The States Taxing the Poor Most

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10. West Virginia
> Income tax on working-poor: $151/yr.
> Lowest taxable income: $22,400 (97% of poverty line)
> Poverty rate: 17.6% (6th highest)
> Median household income: $38,218 (2nd lowest)

West Virginia is among the country’s poorest states. It has both the second-lowest median household income in the nation and the sixth-highest poverty rate. Despite this, the state’s tax code does not help poor families. A family of four living at the poverty line must pay $151 in income tax. West Virginia also taxes families of four making 125% of the federal poverty line at least $730 per year — among the largest amounts in the country.

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9. Ohio
> Income tax on working-poor: $162/yr.
> Lowest taxable income: $16,600 (72% of poverty line)
> Poverty rate: 14.8% (17th highest)
> Median household income: $45,090 (17th lowest)

Ohio is one of only five states in the country that taxes the income of two-parent families of four that make less than three-quarters of the poverty line. That is, families earning $16,637 a year or more are taxed. Additionally, Ohio is one of only a few states where a family of three in which the employed person works a full-time minimum job wage must pay income tax.

8. Indiana
> Income tax on working-poor: $205/yr.
> Lowest taxable income: $19,200 (83% of poverty line)
> Poverty rate: 14.2% (24th highest)
> Median household income: $44,613 (16th lowest)

Single-parent families of three who are at the poverty line receive tax credits in Indiana. Two-parent families of four at the poverty line, however, must pay $205 in income tax. If they make 125% of the federal poverty line, they must pay more than $500 per year — among the country’s highest amounts.

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7. Montana
> Income tax on working-poor: $240/yr.
> Lowest taxable income: $12,500 (54% of poverty line)
> Poverty rate: 14.6% (19th highest)
> Median household income: $42,666 (11th lowest)

Residents of Montana frequently have among the lowest incomes in the nation. The state’s median household income of $42,666 is significantly lower than the national amount of $50,046. A family of four at the poverty line has to pay $240 in taxes. That amount has increased significantly since 1994. Montana also has the lowest rate of income at which it will tax families. A two-parent family of four earning $12,500 a year, or almost half of the federal poverty line, is still subject to income tax.

6. Iowa
> Income tax on working-poor: $251/yr.
> Lowest taxable income: $19,300 (84% of poverty line)
> Poverty rate: 11.9% (14th lowest)
> Median household income: $47,961 (24th lowest)

Iowa is one of five states in which the tax on poverty-level incomes has increased faster than inflation since 1994, and one of only two in which that tax has increased from $0 that year. Iowa’s increase was also the largest in dollar amounts. The state senate in February approved a tax break for working families in Iowa earning $45,000 a year or less. If approved by Governor Terry Branstad, this tax break will aid many low-income residents.