Tax day in the U.S. just passed, and if you feel like you are working a large part of your life just to pay taxes, the statistics bear you out. And in some states, that burden is greater than others.
To identify how much tax people pay in their lifetime in every state, 24/7 Wall St. reviewed Life of Tax: What Americans Will Pay in Taxes Over a Lifetime published by loans and credit builder Self. The report shows average lifetime earnings and taxes compiled from wage data from the Bureau of Labor Statistics Consumer Expenditure Report for the year 2020 and several other sources. States are listed alphabetically. (See also the most tax friendly states for the rich.)
According to Self., Americans will pay on average $480,407 in taxes during their lifetime, or 34.49% of their earnings. Self. calculated the figures by adding federal and state lifetime income taxes as well as sales, property, and automotive taxes. Total lifetime taxes were then compared against lifetime earnings based on figures from the American Community Survey conducted by the Census Bureau, plus 3.9% inflation, and multiplied by a working lifetime of 36 years.
Residents in 34 states will pay less than what the average American will shell out over his or her lifetime. The lowest is Tennessee at $284,624.
Taxes on earnings are the biggest hit on taxpayers, with Americans paying $255,364, on average, in income taxes in a lifetime. Tax on property is next at $174,251, and that is above the property price and maintenance. (These are the states with the highest and lowest property taxes.)
As you might expect, residents in Northeastern states pay the most over a lifetime, and
New Jersey is by far the highest. Residents in the Garden State will pay $1,035,725 in taxes, on average, in a lifetime. New Jersey residents will pay 61.84% of their earnings to taxes over their lifetimes, one of six states where residents pay more than 50% of their earnings in total taxes. New Jersey residents also pay the highest effective rate on owner-occupied property at 2.13%, according to the Tax Foundation.
The other top states or districts in lifetime tax payments are Connecticut ($869,664), the District of Columbia (869,419), Massachusetts ($859,592), and New York ($793,590).
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.