States with the Lowest Taxes and the Highest Taxes

When it comes to taxes, your location can make a huge difference in the amount you owe. Whether you live in a state with low taxes or high taxes, it’s important to be aware of the tax landscape so you can make the most of your financial situation.

Taxes vary from state to state, and there are a variety of taxes that can affect your disposable income. From property taxes to excise taxes on gasoline, it pays to know where you stand when it comes to taxation.

Here’s a look at the states with both the lowest and highest taxes, so you can make sure you’re getting the best deal.

State with the Highest Personal Income Tax Rates:

California stands out as one of the most heavily taxed states in 2020, with a base rate of 12.3% for incomes up to $57,932. If you make more than that, your rate jumps to 13.3% on all income above $1 million dollars. California also has some of the highest sales taxes in the country and a unique property tax system. On top of that, there are a number of additional state taxes, such as the Vehicle License Fee, Gasoline Tax, and Cigarette Tax.

All of these taxes add up to make California one of the most expensive states to live in. Despite the high tax burden, California is one of the most popular states in the nation due to its diverse coastline and temperate climate.

Here’s the list of the top 10 states with the highest taxes:

  1. California 13.3%
  2. Hawaii 11%
  3. New Jersey 10.75%
  4. Oregon 9.9%
  5. Minnesota 9.85%
  6. District of Columbia 8.95%
  7. New York 8.82%
  8. Vermont 8.75%
  9. Iowa 8.53%
  10. Wisconsin 7.65%

Every state has different laws and tax rates, so be sure to research the regulations in your area before making any decisions.

States With The Lowest Personal Income Tax Rates:

In the US, eight states have no personal income tax. This means you get to keep more of your hard-earned money in these states when it comes time to pay taxes.

Here’s a list of the eight states with no personal income tax:

  1. Wyoming
  2. Washington
  3. Texas
  4. Tennessee
  5. South Dakota
  6. Nevada
  7. Florida
  8. Alaska

If you live in one of these states, you’ll be able to keep a larger portion of your wages compared to living in a state with income tax. That said, these states still have other taxes, such as sales tax, property tax, and other taxes. For example, while there’s no income tax in Alaska, they do have some of the highest property taxes in the country.

Lower personal income tax rates may not always be the best option, as they can be deceiving. A wide variety of deductions can be taken, and the overall effective tax rate may be higher than it initially appears.

Additionally, sales taxes, property taxes, and other fees can add up to a substantial amount, so it is important to consider all of these factors when determining the affordability of a state or locality.

Looking for locations with low personal income tax rates is a great starting point if you’re looking for an affordable place to live.

States With the Highest Property Taxes:

Property taxes are one of the major sources of revenue for states and local governments. The amount you pay depends on your property’s value and the local tax rate.

The states with the highest property taxes in 2020 are as follows:

  1. Essex County, New Jersey 16.86%
  2. Passaic County, New Jersey 14.62%
  3. Union County, New Jersey 12.70%

These counties in New Jersey have some of the highest property taxes in the nation. In fact, the average effective property tax rate for New Jersey is 2.40%, which is more than twice the national average of 1.19%.

In addition to New Jersey, California, Illinois, and Texas also have some of the highest property taxes in 2020.

States with the Lowest Property Taxes:

Not all states have high property taxes, thankfully. Some of the states with the lowest property taxes in 2020 are:

  1. Assumption Parish, Louisiana 0%
  2. Vernon Parish 0.45%
  3. Grant Parish 0.68%

In Louisiana, these three counties have a property tax rate of 0%, making them some of the most affordable places to live in the US.

Other states with low property taxes include Alabama, Mississippi, Delaware, and South Carolina. These states have average effective tax rates of 0.36%, 0.52%, 0.53%, and 0.57%, respectively.

States with the Highest Sales Taxes:

Sales taxes are generally collected by the state and can vary significantly from one region to another. The states with the highest sales taxes in 2020 include:

  1. Tennessee 9.55%
  2. Louisiana 9.52%
  3. Arkansas 9.51%
  4. Washington 9.23%
  5. Alabama 9.22%

These states have some of the highest sales taxes in the nation. On top of this, many counties and cities within these states add additional local taxes, making the overall sales tax even higher.

States with the Lowest Sales Taxes:

On the other hand, there are some states with comparatively low sales taxes. The following states had the lowest sales taxes in 2020:

  1. Alaska 1.76%
  2. Oregon 0%
  3. Delaware 0%
  4. Montana 0%
  5. New Hampshire 0%

If you are a consumer, these states may offer a more affordable shopping experience. However, keep in mind that some goods and services are exempt from sales tax in some of these states. Additionally, many of these states have additional local sales taxes that can add up to a significant amount.

Combined Tax Rates:

When looking for a place to live, it is important to consider the overall tax burden. As we have seen, some states may have low personal income tax rates, but they may also have high property taxes and sales taxes.

Here are the top 5 states with the highest state and local tax burden in 2020:

  1. New York 12.7%
  2. Connecticut 12.6%
  3. New Jersey 12.2%
  4. Illinois 11.0%
  5. California and Wisconsin 11.0%

Mostly, these states have relatively high-income tax rates, as well as high property and sales taxes. It is important to consider all of these factors when deciding where to live.