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This one is pretty simple: which states have the overall lowest tax burden? Some states, such as Florida, Texas, and Washington, famously don't level income tax, but do they make up for it with draconian property taxes? Let's take a look.
We're going to make a couple of assumptions: firstly, that you make $80,000 per year, and second, that you own a home at the median price in that state. If you rent, then obviously, income tax is all that matters, and you should pick a state with a low income tax (currently Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming are the ones that have none). But we'll assume you own, so that the whole picture can be accounted for. There's also sales tax, but personal spending varies widely and is much less predictable, so we won't cover it here.
Given these assumptions, here are the ten states with the lowest overall tax burden:
| State | Average Income Tax Rate | Income Tax Amount (Given Assumptions) | Property Tax Rate* | Property Tax Amount (Given Assumptions) | Total Tax Burden |
|---|---|---|---|---|---|
| WY** | 0% | $0 | 0.6% | $2,235 | $2,235 |
| NV | 0% | $0 | 0.6% | $2,744 | $2,744 |
| TN | 0% | $0 | 0.7% | $3,000 | $3,000 |
| FL | 0% | $0 | 0.8% | $3,412 | $3,412 |
| LA | 2.9% | $2,296 | 0.6% | $1,420 | $3,716 |
| IN | 2.7% | $2,168 | 0.9% | $2,164 | $4,332 |
| SD | 0% | $0 | 1.3% | $4,583 | $4,583 |
| AL | 4% | $3,216 | 0.5% | $1,444 | $4,660 |
| AZ | 2.2% | $1,720 | 0.6% | $3,042 | $4,762 |
| OH | 2.3% | $1,808 | 1.7% | $2,990 | $4,798 |
*This is an average, since property taxes are collected by the locality, not the state.
**Also has one of the lowest sales taxes in the Union at 5.44%, putting it behind only Wisconsin, Hawaii, Alaska, Delaware, Oregon, New Hampshire, and Montana, the last four of which are the only states to have no sales tax at all.
While most results are as expected, notice that Texas, with its famous aversion to taxes, is not on this list. That's because it has a biting 1.68% average property tax which cancels out the advantages of the income tax. If you're a renter, Texas is great; if you're buying, property taxes will be an albatross. Texas's overall annual burden is $6,089. Other income tax free states not making the list are Washington (relatively low property tax rate, but high median home price) at $6,192, and New Hampshire (whopping 2.1% property tax rate; $8,838 total burden).
Here are the states with the highest burden:
| State | Average Income Tax Rate | Income Tax Amount (Given Assumptions) | Property Tax Rate* | Property Tax Amount (Given Assumptions) | Total Tax Burden |
|---|---|---|---|---|---|
| NJ** | 4.1% | $3,280 | 2.5% | $11,186 | $14,466 |
| ME | 5.4% | $4,288 | 1.3% | $9,425 | $13,713 |
| NY | 5.2% | $4,168 | 2.1% | $8,245 | $12,413 |
| CT | 5.1% | $4,040 | 2.1% | $7,212 | $11,252 |
| MA | 4.8% | $3,824 | 1.2% | $7,261 | $11,085 |
| OR | 7.6% | $6,080 | 1% | $4,960 | $11,040 |
| CA | 5.6% | $4,448 | 0.8% | $6,338 | $10,786 |
| IL | 4.8% | $3,864 | 2.2% | $6,208 | $10,072 |
| NE | 5.2% | $4,120 | 1.8% | $5,244 | $9,364 |
| RI | 3.4% | $2,696 | 1.7% | $6,461 | $9,157 |
*This is an average, since property taxes are collected by the locality, not the state.
**In addition to winning our highest tax burden state award, largely thanks to its nearly 3% property taxes, New Jersey also collects a nearly 7% sales tax and has a high cost of living. That being said, it's often possible to afford these luxuries given New Jersey boasts the third highest median household income in the country.
With the exception of Illinois and Nebraska, all of these are either on the West Coast or in New England. This means that Washington is the least of evils on the West Coast, and notoriously libertarian New Hampshire is the best option in New England despite its high property taxes.
Note that these are only estimates and to calculate your true tax burden exactly, you will need to look up both the property tax rate for the locale in question and figure your income tax cost using your expected income and applying deductions, bracketing, etc. This is just a general guide to give you an impression of tax burden by state.
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