1. TurboTax /
  2. Tax Calculators & Tips /
  3. Tax Tips Guides & Videos /
  4. Fun Facts /
  5. States with the Highest and Lowest Taxes

States with the Highest and Lowest Taxes

Updated for Tax Year 2017


OVERVIEW

Where you live can help or hinder your ability to make ends meet. A myriad of taxes—property, license, state and local sales, property, inheritance, estate and excise taxes on gasoline—eat away at your disposable income. Weighing the tax landscape against your financial picture lets you stretch your dollars.


House on the water with a long dock and a couple holding hands in the distance

"Location, location, location" applies to more than housing. Where you live can help or hinder your ability to make ends meet.

"It depends on demographics and individual circumstances," says Walter Molony of the National Association of Realtors. "For those relocating for a job, the job is the deciding factor. However, taxes would possibly have some influence on your choice when you're retiring."

A myriad of taxes—property, license, state and local sales, property, inheritance, estate and excise taxes on gasoline—eat away at your disposable income. Weighing the tax landscape against your financial picture lets you stretch your dollars.

Personal income tax top 10

The biggest tax ticket citizens face after paying the Internal Revenue Service is the one their state presents. Forty-one states and the District of Columbia levy a personal income tax.

A comparison of 2017 tax rates compiled by the Federation of Tax Administrators ranks California as the top taxer with a 12.3 percent rate, unless you make more than $1 million and have to pay 13.3 percent.

Each of these states has a personal income tax floor, deductions, exemptions, credits and varying definitions of taxable income that determine what a citizen actually pays. The 10 highest income tax states on the FTA's 2016 list were:

  • California 13.3%
  • Oregon 9.9%
  • Minnesota 9.85%
  • Iowa 8.98%
  • New Jersey 8.97%
  • Vermont 8.95%
  • District of Columbia 8.95%
  • New York 8.82%
  • Hawaii 8.25%
  • Wisconsin 7.65%

Ten states with the lowest personal income tax rates

Only seven states have no personal income tax:

  • Wyoming
  • Washington
  • Texas
  • South Dakota
  • Nevada
  • Florida
  • Alaska

Tennessee and New Hampshire limit their tax to interest and dividend income, not income from wages.

Among the states that tax income, Pennsylvania's 3.07 percent flat tax ranks the Keystone State as the tenth lowest in the nation for 2017.

Low personal income tax rates can be misleading; a lack of exemptions and deductions can raise the effective rate you pay. The Retirement Living Information Center says figuring your total tax burden, including sales and property taxes, gives you a more accurate reading on affordability.

"If you're on a fixed income, property taxes become a factor," says the NAR's Molony.

Property taxes

Property tax falls under local, not state, jurisdiction. The most expensive property tax counties in terms of percent of income, according to the Tax Foundation's analysis of the U.S. Census Bureau's 2009 American Community Survey were:

  • Passaic County, New Jersey 8.79%
  • Essex County, New Jersey 8.27%
  • Union County, New Jersey 8.13%

These Louisiana parishes hold the least expensive spots for property tax as a percent of income:

  • Grant Parish 0.26%
  • Assumption Parish 0.26%
  • Vernon Parish 0.25%

Sales tax takers and leavers

If you're a consumer, you'll want to consider that all but five states—Oregon, New Hampshire, Montana, Delaware and Alaska—rely on sales tax for revenue. Of these, Alaska also has no income tax, thanks to the severance tax it levies on oil and natural gas production. However, 37 states, including sales-tax-free Alaska and Montana, allow local municipalities to impose a sales tax, which can add up.

Lake Providence, Louisiana has the distinction of most expensive sales tax city in the country in 2017: a 12 percent combined state and city rate.

