States With Highest and Lowest Taxes

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States With the Lowest Taxes:

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10. Mississippi
> Taxes paid as pct. of income: 8.6%
> Income per capita: $34,771 (the lowest)
> State income tax collections per capita: $596 (11th lowest)
> Property tax collections per capita: $916 (10th lowest)
> General sales tax collections per capita: $1,144 (7th highest)

Mississippi residents earn just $34,771 per capita annually, the least of any state. Like other states with low incomes, Mississippians face one of the lightest tax burdens nationwide. Taxpayers in the state pay roughly $8.60 of every $100 to state and local governments, 10th most of all states. Compared with other states, sales taxes make up a relatively large share of taxes collected in Mississippi. Although Mississippi’s gasoline and cigarette excise tax rates are among the lowest in the nation, state and local governments collected $783 per capita in excise taxes in fiscal 2014, the fifth most of any state.

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9. South Carolina
> Taxes paid as pct. of income: 8.4%
> Income per capita: $38,302 (6th lowest)
> State income tax collections per capita: $764 (16th lowest)
> Property tax collections per capita: $1,080 (19th lowest)
> General sales tax collections per capita: $729 (19th lowest)

South Carolina is one of the poorest states in the country, and the average tax payment amounts to roughly 8.4% of the state’s income per capita — less than the 9.9% national average tax burden. One reason for the light tax burden is the state’s corporate-friendly tax code. South Carolina is one of six states where the corporate income tax rate at the highest income bracket is at or below 5%. The state collected just $68 per capita in corporate taxes in 2014, less than half the $171 national average.

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8. Nevada
> Taxes paid as pct. of income: 8.1%
> Income per capita: $41,889 (14th lowest)
> State income tax collections per capita: $0 (tied–7th lowest)
> Property tax collections per capita: $953 (13th lowest)
> General sales tax collections per capita: $1,412 (4th highest)

Nevada is one of seven states that collect no individual income tax. Nevada’s economy is heavily dependent on its gambling and tourism industries, which means a relatively large share of taxes collected by Nevada state and local governments comes from non-residents. Sales taxes accounted for 38.1% of total tax revenues in fiscal 2014, and other specialty taxes — such as fees on car rentals, live entertainment, and hotels and lodging — accounted for 37.3% of tax revenue, each among the largest such shares nationwide.

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7. New Hampshire
> Taxes paid as pct. of income: 7.9%
> Income per capita: $55,905 (9th highest)
> State income tax collections per capita: $72 (9th lowest)
> Property tax collections per capita: $2,861 (2nd highest)
> General sales tax collections per capita: $0 (tied–5th lowest)

New Hampshire is one of five states that do not levy a statewide sales tax. In the absence of a sales tax, 66.1% of New Hampshire’s total tax revenue came from property taxes in fiscal 2014 and 9.4% of revenue came from corporate income taxes — each the largest such shares of any state.

New Hampshire recently implemented a tax trigger based on a certain revenue benchmark that if reached will automatically implement changes in the state’s tax policy. For example, if New Hampshire’s education and general funds exceed $4.6 billion by June 2017, the corporate tax rate will fall from 8.2% to 7.9%. Only four other states and D.C. currently have such tax mechanisms.

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6. Louisiana<
> Taxes paid as pct. of income: 7.6%
> Income per capita: $42,947 (20th lowest)
> State income tax collections per capita: $639 (12th lowest)
> Property tax collections per capita: $839 (8th lowest)
> General sales tax collections per capita: $627 (12th lowest)

Due to high local sales tax rates in Louisiana, the state’s combined sales tax rate of 10% is the highest in the country. Louisiana collected $1,491 per capita in sales taxes in fiscal 2014, the fifth most of any state. Income and property tax collections, however, were among the lowest in the country. The average Louisiana homeowner pays just 0.5% of their home value in property taxes, the third lowest effective property tax rate nationwide. Overall, just $7.60 in every $100 earned in Louisiana goes to state and local governments, one of the lightest tax burdens of any state.