State Tax Burden

lowest-to-highest-state-tax-burden-even-weighting

One way to look at State tax burden when comparing one state with another, is to use the same weighting factor (or value, or importance) for each category (sales tax, income tax, property tax). If you value each category the same, that is, sales tax is just as important to you as income tax which is just as important as property tax, the results are as follows.

Using the data from an earlier post, Lowest to Highest Taxes by State, each tax category was individually ranked from lowest to highest for each state (sales tax, income tax, and property tax).

The data was ‘normalized’, meaning that the values were processed in a way that makes it possible to be compared against other values (apples to apples).

Then, in this example, the tax category ‘normalized’ values were added together for each state, and then sorted from lowest to highest.


State Tax Burden (sales, income, property)

The same weight is applied to each category
lowest to highest (best to worst, most favorable to least favorable)

1 Wyoming
2 Florida
3 South Dakota
4 Delaware
5 West Virginia
6 Nevada
7 Kentucky
8 New Hampshire
9 Arkansas
10 Michigan
11 New Mexico
12 North Dakota
13 Colorado
14 Alaska
15 Tennessee
16 Indiana
17 Pennsylvania
18 Ohio
19 Hawaii
20 Texas
21 Montana
22 Oklahoma
23 Mississippi
24 Utah
25 Louisiana
26 Alabama
27 Idaho
28 Georgia
29 Virginia
30 Arizona
31 Maryland
32 Maine
33 Washington
34 North Carolina
35 South Carolina
36 Massachusetts
37 Oregon
38 Connecticut
39 Wisconsin
40 D.C.
41 Missouri
42 Iowa
43 Nebraska
44 Kansas
45 New Jersey
46 Minnesota
47 Rhode Island
48 Illinois
49 Vermont
50 New York
51 California



lowest-to-highest-state-tax-burden

Another way to look at the tax burden data is to apply more importance to certain categories in order to better represent your own concerns. In the following example, the most weight (or importance) has been applied to property tax (it never goes away – even after retirement), followed by income tax, followed by sales tax.

The specific weighting factors chosen are,
property tax (4x)
income tax (3x)
sales tax (2x)

This particular weighting is designed to better represent an example where someone is researching a move, and will be earning income that fits more-or-less the average U.S. worker -roughly $60K (state income tax rates were mostly the same between $50K – $100K), and someone who will be purchasing a home with the likelihood of retiring there and is concerned about property taxes (which will never go away – even after retirement).


State Tax Burden (sales-income-property)

Category weighting is applied as described above.
lowest to highest (best to worst, most favorable to least favorable)

1 Wyoming
2 Florida
3 West Virginia
4 Tennessee
5 Delaware
6 New Mexico
7 Nevada
8 Arkansas
9 South Dakota
10 Kentucky
11 Indiana
12 Alabama
13 Mississippi
14 Louisiana
15 Oklahoma
16 Colorado
17 Arizona
18 Michigan
19 Ohio
20 Utah
21 Hawaii
22 Pennsylvania
23 Texas
24 Alaska
25 North Dakota
26 Georgia
27 Montana
28 South Carolina
29 New Hampshire
30 Idaho
31 Washington
32 North Carolina
33 Maine
34 Virginia
35 Maryland
36 Missouri
37 Oregon
38 Kansas
39 Massachusetts
40 Iowa
41 D.C.
42 Connecticut
43 Wisconsin
44 Illinois
45 Nebraska
46 Minnesota
47 New Jersey
48 Rhode Island
49 Vermont
50 New York
51 California



In addition, it may be helpful to know a little more about State money management and State fiscal responsibility. The following is a list of State budget deficit shortfalls projected for FY 2011 and 2012.

Data acquired from cbpp.org

States with the worst budget deficit 2011

(shortfall as percentage of budget)

Nevada (55%)
Illinois (40%)
New Jersey (38%)
Arizona (37%)
Maine (35%)
North Carolina (31%)
Vermont (31%)
Connecticut (29%)
New Hampshire (27%)
South Carolina (26%)


States with the worst budget deficit forecast 2012

(shortfall as percentage of budget)

Nevada (45%)
Illinois (45%)
New Jersey (37%)
Texas (32%)
California (29%)
Minnesota (25%)
Oregon (25%)
Louisiana (22%)
Connecticut (21%)
North Carolina (20%)



Now that we know who the worst State budget offenders are, let’s see which states do better with their fiscal management and have the smallest budget deficit, if any.

States with the least budget deficit 2011

Alaska (no deficit)
Alabama (no deficit)
Arkansas (no deficit)
North Dakota (no deficit)
Wyoming (no deficit)
Indiana (2%)
Montana (4%)
West Virginia (4%)
Iowa (6%)
Massachusetts (6%)

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21 Comments

  1. There is an alternative way to look at this data. If you are a single mother or otherwise simply want to live on the dole then you choose a state on the far right of your chart. Obviously the total tax “take” is redistributed to the lazy indolent freeloaders.

