States With Highest and Lowest Taxes

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5. Texas
> Taxes paid as pct. of income: 7.6%
> Income per capita: $46,947 (24th highest)
> State income tax collections per capita: $0 (tied–7th lowest)
> Property tax collections per capita: $1,635 (14th highest)
> General sales tax collections per capita: $1,226 (6th highest)

Texas is one of only a few states with no personal income tax. Property owners shoulder the largest share of tax burden in the state. Property taxes account for 40.4% of all state and local taxes collected in the state, a larger share than in all but four other states.

Texas generates a significant portion of its revenue from its abundant natural resources. According to a report released by the Texas Oil and Gas Association, the oil and gas industry contributed $9.4 billion in taxes to local and state governments in 2016 alone.

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4. Tennessee
> Taxes paid as pct. of income: 7.3%
> Income per capita: $42,094 (16th lowest)
> State income tax collections per capita: $46 (8th lowest)
> Property tax collections per capita: $830 (7th lowest)
> General sales tax collections per capita: $992 (18th highest)

Despite Tennessee’s second highest statewide sales tax rate of 7.0%, the tax burden is still one of the lightest in the country because of low individual income and property tax rates. Tennessee is in the process of phasing out its individual income tax. The intent of the bill, enacted last year, reduces the tax rate by 1% annually and will be eliminated in 2021.

Tennessee is one of only three states with both a tax burden that is less than 10% and a pension fund that meets nearly all of its obligations. The Tennessee pension fund had 99% of the assets it needed to meet its obligations for the 2014 fiscal year.

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3. Wyoming
> Taxes paid as pct. of income: 7.1%
> Income per capita: $56,081 (6th highest)
> State income tax collections per capita: $0 (tied–7th lowest)
> Property tax collections per capita: $2,109 (9th highest)
> General sales tax collections per capita: $1,384 (5th highest)

Wyoming is one of many resource-rich states with a relatively low tax burden. However, recent dips in energy prices have led to decreased government revenue. Partially as a result, the two year budget passed in March 2016 cut funding to the vast majority of state agencies by 2%. This year, the state legislature passed House Bill 236, which if signed by Gov. Matt Mead, will cut public school funding by $34 million in the upcoming school year.

Wyoming taxpayers pay more taxes to other states than to their own state and local governments. It is the only state where this is the case.

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2. South Dakota
> Taxes paid as pct. of income: 7.1%
> Income per capita: $47,881 (21st highest)
> State income tax collections per capita: $0 (tied–7th lowest)
> Property tax collections per capita: $1,301 (24th lowest)
> General sales tax collections per capita: $1,131 (9th highest)

South Dakota is one of only two states that do not levy either corporate or individual income taxes. While the state’s 4.5% general sales tax rate is nearly the lowest in the country, sales tax revenue accounted for 40.4% of the state’s total tax collection in fiscal 2014 — the third largest share nationwide. South Dakota residents are relatively wealthy, and taxes amount to just 7.1% of income on average, the second lowest tax burden of any state.

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1. Alaska
> Taxes paid as pct. of income: 6.5%
> Income per capita: $56,147 (5th highest)
> State income tax collections per capita: $0 (tied–7th lowest)
> Property tax collections per capita: $2,639 (4th highest)
> General sales tax collections per capita: $0 (tied–5th lowest)

Other than North Dakota, Alaska is the only state where a majority of tax revenue comes from sources other than property, sales, individual income, or corporate taxes. Nevertheless, funds received by Alaskan state and local governments totalled $19,357 per capita in fiscal 2014, the most of any state nationwide. A bulk of Alaska’s tax revenue comes from severance taxes on the state’s oil industry, which frequently accounts for more than 70% of the annual budget. Lucrative oil extraction has allowed Alaska to provide each resident with an annual dividend from the Alaska Permanent Fund. Annual payouts from the fund exceeded $2,000 per resident in 2007 and 2015.