I usually hear about some great benefits of residing in one of many few states in america that don’t acquire state earnings taxes. Nevertheless, I simply as usually questioned how different tax implications in every state evaluate. How a lot does every state cost in gross sales tax and property tax?
For instance… three states (of 8 complete) that don’t acquire state earnings taxes in any respect are Florida, Texas, and Tennessee. Do they cost considerably extra in state gross sales tax to make up for the distinction? What about property taxes? Is there a big discrepancy there?
Is it actually extra advantageous for a mean particular person to reside in a state that doesn’t acquire taxes on their earnings?
The Variables Stop a Problem
As I did my analysis for this text and began digging into the numbers, it turned abundantly clear that there are too many variables in play to find out comparable numbers that might apply to anyone (or all people).
Earnings tax charges in some states are fastened charges the place all people pays the very same share. Different states cost progressive variable earnings tax charges, the place the proportion you pay relies in your earnings. This variable alone made this comparability practically unimaginable to finish.
State gross sales taxes additionally sophisticated issues, as some states even have native jurisdictions (cities or counties) that cost separate gross sales taxes along with the state gross sales taxes. Once more, this variable made this comparability very troublesome.
Property taxes prevented the ultimate problem, as these charges are usually set by native jurisdictions and never by the state. However, I felt that property taxes wanted to be included on this comparability as a result of all people has to reside someplace. Even renters not directly pay property tax, so it applies to nearly all people.
Word: I purposely ignored fuel tax for this comparability, because the world strikes in the direction of extra electrical automobiles and the quantity that a mean particular person spends on fuel can differ so vastly.
How I Got here Up With The Common Family for america
I created a spreadsheet in Google Sheets with 5 totally different tabs (sheets) as follows…
I used the median family earnings for every state. The gross sales tax knowledge listed out the typical gross sales tax fee for every state, so I used that and calculated primarily based on a made-up assumption that every family spends 15% of its earnings on items which might be topic to gross sales tax. The earnings taxes for every earnings stage are precise, primarily based on the default variables within the IRS calculator that I used. The property taxes are precise averages primarily based on common dwelling costs in every state.
The Highest General Taxed States for Common U.S. Households
Congratulations to New Jersey, Connecticut, and Illinois for rounding out the highest 3 for being the very best taxed states for common households! The Large Apple (New York) adopted up within the 4th spot general. To my shock, California didn’t even make the highest 10!
| State | Median Earnings | State Earnings Tax | Gross sales Tax | Avg Property Tax | Complete Taxes |
| New Jersey | $85,245 | $3,241.91 | $844 | $5,419 | $9,504.84 |
| Connecticut | $79,855 | $3,942.03 | $761 | $4,658 | $9,360.65 |
| Illinois | $68,428 | $3,272.10 | $904 | $4,942 | $9,118.38 |
| New York | $71,117 | $3,532.50 | $909 | $3,749 | $8,190.38 |
| Massachusetts | $84,385 | $3,999.25 | $791 | $2,667 | $7,457.36 |
| Minnesota | $73,382 | $4,068.26 | $824 | $2,429 | $7,321.71 |
| Wisconsin | $63,293 | $2,760.81 | $516 | $4,027 | $7,303.33 |
| Iowa | $61,836 | $3,109.48 | $644 | $3,407 | $7,160.19 |
| District of Columbia | $90,842 | $5,054.82 | $818 | $1,221 | $7,093.40 |
| Hawaii | $83,173 | $5,839.49 | $554 | $606 | $6,999.42 |
The Lowest General Taxed States for Common U.S. Households
Congratulations to Wyoming, Nevada, and Tennessee for being the highest 3 states to reside in for the typical family when it comes to paying the least in general taxes. Florida and Alaska weren’t far behind in 4th and fifth place.
| State | Median Earnings | State Earnings Tax | Gross sales Tax | Avg Property Tax | Complete Taxes |
| Wyoming | $65,304 | $0.00 | $511 | $1,319 | $1,830.33 |
| Nevada | $62,043 | $0.00 | $766 | $1,310 | $2,075.92 |
| Tennessee | $54,833 | $0.00 | $785 | $1,548 | $2,333.48 |
| Florida | $57,703 | $0.00 | $607 | $1,934 | $2,540.75 |
| Alaska | $77,790 | $0.00 | $205 | $2,599 | $2,804.37 |
| Arkansas | $49,475 | $1,084.53 | $703 | $1,358 | $3,145.32 |
| Washington | $77,006 | $0.00 | $1,073 | $2,134 | $3,207.08 |
| Louisiana | $50,800 | $1,414.25 | $728 | $1,187 | $3,328.96 |
| South Dakota | $59,896 | $0.00 | $575 | $2,857 | $3,432.00 |
| North Dakota | $65,315 | $657.20 | $682 | $2,138 | $3,477.09 |
State Earnings Taxes Do Matter!
I’ll admit – I used to be barely shocked after I noticed the ultimate numbers after finishing the calculations. I assumed the low (or no) earnings tax states would certainly compensate for the discrepancy by charging a lot larger gross sales taxes and property taxes. Because it seems, 7 of the 8 states that acquire zero earnings taxes made the highest 10, with 5 of these being the highest 5 spots! Texas is the one no earnings tax state that didn’t make the highest 10 on this record.
Need to see ALL of the info? Click on right here to entry a View Solely model of my Google Sheet.
Pay Much less in Taxes by Residing in a Sure State
The underside line is that this… when you don’t already reside in one of many states that costs the least in taxes and also you’re open to contemplating a transfer… you might wish to contemplate one of many states that costs the least in general taxes.
In any case – it’s all the time smart to maintain as a lot of your cash as attainable out of the fingers of the federal government, who’s well-known for his or her skill to mishandle cash.
Keep in mind – these numbers had been calculated utilizing imprecise averages and made-up assumptions. You’ll want to calculate your individual numbers primarily based in your particular variables earlier than making an enormous life determination, like shifting to a different state simply because some random blogger printed some numbers. Lol
