less. It also depends on what is taxable. Groceries are not taxable, soap, pop, etc is taxable. Some clothing is taxable. Nearby in Pennsylvania clothing is not taxable. Some states everything is taxable. As for property taxes a $ 100,000 house in New York State would cost $ 250,000 in Virginia and cost $ 60,000 in Arkansas. Everyone must do a through self study on this, however I find this site a very good place to start. Thanks.
Thanks Chuck. Yes it is a highly complex set of data to dig into. There are so many ‘hidden’ taxes, and tax on top of tax, all of which is highly variable depending on lcation. It’s nearly impossible to get a handle on it. (I think ‘they’ like it this way)
ken…..keep up the great job you are doing…….i appreicate your hard work……..as you state…..it is info that each person has to some more digging…..but a good start
It’s Info like that, persuades people to keep returning to a fantastic resource like this site. Keep up the great work.
I live in Illinois and the local sales taxes on a $1.00 cup of McDonald’s coffee can range from $.07 up to $.12.
Can you believe that, paying $.12 to the Looters for a cup of coffee. Not to mention DunkinDonuts is twice the price and Starbucks is 3 times.
I do believe it… The government LOVES to tax things like that. After all, who can live without caffeine? They’ve got you… Just like taxing gasoline, etc. So many taxes. And we somehow have more than $15 Trillion of debt?!
@ Chris: This is why you should make your own coffee! Buy a travel mug. Add it up. How much money do you spend on buying coffee in one month? SAVE that money instead. Stay well and thrifty, Lauren
America as a nation disporpotionately dispense money into our communities.
If the government used tax dollars to supply the american people with a cheaper form of electricity,gas,and transportation we would have a more prosperous nation.We privatize some of the most important things in our culture and this privatization ultimately draws a gap between have and have nots,,,,,,,
Lets grow up as a nation…….
Thanks for putting this together, moved last year and it helps me decide where to claim most of my income last year.
The current income tax rate in IL is now 5%, not 3%…Politicos raised it last year and now people are moving out, inc. business.
Thanks for that data point Dave, I am hoping to update this entire article with a new one, once I can capture all of the most recent facts (which often lag a year behind). I have a feeling that we will all be experiencing more tax increases in our future as the politicians struggle to pay for their lavish spending of years gone by.
It may seem strange, but I think I’ll add this site/blog to my resources for retirement planning. While I do hope for the best, I realize that planning for the worst is the smart move. What money I do have for retirement, I will purchase a piece of land in a state with a low tax burden but has soil capable of a reasonable range of vegitables. Oh yeah, good hunting required (at least nearby). Putting the puzzle pieces together…
I’m not sure where each individual state information originated, but I see Alaska shows a 7% state sales tax. This is untrue, there is NO state sales tax in Alaska. It is also possible there is no property tax for Seniors, but since I haven’t reached that plateau as of yet, I haven’t checked further; have only heard that it’s true. But, I do know I pay NO sales tax where I live, 2.5% if I’m shopping in Palmer, and 3% in Wasilla, with both of those being city taxes, only.
@Sue Ann, you may not have read this paragraph which is immediately prior to the list, “This sales tax list includes the base rate plus the maximum local surtax that may exist in that State (this surtax inclusion is typically only on certain goods and may slightly skew some State results – but I wanted to include a worst-case scenario). Your sales tax rates may be lower if living outside of the surtaxed area or not purchasing a surtaxed product.”
In other words, the list includes any surtax (a unique tax on ‘some’ products, and in ‘some’ places) that may exist there. The next update that I make will not include this scenario because it has thrown a bit of confusion into the mix, which was not intended.
Well done on this compilation, it provides a great starting point where assessing where to retire to.