Special Report
American Cities With the Highest (and Lowest) Taxes
February 25, 2013 6:21 am
Last Updated: April 27, 2020 3:46 pm
5. Jacksonville, Fla.
> Taxes for family earning $25,000: $2,956 (26th lowest)
> Taxes for family earning $150,000: $6,429 (4th lowest)
> Unemployment rate: 7.7% (21st highest)
As residents of Florida, individuals and families living in Jacksonville pay neither a state nor local income tax. Partly because of this, the tax burden for wealthier families remained low in 2011. A typical family of three with two sources of income, earning $150,000 per year, would have paid 4.3% of its income on state and local taxes — less than all but four other cities. However, a family earning just $25,000 per year would have had to pay 11.8% of its annual income in taxes. Florida’s 6% sales tax accounts for the majority of the state’s tax revenue.
4. Fargo, N.D.
> Taxes for family earning $25,000: $2,228 (2nd lowest)
> Taxes for family earning $150,000: $7,908 (10th lowest)
> Unemployment rate: 3.2% (the lowest)
Fargo has a very low tax burden compared to most large cities, especially for families who make little money. For a family of three making just $25,000, the tax burden was just $2,280 in 2011, the second lowest of all cities. Although both the city and the state do not collect as much in total tax revenue from households, the 3.2% unemployment rate means that more people are likely to own homes, spend more money when shopping, and purchase cars, driving up tax payments in those categories. In addition, North Dakota collects revenue through various oil and gas taxes, such as the oil gross production tax, the gas gross production tax and the oil extraction tax.
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3. Houston, Tex.
> Taxes for family earning $25,000: $2,709 (14th lowest)
> Taxes for family earning $150,000: $6,571 (6th lowest)
> Unemployment rate: 6.1% (17th lowest)
Houston is one of just eight cities in which a family of three earning $150,000 a year paid less than 5% of its annual income in taxes in 2011. One major reason is the absence of any state income or local income tax, which cost a similar family an average of $6,835 in the cities where income taxes are levied. However, residents did pay one of the nation’s highest sales taxes, at 8.25%. This cost a family earning $150,000 in Houston almost $2,500 in sales taxes — higher than in two-thirds of cities surveyed. Additionally, the city had one of the nation’s highest property tax rates, at $2.53 per $100 of assessed property value.
2. Anchorage, Alaska
> Taxes for family earning $25,000: $2,236 (3rd lowest)
> Taxes for family earning $150,000: $5,095 (2nd lowest)
> Unemployment rate: 5.2% (tied for 10th lowest)
Anchorage has a tax rate lower than all but one major city in the United States. The low taxes are even better given that the city’s median household income of $72,813 in 2011 was higher than all other cities. Anchorage’s one weak spot is its property tax burden, which is generally among the top quarter of all cities measured. The city is just one of a handful where residents are not required to pay any sales taxes. In addition, the auto tax burden is among the lowest of all cities. This week, the Anchorage Chamber of Commerce will host a debate on the pros and cons of changing the state’s oil tax law.
1. Cheyenne, Wyo.
> Taxes for family earning $25,000: $2,424 (5th lowest)
> Taxes for family earning $150,000: $4,702 (2nd lowest)
> Median household income:
> Unemployment rate: 5.2% (tied for 10th lowest)
No city measured has a lower burden on families than Cheyenne. A family of three earning $25,000 would have had a 9.7% tax burden in 2011, the fifth lowest of all cities. The tax burden becomes even lighter as someone moves up the income ladder. A family of three earning $150,000 had a tax burden of just 3.1%, lower than any other city. For a family of three making $75,000 to $150,000, the city has the second lowest property tax burden behind Birmingham, Alabama.
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