Tax season is here, and many Americans are focusing on how much they owe to the federal government.
However, state and local taxes can also take a big bite out of your income, depending on where you live.
WalletHub, a financial advisory site, recently published a study ranking the states with the highest state and local tax rates.
The report highlights where residents are paying the most to their state and local governments.
“Every year during tax season, Americans are reminded of just how much of their hard-earned income isn’t theirs to keep.
Living in the right state can ease the stress of tax time, though, as taxpayers in the least expensive states pay less than half as much as those in the most expensive states,” said WalletHub Analyst Chip Lupo.
The study calculated effective rates for income tax, real estate tax, vehicle property tax, and sales and excise tax across all 50 states.
These rates were then combined to determine the total effective state and local tax rate based on the median U.S. household income.
The report also estimated the average amount paid annually by residents, based on each state’s median income.
Illinois topped the list with the highest total effective tax rate at 16.58%, costing the average household around $12,270 per year in state and local taxes.
New York followed with a total effective tax rate of 14.74%, with the average household paying approximately $13,774 annually — the second-highest annual amount in the country, behind New Jersey’s $15,032.
New York’s total effective tax rate includes a 6.15% real estate tax, 3.8% income tax, and 4.79% sales and excise tax.
Here are the top 10 states with the highest state and local tax rates:
- Illinois
- Total Tax Rate: 16.58%
- Annual Taxes on Median Household: $12,270
- New York
- Total Tax Rate: 14.74%
- Annual Taxes on Median Household: $13,774
- Connecticut
- Total Tax Rate: 14.54%
- Annual Taxes on Median Household: $13,231
- New Jersey
- Total Tax Rate: 13.98%
- Annual Taxes on Median Household: $15,032
- Pennsylvania
- Total Tax Rate: 13.94%
- Annual Taxes on Median Household: $9,955
- Kansas
- Total Tax Rate: 13.76%
- Annual Taxes on Median Household: $9,090
- Nebraska
- Total Tax Rate: 13.22%
- Annual Taxes on Median Household: $9,003
- Iowa
- Total Tax Rate: 13.14%
- Annual Taxes on Median Household: $8,456
- Ohio
- Total Tax Rate: 12.75%
- Annual Taxes on Median Household: $7,974
- Texas
- Total Tax Rate: 12.54%
- Annual Taxes on Median Household: $9,093
These figures show just how much state and local taxes can vary across the country, making location a key factor when considering your overall tax burden.
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