  2. The figures concerning Alaska are just not correct; as a resident, I know. First of all, the state has no state sales tax, but does allow local governments to impose limited sales taxes. Only the smallest towns typically impose the maximum rate. Anchorage, the largest city, has 0%…a car with a $30,000 sticker price costs….$30,000. Also, it is possible to live in certain areas of Alaska without paying ANY property tax on your home, as property taxes are imposed by borough or municipal governments only. Finally, your calculation does not take into account the annual disbursement of the Permanent Fund Dividend to every man, woman and child by the state. The PFD is a dividend paid out from the oil tax trust fund. Last year, a family of four got $5200 ($1300 x4) in October, subject only to federal income tax. The PFD will usually easily offset the cost of local property taxes for most Alaskans, with money left over. The NET result (no sales tax for most residents, no income tax and the local property taxes offset by the PFD) places Alaska clearly in FIRST place when it comes to figuring out the state with the lowest tax burden, with many residents actually MAKING money when you add it all up. No other state even comes close.

    1. So Alaskan taxes are favorable. Before anyone decides to move there, though, he or she must consider the cost of living which includes a lot more than taxes. That may be high enough to offset the low tax rates.

  3. In olden days comparing sales, income and property taxes was a reasonable way to determine the tax burden in a state. However states realize that raising these taxes creates a big uproar so many have taken to raising their income by imposing other taxes and increasing “fees”. It becomes nearly impossible to calculate how much the state is taking from you because of this. Where I live they imposed a new “flush” tax (which is getting ready to be doubled), they tax every bottle (water, soda, etc.)(this is not a deposit – there is no way to get it back), they have an added tax on snacks, cigarette tax, alcohol tax, driver’s registration and tags have doubled, fuel tax may double, tolls have been raised and the doubling of these is scheduled to phase in, licensing fees for game machines went from $150 to $1000 per machine per year… the list goes on and on and on and on…. You can see how difficult it becomes to calculate your true tax burden and why citizens and businesses are collapsing under the weight of these taxes.

      1. As do my family and I. That’s actually what led me to this article — with the latest round of tax hikes, we’ve had more than enough and are searching for a less oppressive place to live. We’re sick of working to support all the freeloaders here — time to vote with our feet and get out of this commie rat hole.

    1. No one actually mentions first hand where they are. I am in New Jersey. Have a home (assessed 2014) at 144,000. MY taxes are $2500 year. And I am now on Social Security.

      Came here to take care of Mom who had a pension and SS. She passed away, and I have to sell to move somewhere less expensive. So I’m struggling, and had to resort to getting help from the County for Oil/Elec.

      I’ve heard this is happening to a lot of folks, they are being taxed ridiculously. I do not live extravagant. And my thoughts are to go to North or South Carolina. And I will work, if I can find a job.

      NJ area is mostly resort near where I live(southern end) and at my age, who would hire me now?

      Just saying…that’s what is happening in NJ.

      1. @Juliana, Taxes are crushing America due to the extraordinary and out-of-control spending, and unfortunately I believe it will only get worse from here.

        Having said that, your current property tax burden of $2500 is what it is, and the only way you will be able to change that is to either…

        1. Sell the house, and find an apartment – arguably not much or any better because you will still be effectively paying property tax which is built into your rent. Although if you can sell, and assuming that you will make a profit, then it will put money in your pocket for now.

        2. Sell the house, and move to another location with lower property taxes and living expenses (which involves finding work and all the difficulties that go along with a major move).

        3. Stay where you are and somehow find a way to trim your budget and/or increase your take-home income. Your taxes are a little more than $200/mo., which is about $7/day. Perhaps changing a few spending habits might be able to come up with that $7 – although only you know your own situation.

        …my 2-cents.

        1. Good points in all cases.

          So far, I live on $740/mo (SS) and was doing okay until my car got totaled (it was sitting in front of this house)…and I was forced to get a ‘used’ car…which also had a car note attached. So slowly, my usable income dwindled. Up until that point, I had a car that was going on 11 years, 158,000 miles and doing pretty decent ( It was a Honda Element).

          Even if I hold out until I’m 65, I do not get the Homestead credit until then. I grow my own veggies during the summer, I may go out once a month to eat with friends. Actually, I don’t do much extra. And I’m selling my mother’s belongings on ETSY, so that brings in a little each month.

          The truth is – Further down the road, when my arthritis gets worse (I’m on painkillers daily)…I don’t see how I could manage this when I can’t even work on anything. So far, I can pick up odd jobs.

          Bottom line is, NJ ranks one of the highest Taxed properties in the country – and I don’t see it getting better. I was considering moving closer to my brother – but he’s not up for company. He is a good brother, but I think he’s in denial about the fact that we are getting older and may need to rely upon each other as we age. I SEE it coming – he doesn’t.

