Want a Lower Tax Burden? Don’t Move to These States

A view of Time Square in New York City.
Carmen Mandato/ The Penny Hoarder

As T. S. Eliot famously penned, April is the cruellest [sic] month.

Seasonal allergies are in full swing, the sky keeps showering its pre-May-flowers rain, and, of course, Tax Day is coming up.


Ready for Tax Day?

Though for many full-time employees Tax Day means a nice return check, it’s still easy to procrastinate filing.

It can be time-consuming and confusing, and you may end up owing the government money. No one wants that.

And no matter your circumstances, you’ll be forced to face the total number of your hard-earned dollars that never see the inside of your pocket.

Even though your taxes go toward important government projects (like, you know, maintaining a usable road system), it’s a little disappointing to see money you worked hard for disappear from your paycheck.

But you may not know that a very simple factor has a huge impact on how much of your paycheck goes straight to Uncle Sam every year: where you live.

Your Tax Burden, and Why It Matters Where You Live

Before we go any further, a quick disclaimer: We are by no means tax experts. That’s why we’ve compiled this list of ways to find free tax help!

OK, with that out of the way, let’s look at some numbers.

A lot of us know that state income tax rates vary widely. Some states, like New York, have rates almost as high as 9%, while the luckiest among us live in states free of income tax entirely (yay, Florida!)

But other state-mediated tax rates also affect the total amount of tax you pay, including property tax and gross sales tax.

In an effort to simplify all this information, WalletHub released a study listing all the states by total tax burden.

That’s the sum of individual income, property, and sales and gross receipts taxes as a percentage of income — so you can see at a glance how your state stacks up (and about how much of your paycheck you can expect to miss).

Tax burden is “not to be confused with tax rates, which fluctuate widely based on an individual’s particular circumstances,” explains WalletHub’s Richie Bernardo.

Some of the tax rates you pay are income-dependent, and some might be irrelevant in your case.

For instance, if you don’t own property, you won’t pay property tax. And if you live in certain cities, like New York or Philadelphia, you’ll pay an additional income tax, raising your total.

Instead, “tax burden measures the exact portion of the total personal income of residents in a state that are paid toward state and local taxes.”

And although figuring out your individual tax situation won’t be as easy as subtracting X% of your salary, the list is a decent starting point for estimating how much you can expect to pay in state and local taxes this year.

How Does Your State Stack Up?

So, do you live in a state with a heavy tax burden? Or is your state’s burden relatively light?

Some of the study’s data isn’t that surprising. For instance, New York state tops the list with the highest tax burden (13.12%). Surprise, surprise.

But we were surprised to find out the bottom 10 isn’t just a rehashing of the list of the seven income-tax-free states. In fact, a few of those states — like Washington and Nevada — are up in the 30s with higher-than-expected tax burdens of 8.45% and 8.37%, respectively.

Here are the top and bottom five states by tax burden:

States With the Highest Tax Burden

1. New York (13.12%)

2. Hawaii (11.86%)

3 and 4. Maine and Vermont (11.13%)

5. Connecticut (10.91%)

States With the Lowest Tax Burden

1. South Dakota (6.94%)

2. New Hampshire (6.88%)

3. Tennessee (6.56%)

4. Delaware (5.91%)

5. Alaska (5.18%) — plus, as you may know, you get paid just to live there. Just make sure you invest in a warm coat!

Don’t see your state? Check out the full details over at WalletHub to see where it stands.

And if you’re not done filing your taxes yet? Get on it.

Don’t forget to make sure you’re getting all your credits and deductions. Here are nine deductions for parents you might not know about, and a guide to deductible business costs for freelancers.

Your Turn: What’s your state’s tax burden? Have you finished filing your taxes yet?

Jamie Cattanach (@jamiecattanach) is a staff writer at The Penny Hoarder and a native Floridian who’s been super-spoiled by living in an income-tax-free state most of her life. She also writes other stuff, like wine reviews and poems.