States With the Highest and Lowest Taxes

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States With the Lowest Taxes

Source: Urbanative / Wikimedia Commons

11. Oklahoma
> Taxes paid as pct. of income: 8.6%
> Income per capita: $42,692 (14th lowest)
> State income tax collections per capita: $764 (17th lowest)
> Property tax collections per capita: $678 (2nd lowest)
> General sales tax collections per capita: $630 (12th lowest)

Oklahoma has one of the lowest effective tax rates of any state in the country. Per-capita state and local tax revenue in Oklahoma total just $3,697, nearly $1,200 less than the average revenue across all states. Like many states where residents have a relatively small tax burden, state and local governments depend heavily on excise and other taxes apart from income or property tax. An estimated 23.5% of state government revenue comes from excise taxes, a far greater share than the 18.2% average across all states.

The low tax burden may have contributed to some budgetary problems. Recently, the state’s Republican-controlled legislature approved a tax increase to give public school teachers a pay raise and avoid a strike. Despite the measure, teachers across the state walked out in protest in early April. Currently, teachers in Oklahoma are among the lowest paid in the profession on average nationwide.

Source: Thinkstock

10. Mississippi
> Taxes paid as pct. of income: 8.6%
> Income per capita: $35,484 (the lowest)
> State income tax collections per capita: $603 (12th lowest)
> Property tax collections per capita: $972 (13th lowest)
> General sales tax collections per capita: $1,105 (9th highest)

With a median household income of $41,754, Mississippi is the poorest state in the country. Due in part to a weak tax base, the state collects only $603 per capita in income tax, nearly $500 less than the average across all states. In the absence of strong income tax revenue, Mississippi relies heavily on sales tax. The state’s 7.0% sales tax rate is the second highest among states, and sales taxes accounts for 31.2% of the state’s total revenue, well above the 23.5% average across all states.

A fiscally conservative state, Mississippi not only has low taxes, but also relatively little borrowing. Per-capita debt in the state and across local governments totals just $4,738, the third lowest among states and about half the average per capita debt across all states.

Source: Thinkstock

9. South Carolina
> Taxes paid as pct. of income: 8.4%
> Income per capita: $39,517 (7th lowest)
> State income tax collections per capita: $780 (19th lowest)
> Property tax collections per capita: $1,130 (20th lowest)
> General sales tax collections per capita: $659 (13th lowest)

State and local governments in South Carolina collected $3,425 in tax revenue per person in fiscal 2015, the third lowest per capita collection amount of any state. As a percent of income per capita, South Carolinians pay less in taxes than residents of all but eight other states.

Earlier this year, state lawmakers moved forward on legislation that would create a flat income tax. If passed, the new law would change the current five tier structure that tops out at 7.0% to a single rate of 4.85%. South Carolina collected $780 in income tax per capita in 2016, slightly less than the $1,068 average per capita income tax revenue across all states.

Source: Thinkstock

8. Nevada
> Taxes paid as pct. of income: 8.1%
> Income per capita: $43,567 (19th lowest)
> State income tax collections per capita: None
> Property tax collections per capita: $959 (11th lowest)
> General sales tax collections per capita: $1,451 (3rd highest)

Nevada is one of only a handful of states with no income tax. With fewer revenue streams, the state relies more heavily on sales tax than most others. Nevada’s 6.85% sales tax rate is higher than that of most states, and much of the revenue derived from sales tax comes from tourists. Some 42.9 million people visited Las Vegas in 2016, spending some $35.5 billion. Sales taxes account for nearly 40% of state and local government revenue in Nevada, more than in all but three other states and nearly double the 23.5% average across all states.

Source: Thinkstock

7. New Hampshire
> Taxes paid as pct. of income: 7.9%
> Income per capita: $55,954 (7th highest)
> State income tax collections per capita: $66 (9th lowest)
> Property tax collections per capita: $3,054 (2nd highest)
> General sales tax collections per capita: None

One of only a handful of states with no sales tax, state and local governments in New Hampshire depend much more on property taxes than is typical. Homeowners in the state pay an average of about 2% of their home value in non-federal property taxes annually, a higher share than in all but two other states. Partially as a result, some 65.7% of state and local revenue come from property taxes, by far the largest share of any state and more than double the average across all states.

Though it taxes capital gains, New Hampshire is also one of only a handful of states with no personal income tax. It does, however, collect heavily on corporate taxes. On a per capita basis, New Hampshire collected $525 in corporate taxes in fiscal 2016, more than any other state.

Source: Thinkstock

6. Louisiana
> Taxes paid as pct. of income: 7.6%
> Income per capita: $42,298 (13th lowest)
> State income tax collections per capita: $612 (13th lowest)
> Property tax collections per capita: $869 (8th lowest)
> General sales tax collections per capita: $680 (14th lowest)

On a per capita basis, Louisiana residents pay just 7.6% of their income to state and local governments in the form of taxes, tied as the fifth smallest share of any state. The Louisiana state government collects just $1,987 per capita annually, less than all but five other states. Currently, Louisiana levies a 20 cent tax on every gallon of gas sold in the state, far less than in the majority of other states. Recently, state lawmakers struck down a bill that would have allowed local municipalities to levy an additional tax on gasoline in order to fund road and bridge repairs.

Like many states with low tax burdens, Louisiana is relatively poor. The typical household in the state earns just $45,146 a year, about $12,500 less than the median household income nationwide.