States Where People Pay The Most (And Least) In Taxes

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5. Wyoming
> Taxes paid by residents as pct. of income: 7.8%
> Total state and local taxes collected: $9.3 billion
> Pct. of total taxes paid by residents: 29.9%
> Pct. of total taxes paid by non-residents: 70.1%

Besides Alaska, Wyoming has the greatest percentage of its state revenue paid for by non-residents. This is because of taxes on oil and coal that bring money in from out-of-state oil and mineral companies. These taxes account for such a large percentage of Wyoming’s revenue that the state does without a corporate income tax. The state also has no individual income taxes. Wyoming has an average state and local sales tax rate of 5.38%, one of the lowest in the country.

4. Tennessee
> Taxes paid by residents as pct. of income: 7.6%
> Total state and local taxes collected: $48 billion
> Pct. of total taxes paid by residents: 63.7%
> Pct. of total taxes paid by non-residents: 36.3%

Tennessee has the eleventh lowest per capita income in the country. Residents of the state pay just $1,851 in taxes, the second lowest amount in the U.S. The state’s business climate is average, but other taxes are relatively low. The sales tax of 7% is one of the highest in the country, but food purchases are only taxed 5.5%. Dividend and interest income is taxed in the state at a rate of 6%, but there is no other personal income tax levied. Tennessee collects no state-level property tax, one of just a few to do so.

3. South Dakota
> Taxes paid by residents as pct. of income: 7.6%
> Total state and local taxes collected: $5.2 billion
> Pct. of total taxes paid by residents: 56%
> Pct. of total taxes paid by non-residents: 44%

Since 1977, South Dakota’s tax burden has dropped from 9.1% to 7.6%, causing the state to change from the 15th least burdened state to the third least burdened. The state has no corporate or individual income tax. It is easier for South Dakota to keep a low tax burden than many other states, however. According to the most recent data available from the Tax Foundation, South Dakota receives $1.53 back for every dollar collected in federal taxes, lessening the state’s dependence on state and local revenue.

2. Nevada
> Taxes paid by residents as pct. of income: 7.5%
> Total state and local taxes collected: $20 billion
> Pct. of total taxes paid by residents: 52.5%
> Pct. of total taxes paid by non-residents: 47.5%

Nevada has the second-lowest tax burden in the country, with residents paying just 7.5% of their income on state and local taxes. Nearly half of all state tax revenue comes from non-residents. According to the Tax Association’s State Business Tax Climate Index, Nevada has one of the most favorable environments for business, as it is one of the four states to levy no corporate tax at all. A significant amount of the state’s revenue comes from “sin taxes” on gambling, alcohol, and tobacco, most of which comes from tourists. Sales tax is above the national average, and the tax on gasoline is one of the highest in the country. Counties are also allowed to levy additional gas taxes on top of the state.

1. Alaska
> Taxes paid by residents as pct. of income: 6.3%
> Total state and local taxes collected: $18.8 billion
> Pct. of total taxes paid by residents: 20.5%
> Pct. of total taxes paid by non-residents: 79.5%

Alaskans have the lowest tax burden of any state in the country, paying just 6.3% of their income in state and local taxes. This is over one full percentage point lower than the state with the second smallest tax burden. According to the Tax Foundation, “Before the Trans-Alaska pipeline was finished in 1977, taxpayers in Alaska bore the second-highest tax burden in the country. By 1980, with oil tax revenue pouring in, Alaska repealed its personal income tax and started sending out checks instead. The tax burden plummeted, and now Alaskans are the least taxed.” The state also levies no personal income tax or sales tax.

Charles B. Stockdale, Michael B. Sauter, Douglas A. McIntyre