Tax Burden by State

Each April, Uncle Sam claims a portion of the previous year’s earnings. Because the tax code is so complex, it can be difficult for the average person to understand exactly how they’re affected. One helpful measure that simplifies things is the “tax burden.” Unlike tax rates, which can differ significantly depending on an individual’s situation, tax burden looks at the share of total personal income that residents pay in state and local taxes. This burden isn’t the same across the United States.

To identify where residents face the highest tax burdens, WalletHub compared all 50 states by examining three major types of state tax burdens—property taxes, individual income taxes, and sales and excise taxes—and calculating their cost as a percentage of total personal income in each state.

Key Findings

• Hawaii has the highest overall tax burden, while Alaska has the lowest.
• Vermont has the highest property tax burden, while Alabama has the lowest.
• Oregon has the highest individual income tax burden, while seven states (including Texas, Florida and Nevada) have none.
• Hawaii has the highest sales and excise tax burden, while New Hampshire has the lowest.
• Red states have a lower tax burden than blue states, on average.

Main Findings

Overall Tax Burden by State

Note: *No. 1 = Highest

In-Depth Look at State Tax Burdens

Total Tax Burden

Hawaii has the highest total tax burden, with residents paying out over 13% of their income to state and local governments. That includes 3.2% on income taxes, 2.6% on property taxes, and 7.5% in sales and excise taxes.

Alaska has the lowest total tax burden, as its residents pay no income tax. They also pay out only 3.3% of their income in property taxes and 1.6% in sales and excise taxes, for a total of 4.9%.

Income Tax Burden

Oregon has the costliest state and local income taxes in the nation, at 4.8% of its residents’ income. On the other end of the spectrum, Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming do not charge any income tax. This makes them attractive states to move to.

Property Tax Burden

Vermont charges the most in property taxes, at 4.9% of residents’ income. All states have some sort of property tax, but Alabama’s is by far the lowest, at just 1.4%.

Sales and Excise Tax Burden

Residents of Hawaii pay out around 7.5% of their income in sales and excise taxes every year. New Hampshire residents have the lowest burden – the state does not charge a general sales tax, and other excise taxes only work out to less than 1% of the average resident’s income each year.

Blue States vs. Red States

The methodology can be found on the full version of the article on WalletHub.