The top five highest total sales tax states as ranked by the Tax Foundation for 2017 were (combination of state and average local sales tax):

  • Louisiana 9.98%
  • Tennessee 9.46%
  • Arkansas 9.30%
  • Alabama 9.01%
  • Washington 8.92%

Residents of these states pay the least in sales taxes overall:

  • Alaska 1.78%
  • Oregon 0%
  • Delaware 0%
  • Montana 0%
  • New Hampshire 0%

Combined sales and income tax leaders

The Tax Foundation interprets individual tax burden by what taxpayers actually spend in local and state taxes, rather than report these expenses from the state revenue perspective used by the Census Bureau. Its State and Local Tax Burden Rankings study reported that Americans paid an average rate of 9.9 percent in state and local taxes in 2012. According to the foundation, the five highest state-local tax states were:

  • New York 12.7 %
  • Connecticut 12.6%
  • New Jersey 12.2%
  • Illinois 11.0%
  • California and Wisconsin 11.0%

The same states have ranked as the top three consistently since 2005, according to the foundation. "Lots of people want to relocate for lifestyle issues," says Molony. "Some seek a nicer climate. If all things are equal between climate choices, the tax situation becomes an area worth exploring."

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $59.99$39.99*
Start for Free

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • TURBOTAX ONLINE/MOBILE

  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Absolute Zero $0 federal (forms 1040EZ/1040A) + $0 state limited time offer only available with TurboTax Free Edition; offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase. Special discount offers may not be valid for mobile in-app purchases.
  • QuickBooks Self-Employed Offer with TurboTax Self-Employed: To receive your complimentary subscription to QuickBooks Self-Employed through 4/30/19, you must pay for your 2017 TurboTax Self-Employed return by 4/17/18 and sign-in and access your QuickBooks Self-Employed account via mobile app or at https://selfemployed.intuit.com/turbotax at least twice by 7/15/18. You will have the option of renewing your QuickBooks Self-Employed subscription by 4/30/19 for another year at the then-current subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section. See QuickBooks.com for price comparison. Offer not valid for existing QuickBooks Self-Employed subscribers already on a payment plan.
  • Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15%) for tax year 2017. Actual results will vary based on your tax situation.
  • Anytime, anywhere: Internet access required; standard data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Help and Support: Access to a TurboTax specialist is included with TurboTax Deluxe, Premier, Self-Employed and TurboTax Live; not included with Free Edition (but is available as an upgrade). TurboTax specialists are available to provide general customer help and support using the TurboTax product. SmartLook on-screen help is available on a PC, laptop or the TurboTax mobile app. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Advice, Expert Review and TurboTax Live: Access to tax advice and Expert Review (the ability to have a Tax Expert review and/or sign your tax return) is included with TurboTax Live or as an upgrade from another version, and available through October 15, 2018. These services are provided only by credentialed CPAs, EAs or tax attorneys. State tax advice is free. Some tax topics or situations may not be included as part of this service, which shall be determined in the tax expert's sole discretion. In the event your return is reviewed by a tax expert and requires a significant level of tax advice or actual preparation, the tax expert may be required to sign your return as the preparer at which point they will assume primary responsibility for the preparation of your return. Expert Review [and TurboTax Live] not available on the TurboTax mobile app or when using a web browser on your mobile phone. On-screen help is available on a PC, laptop or the TurboTax mobile app. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Return Access and My Docs features: Included with TurboTax Deluxe, Premier, Self-Employed, TurboTax Live or with PLUS benefits. Access to all tax-related documents we have on file for you is available through 10/31/2019. Terms and conditions may vary and are subject to change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2016 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • #1 rated online tax prep provider: Based on independent comparison of the best online tax software by TopTenReviews.com March 13, 2017.
  • Get tips based on your tax and credit data to help get you to where you want to be: Tax and credit data accessed upon your consent.
  • TURBOTAX CD/DOWNLOAD SOFTWARE

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice via phone is included with Premier and Home & Business; fees apply for Basic and Deluxe customers. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2016 TurboTax products.
  • Data Import: Imports financial data from participating companies; may require a free Intuit online account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2016 and higher) and QuickBooks Desktop (2012 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.