I usually hear about the benefits of dwelling in one of many few states in the US that don’t gather state earnings taxes. Nevertheless, I simply as usually puzzled how different tax implications in every state examine. How a lot does every state cost in gross sales tax and property tax?
For instance… three states (of 8 whole) that don’t gather 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 gather taxes on their earnings?
The Variables Forestall a Problem
As I did my analysis for this text and began digging into the numbers, it grew to become abundantly clear that there are too many variables in play to find out comparable numbers that may apply to anyone (or all people).
Earnings tax charges in some states are mounted charges the place all people pays the very same share. Different states cost progressive variable earnings tax charges, the place the share you pay relies in your earnings. This variable alone made this comparability practically not possible to finish.
State gross sales taxes additionally difficult 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 virtually all people.
Notice: I purposely ignored gasoline tax for this comparability, because the world strikes in direction of extra electrical automobiles and the quantity that a mean particular person spends on gasoline can differ so drastically.
How I Got here Up With The Common Family for the US
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 common gross sales tax price 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 are 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 house costs in every state.
The Highest Total Taxed States for Common U.S. Households
Congratulations to New Jersey, Connecticut, and Illinois for rounding out the highest 3 for being the 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 | Whole 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 Total Taxed States for Common U.S. Households
Congratulations to Wyoming, Nevada, and Tennessee for being the highest 3 states to reside in for the common 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 | Whole 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 increased gross sales taxes and property taxes. Because it seems, 7 of the 8 states that gather 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… in the event you don’t already reside in one of many states that expenses the least in taxes and also you’re open to contemplating a transfer… chances are you’ll need to think about one of many states that expenses the least in general taxes.
In spite of everything – it’s at all times sensible to maintain as a lot of your cash as potential out of the fingers of the federal government, who’s well-known for his or her capability to mishandle cash.
Bear in mind – these numbers have been calculated utilizing imprecise averages and made-up assumptions. You should definitely calculate your personal numbers primarily based in your particular variables earlier than making a giant life resolution, like shifting to a different state simply because some random blogger printed some numbers. Lol
