Special Report
States With the Highest (and Lowest) Taxes
April 2, 2014 9:02 am
Last Updated: December 4, 2019 8:05 am
5. Wisconsin
> Taxes paid by residents as pct. of income: 11.0%
> Total state taxes collected: $16.0 billion (17th highest)
> Tax burden per capita: $4,477 (10th largest)
> Income per capita: $40,741 (25th highest)
Wisconsin’s income tax was the state’s largest source of tax revenue, accounting for more than 42% of the state’s total tax revenue. Governor Scott Walker has recently suggested overhauling the income tax system, but such reforms would not go into effect until 2015. Gas is currently taxed at nearly 31 cents a gallon in Wisconsin, among the highest rates nationwide. The high effective property tax rate in the state may also have contributed to the overall high tax burden in Wisconsin. Property values were taxed at 1.76% in 2012, more than all but three other states. The combination of such taxes meant residents faced the fifth-highest tax burden in the U.S. and also paid $3,387 — or 8.3% of their incomes — in Wisconsin state and local taxes.
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4. California
> Taxes paid by residents as pct. of income: 11.4%
> Total state taxes collected: $115.1 billion (the highest)
> Tax burden per capita: $5,136 (6th largest)
> Income per capita: $45,254 (15th highest)
California has the highest number of ultra-wealthy individuals — people with a net worth of at least $30 million — in the country. Individuals making $1 million or more per year paid 13.3% of their income in state income tax, the highest personal income tax rate in the nation. The state also levies the highest gasoline tax of any state, charging customers 52.5 cents per gallon. Even the state’s sales taxes were quite high, with the average combined state and local sales tax rate of 8.41%, the eighth highest in the nation. California also had one of the highest poverty rates in the nation that year and spent $69 billion on public welfare, by far the most of any state.
3. Connecticut
> Taxes paid by residents as pct. of income: 11.9%
> Total state taxes collected: $15.4 billion (19th highest)
> Tax burden per capita: $7,150 (the largest)
> Income per capita: $60,287 (the highest)
Connecticut had among the steepest property taxes in the country. Residents paid $2,577 per person on average in 2011, the second most in the country. A typical house in Connecticut cost $267,800 in 2012, among the nation’s highest home prices. Property values are likely tied to the high incomes among Connecticut’s wealthy residents. The average income in the state was more than $60,000 in 2011, the highest in the country. Also due to their high incomes, Connecticut residents paid more in state and local taxes — $7,150 per person — than people in any other state. Of this, they paid an average of $4,885 to Connecticut governments. Residents also paid $2,264 per person in taxes to other states, such as neighboring New York, the most in the nation. Residents also had to pay at the pump. State taxes on gas totaled nearly 50 cents a gallon this year, more than in any other state, except California and New York.
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2. New Jersey
> Taxes paid by residents as pct. of income: 12.3%
> Total state taxes collected: $27.5 billion (7th highest)
> Tax burden per capita: $6,675 (2nd largest)
> Income per capita: $54,422 (2nd highest)
New Jersey had the highest effective property tax rate in the country, as well as the second-highest state sales tax. One of the factors that may have contributed to the higher taxes was the state’s considerable debt burden of $7,328 per capita, the fifth highest in the U.S. Families living in the state, however, may benefit from the high property taxes as they are often used to fund public school systems. Indeed, the American Legislative Exchange Council ranked New Jersey third in the nation for the quality of its public education in 2012. In addition to the state’s high property and income taxes, New Jersey residents paid an average of $2,000 per person in taxes to other states, such as neighboring New York and Pennsylvania.
1. New York
> Taxes paid by residents as pct. of income: 12.6%
> Total state taxes collected: $71.5 billion (2nd highest)
> Tax burden per capita: $6,622 (3rd largest)
> Income per capita: $52,417 (5th highest)
New York residents faced the nation’s highest state and local tax burden in fiscal 2011. Overall, 12.6% of residents’ income, or $6,622 per person, went to either state or local taxes that year, with the bulk of payments going to the state of New York or its local governments. The state collected about $71.5 billion in taxes in fiscal 2012. More than half of that came from individual income taxes, which contributed $38.8 billion to the state’s coffers. Helping to boost these collections, the state charged residents an individual income tax rate of 6.85% if they earned more than $205,850 a year, and a rate of 8.82% if they earned more than $1,029,250 a year. New York is one of just two states that has a “tax benefit recapture” provision, which requires residents to pay the tax rate from their highest bracket on all their income, rather than on income earned above the bracket’s threshold.
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