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Comparing States’ Taxes: A Review of Taxes by State

Comparing States’ Taxes: A Review of Taxes by State

Without any doubt, tax season is a stressful time for millions of people in the United States. As per the statics of labor bureau, the average household of the United States is paid taxes, such as $5,700. In a tax-expensive state, the life of a taxpayer can be tough. They pay three times more taxes than a cheapest state. There are some misconceptions about tax issues because low taxes doesn’t actually mean low taxes. By Comparing States’ Taxes, you will get a better understanding of tax rules in each state. For instance, citizens of Washington don’t pay income taxes, but still, they have to spend more than 8% of their annual income on excise and sales taxes.

Citizens of Texas don’t pay any income tax but spend 1.86% of income on charges of real estate. On the other hand, the residents of California have to pay a little extra tax, such as 4% of revenue in excise and sales taxes and only 0.79% in property taxes.

Taxes on Retirement Benefits

There are seven states without any tax on individual income like retirements, such as Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska. States like Tennessee and Hampshire impose taxes on interest and dividend at 5% flat rate.

In Columbia District and other 41 countries, the tax treatment of individual income may vary widely. For instance. Some countries example total pension income and social security income. Other states offer partial credits or exemption and some countries tax whole retirement income.

  • Countries that exempt entire pension income for qualified folks are Wyoming, Washington, Texas, Tennessee, South Dakota, Pennsylvania, New Hampshire, Nevada, Mississippi, Illinois, Florida, and Alaska.
  • Countries that provide some credit for a section of pension revenue include Wisconsin, Virginia, Utah, South Carolina, Oregon, Oklahoma, Ohio, New York, New Mexico, New Jersey, Montana, Missouri, Michigan, Maryland, Maine, Louisiana, Kentucky, Iowa, Hawaii, Georgia, Delaware, Colorado, Arkansas, and Alabama.
  • Countries, where the entire pension income is taxable, are West Virginia, Vermont, Rhode Island, North Dakota, North Carolina, Nebraska, Minnesota, Massachusetts, Kansas, Indiana, Idaho, Columbia District, Connecticut, California, and Arizona. 

Comparing States’ Taxes 

Comparing income tax of different states can be a tricky job because tax rates and approaches have huge variations. Numerous states have complicated the graduated system, such as the system of Hawaii. Hawaii has 12 different tax rates for different brackets. Eight countries charge a flat percentage of the income of residents regardless of their salaries. For instance, 4.63% taxable income in Colorado, 3.3% taxable income in Illinois and 3.75% in Indiana. Moreover, seven countries don’t charge taxes on income like Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska.

Local and State Tax Burden in Percentage of Income, Year 2017
 
 
State
Rank
Tax Burden
Ala.
49
6.30%
Alaska
50
6.50%
Ariz.
31
8.20%
Ark.
15
9.10%
Calif.
10
9.50%
Colo.
35
8.00%
Conn.
6
10.20%
Del.
50
5.60%
Fla.
45
6.80%
Ga.
32
8.20%
Hawaii
2
11.30%
Idaho
39
7.80%
Ill.
9
10%
Ind.
23
8.60%
Iowa
19
9.00%
Kans.
20
8.70%
Ky.
22
8.70%
La.
29
8.30%
Maine
4
10.70%
Md.
12
9.40%
Mass.
18
9.00%
Mich.
26
8.50%
Minn.
5
10.20%
Miss.
17
9.00%
Mo.
38
7.80%
Mont.
41
7.50%
Nebr.
16
9.00%
Nev.
30
8.30%
N.H.
46
6.70%
N.J.
7
10.10%
N.M.
21
8.70%
N.Y.
1
12.90%
N.C.
28
8.30%
N.D.
36
7.90%
Ohio
13
9.20%
Okla.
47
6.60%
Ore.
27
8.40%
Pa.
24
8.50%
R.I.
8
10.10%
S.C.
37
7.80%
S.D.
44
7.10%
Tenn.
48
6.50%
Tex.
34
8.00%
Utah
25
8.50%
Vt.
3
10.80%
Va.
40
7.60%
Wash.
33
8.20%
W.Va.
14
9.10%
Wis.
11
9.40%
Wyo.
42
7.30%


This comparison chart makes it clear to understand that overall burden of taxes in numerous states is similar. For instance, Utah and Wisconsin got 35th and 11th ranking respectively, but their difference in percentage point is less. In a few countries, the difference may be dramatic, such as residents of New York have to pay 12.9 percent of their income in local and state taxes, as compared to Delaware where the residents pay only 5.6%. The tax burden on each state is variable and subject to changes as per fluctuation in economic condition. 

  

 


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