Special Report

The States Taxing the Poor Most

5. Georgia
> Income tax on working-poor: $273/yr.
> Lowest taxable income: $15,900 (69% of poverty line)

> Poverty rate: 16.5% (11th highest)
> Median household income: $46,430 (21st lowest)

Georgia has among the highest rates of residents living below the poverty line in the country. It also has the fourth-lowest tax threshold in the county. Families making just 69% of the poverty line or more are taxed. For those low-income families, taxes are generally getting worse. The amount that a family of four living on the poverty line must pay in income tax has more than doubled since 1994, from $116 to $273.

Also Read: The Eight Countries Taxing Business the Most

4. Oregon
> Income tax on working-poor: $274/yr.
> Lowest taxable income: $20,200 (88% of poverty line)
> Poverty rate: 14.6% (18th highest)
> Median household income: $46,560 (22nd lowest)

A family of four in Oregon living at the poverty line pays the fourth-most taxes in the country at $274. For a family that size making 125% of the poverty line, the amount of tax owed jumps to $869 — the third most in the country. State lawmakers have considered extending tax breaks for low-income households in recent years, but significant action has not yet taken place.

3. Hawaii
> Income tax on working-poor: $331/yr.
> Lowest taxable income: $17,800 (77% of poverty line)
> Poverty rate: 10.0% (6th lowest)
> Median household income: $63,030 (5th highest)

Hawaii has a particularly low poverty rate of 10%. It also has one of the highest median household incomes in the country. The state continues to tax families at the poverty line at one of the highest rates in the country. However, the amount a family of four at the poverty line pays in income tax has decreased since 1994. That year, the amount was $406. Today, it is $331. The state also taxes families making 77% of the poverty line or more.

Also Read: The Most Unhealthy Counties in America

2. Illinois
> Income tax on working-poor: $509/yr.
> Lowest taxable income: $13,100 (57% of poverty line)
> Poverty rate: 13.1% (25th lowest)
> Median household income: $52,972 (17th highest)

Illinois taxes families of four making 57% of the poverty level. This means that a family earning $13,100 a year must pay income tax. Due to state fiscal issues, Illinois raised its flat income tax rate from 3% to 5% in 2011. This caused income taxes for a family of four at the poverty line to increase by $322. However, the state plans to fully implement tax credits for low-income families by 2013, which “will almost completely offset the impact of the income tax increase for poor families,” according to CBPP.

1. Alabama
> Income tax on working-poor: $548/yr.
> Lowest taxable income: $12,600 (55% of poverty line)
> Poverty rate: 17.4% (7th highest)
> Median household income: $40,474 (5th lowest)

Alabama is one of the country’s poorest states, and it taxes its poor residents’ incomes the most. The state has a poverty rate of 17.4%, which is among the nation’s highest. It also has the fifth-lowest median household income. A family of four at the poverty line must pay $548 in income taxes. This amount has consistently increased since 1994. Additionally, Alabama has the second-lowest tax threshold in the country. A single-parent family of three making $9,800 — or 55% of the group’s poverty level of $17,922 — remains subject to income tax.

Charles B. Stockdale