          So, I’m being realistic and know I have to plan some kind of future for myself. Thus far, I’ve taken care of both parents, at one time or another. MY husband took off 4 years ago, and left me – He likes being taken Care of, but not the responsibility of marriage. I know why his first wife left him “now”.

          I wouldn’t get an apartment in this area – they are high in compared to some places I’ve lived. And Cape May County has the highest unemployment rate in the state. Work is seasonal, at best. Truth is, I only came here to take care of my Mom, she had Alzheimers – and passed away Sept. 2014. So, I anticipated living here longer, but her unfortunate demise came sooner than expected.

          Just saying more than necessary on this story – and starting over at 62 is not ideal…but I’m sure it is doable. I’m not dead yet. haha

          As far as cutting corners…I think I’ve done the best I can – but no room for error, car repairs, or home repairs. I’ve been living on lots of Prayers and hand outs from my Brother. But I don’t want to ride that horse to death. I just guess this is my best move, is to move.

          Thanks for sharing your thoughts. (And there’s always the Hope, I could get married again) I’m still a pretty woman. But I’m not so sure I want to do that either! LOL

  4. So glad to see that other Marylander’s feel the same way I do. My husband and I are doing everything in our power to get the hell out of Maryland ASAP, a middle class family can just never get ahead here. My main hope is that people see through Martin O’Malley’s bs when he tries to run for President in 2016.

  5. lived in md. 64 yrs.md. is not a place for the average retiree.researched north and south carolina.no,i mean no st. tax on ssi. adjusted gross income on pension is reduced.prop.tax”s are unbelievable,more so with homestead act.so many homes to choose from in all areas.having a hard time choosing which home i want.can”t wait.

  6. ALl you people need to remember which way to vote after you move to your free state. Otherwise youre just spreading the disease.

  7. Don’t move to Virginia! Not only do we have income tax, but we also have “personal property tax”. This runs me about $500 every 6 months for having a 2006 Saturn, 2001 (retail 10K) small RV, 2009 motorcycle trailer and a 2013 (worth about 13K) Harley. Even though my retired income is too low for federal income tax, I still pay income tax to the state of VA every year. No, I do not get food stamps or any government aid. My pretax income is $21,600. As soon as I graduate college May 2015, I am out of here! I was looking a relocating back to Oregon or Washington but I may go back to Florida instead…I just wish there was a chart that included ALL the taxes!

  8. No income tax if you can live on a retirement under 60K, house plus 8 acres property taxes $375 a year, car license plates $20 for two years but insurance one of the highest in country (1,000 a year for liability on two cars, full coverage if bank owned car is a killer, home insurance $900-1000) and sales taxes bordering at 10% (4% state plus community taxes take to 8.75 in shreveport to 9.5% other small communities, even small towns with 500 people have a 5% sales tax. Arkansas/Mississippi/Texas sales tax bad juju, even though there are three tax free times per year in the cajun state. March/May for hurricane supplies/August school supplies/September 2nd amendment supplies. Anything you really want is usually gone in two hours! Not a bad place if you live in the county with septic tank and no garbage pickup and you can open burn anything… But the Summer HEAT is unforgiving! AC here is a must, I just dont know how pioneers existed in this place!

  9. Summer Heat I must revise September – April are pretty good days but its the May-August that at times are punitive. Even got snow this year even if it was only half inch.

    1. @ Johny Walker

      Ken gets all the credit, he does a hell of a job keeping us all thinking and planning. AND having a little fun :-) :-)

      FYI, great Scotch, but I’m sure you have heard that a thousand times HAHAHA

      Welcome to the “nut-house” :-)

      NRP

  10. retired couple in Md. tired of HIGH property taxes ( nearly 5k for a 350K home :( ). Services are MENIAL, we get very little snow to remove, no parks or bike trails to enjoy….roads always in need of repair…WHY the high taxes? Am seriously thinking of N. C. Any thoughts to share? leaning towards Raleigh, Falls lake area. The only ” major” complaint I have about N.C. is MOST ( not all ) homes have ELECTRIC heat :(. ” mild” climate (?). maybe…but not THAT mild !! Who wants to wear a SWEATER in the house !!

    1. Robert,..
      I would be looking for something with more elevation… closer to the 800-900 ft level. ..since relatively close to ocean… For any location.I would make my self aware of any geological things going on in area… ie.. earthquakes, sink holes.hurricanes,and other weather events. also check out power plants and what fuel they run on..
      Heat a big issue.. availability of NG or Propane could mitigate having an all electric house with other modifications… Since you are used to cooler temps than those of us “down SOUF…” you may adjust well., backup heating,cooling, water options,cooking.. are always nice..and can save lives.
      Good searching.

    2. Hey Robert
      Are your main goals lower property taxes and/or more services? What is attractive to you about Raleigh, Falls lake area? I find your query interestin as I am in nc foothills.

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