The nationwide effort to contain the spread of COVID-19 has taken a considerable economic toll. In recent weeks, travel has all but ground to a halt, and nonessential businesses have shuttered, causing mass layoffs and a historic unemployment crisis. The crunch has arrived at a time when many Americans are already facing financial strain — tax season.
Exactly how much of a financial burden taxes impose can depend on where one lives. While every American is subject to the same federal tax code, state and local tax laws vary dramatically by region. As a result, in some parts of the country, state and local taxes account for a larger portion of a typical resident’s income than in others.
Using data from the U.S. Census Bureau’s 2017 Census of Governments, 24/7 Wall St. reviewed the total state and local tax collections as a share of income on a per capita basis to identify the states with the lowest and highest tax burden. Federal taxes were not included in the calculation.
Every state levies some combination of property, income, and sales taxes. All told, Americans pay just over $5,000 a year in state and local taxes, equal to 9.8% of their estimated annual income. State by state, however, this share varies from as little as 7.2% of annual income to as much as 13.8%. Typically, property taxes are the largest driver of the overall tax burden within a state. These are the states with the highest (and lowest) property taxes.
In light of the COVID-19 crisis, nearly every state has taken measures to ease the financial pressure of tax season. For example, the IRS has pushed the deadline for filing federal income taxes from April 15 to July 15, 2020, and most states have followed suit. This is why April 15 is usually the last day to file your taxes.
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.