As the sayings go, taxes are one of the few certainties in life, and the annual ritual of filling them with the IRS is not one that many people look forward to. The average American paid $10,845 in federal income taxes alone in 2020. But, while every resident is subject to the same federal tax laws, states also have the authority to set their own tax policy, and exactly how much you end up paying in taxes depends largely on where you live.
To raise revenue, state governments levy a broad range of taxes. While these typically include taxes on property, income, and sales, tax rates vary considerably by state. In fact, in some parts of the country, residents are exempt from paying one or more of these tax categories altogether.
Using 2021 data from the Tax Foundation, an independent, nonprofit, tax policy research organization, 24/7 Wall St. identified the states where people pay the largest share of their income on taxes. States are ranked by per capita tax collections as a share of income per capita. The Tax Foundation considered only taxes levied at the state level, and figures do not include federal or local taxes.
Depending on the state, per capita tax collections range from less than $1,500 to well over $6,000. As a percentage of a resident’s income, tax burdens by state range from as little as 2% to over 10%.
For most states, income tax is a major source of revenue. But several states do not levy an income tax at all and are able to offset lost revenue through other taxes. States with no income tax include Florida, which benefits from sales tax revenue through its tourism industry, and Alaska, which levies taxes on resource extraction, specifically oil and gas. (Here is a look at the most tax friendly states for the rich.)
Perhaps not surprisingly, each of the five states with the lowest tax burdens – where residents pay the smallest share of their income in taxes to the state government – do not levy a personal income tax. Meanwhile, many of the states with the highest tax burdens are also those with nation-leading revenue in per capita income taxes. (Here is a look at how much the average person pays in taxes in a lifetime in every state.)
Click here to see where people pay the most of their income in state taxes.
Click here to see our detailed methodology.
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