It’s tax season, and Uncle Sam is back to collect what’s due. But some Americans are hit harder by taxes than others. The Institute on Taxation & Economic Policy, or ITEP, found in its latest report that many taxes — including property taxes, sales taxes, and some state and local taxes — are regressive. That means they take more money out of the pockets of Americans in the lower- and middle-income brackets than from wealthier families.
After accounting for all taxes, in fact, “The nationwide average effective state and local tax rate is 11.4 percent for the lowest-income 20 percent of individuals and families, 9.9 percent for the middle 20 percent, and 7.4 percent for the top 1 percent,” according to the ITEP. Such findings have brought the question of fairness to the forefront of the current tax season.
With less than a month until the tax deadline for most Americans, WalletHub identified the best states where people in different income brackets spend the most and least on sales and excise taxes, property taxes and income taxes. It’s important to note that our analysis does not focus on tax rates but rather on the share of a person’s income that he or she contributes toward various tax obligations. For instance, tax rates may be lower in one state, but because of a comparatively higher cost of living, the actual tax burden may be higher for that state’s residents. Read on for our findings, along with expert commentary and a detailed description of our methodology.
Main Findings
Best & Worst States for Low Income Earners
Best & Worst States for High Income Earners
|
State |
“Low Income” Rank |
“Middle Income” Rank |
“High Income” Rank |
|---|---|---|---|
| Alabama | 27 (9.80%) | 16 (8.66%) | 9 (6.31%) |
| Alaska | 2 (5.87%) | 1 (4.35%) | 1 (3.01%) |
| Arizona | 42 (11.13%) | 23 (9.22%) | 21 (8.00%) |
| Arkansas | 43 (11.29%) | 38 (10.27%) | 35 (9.26%) |
| California | 24 (9.65%) | 24 (9.22%) | 34 (9.13%) |
| Colorado | 11 (8.84%) | 10 (8.27%) | 14 (7.58%) |
| Connecticut | 37 (10.64%) | 41 (10.42%) | 50 (11.13%) |
| Delaware | 1 (5.24%) | 2 (5.74%) | 10 (6.88%) |
| District of Columbia | 8 (8.80%) | 21 (9.08%) | 30 (8.72%) |
| Florida | 25 (9.68%) | 5 (7.26%) | 5 (5.45%) |
| Georgia | 30 (10.08%) | 30 (9.70%) | 25 (8.21%) |
| Hawaii | 49 (12.94%) | 49 (11.59%) | 45 (10.34%) |
| Idaho | 9 (8.81%) | 11 (8.28%) | 16 (7.64%) |
| Illinois | 50 (13.18%) | 50 (11.71%) | 49 (11.01%) |
| Indiana | 47 (11.82%) | 45 (10.71%) | 22 (8.01%) |
| Iowa | 39 (10.97%) | 43 (10.54%) | 36 (9.31%) |
| Kansas | 34 (10.57%) | 42 (10.47%) | 41 (9.81%) |
| Kentucky | 32 (10.37%) | 44 (10.68%) | 43 (10.00%) |
| Louisiana | 38 (10.72%) | 33 (9.77%) | 15 (7.60%) |
| Maine | 15 (8.93%) | 31 (9.71%) | 46 (10.47%) |
| Maryland | 23 (9.65%) | 36 (10.12%) | 48 (10.73%) |
| Massachusetts | 18 (9.30%) | 15 (8.60%) | 26 (8.28%) |
| Michigan | 19 (9.34%) | 27 (9.51%) | 18 (7.89%) |
| Minnesota | 17 (9.03%) | 28 (9.62%) | 38 (9.48%) |
| Mississippi | 36 (10.63%) | 32 (9.75%) | 17 (7.77%) |
| Missouri | 13 (8.90%) | 22 (9.10%) | 24 (8.15%) |
| Montana | 3 (6.77%) | 3 (6.53%) | 12 (7.28%) |
| Nebraska | 35 (10.62%) | 40 (10.42%) | 39 (9.60%) |
| Nevada | 7 (8.62%) | 4 (7.06%) | 2 (4.31%) |
| New Hampshire | 6 (8.30%) | 6 (7.28%) | 7 (5.87%) |
| New Jersey | 28 (9.87%) | 20 (9.01%) | 42 (9.88%) |
| New Mexico | 41 (11.06%) | 35 (9.96%) | 28 (8.53%) |
| New York | 46 (11.61%) | 51 (12.70%) | 51 (12.48%) |
| North Carolina | 21 (9.42%) | 25 (9.26%) | 23 (8.07%) |
| North Dakota | 26 (9.70%) | 12 (8.33%) | 8 (6.01%) |
| Ohio | 40 (10.99%) | 46 (10.81%) | 37 (9.39%) |
| Oklahoma | 45 (11.54%) | 39 (10.31%) | 31 (8.72%) |
| Oregon | 12 (8.85%) | 19 (8.85%) | 33 (9.09%) |
| Pennsylvania | 48 (12.06%) | 47 (11.22%) | 40 (9.62%) |
| Rhode Island | 29 (10.01%) | 26 (9.42%) | 32 (9.04%) |
| South Carolina | 5 (7.99%) | 13 (8.43%) | 20 (7.94%) |
| South Dakota | 33 (10.38%) | 18 (8.80%) | 6 (5.76%) |
| Tennessee | 22 (9.45%) | 9 (8.09%) | 4 (5.11%) |
| Texas | 44 (11.34%) | 34 (9.80%) | 11 (7.05%) |
| Utah | 4 (7.63%) | 8 (7.75%) | 19 (7.93%) |
| Vermont | 10 (8.81%) | 29 (9.63%) | 47 (10.62%) |
| Virginia | 20 (9.39%) | 17 (8.68%) | 29 (8.66%) |
| Washington | 51 (14.59%) | 48 (11.26%) | 13 (7.32%) |
| West Virginia | 16 (9.02%) | 14 (8.50%) | 27 (8.44%) |
| Wisconsin | 31 (10.11%) | 37 (10.25%) | 44 (10.15%) |
| Wyoming | 14 (8.92%) | 7 (7.75%) | 3 (5.03%) |
Detailed Findings
| State | Income Level | Sales & Excise Tax as % of Income | Property Tax as % of Income | Income Tax as % of Income | Total Tax as % of Income |
|---|---|---|---|---|---|
| Alabama | Low | 6.40% | 1.30% | 2.10% | 9.80% |
| Middle | 4.93% | 1.25% | 2.49% | 8.66% | |
| High | 2.87% | 1.00% | 2.44% | 6.31% | |
| Alaska | Low | 2.68% | 3.19% | 0.00% | 5.87% |
| Middle | 1.73% | 2.62% | 0.00% | 4.35% | |
| High | 0.81% | 2.20% | 0.00% | 3.01% | |
| Arizona | Low | 6.89% | 3.40% | 0.85% | 11.13% |
| Middle | 5.11% | 2.65% | 1.46% | 9.22% | |
| High | 2.98% | 2.51% | 2.51% | 8.00% | |
| Arkansas | Low | 8.23% | 1.84% | 1.22% | 11.29% |
| Middle | 6.30% | 1.54% | 2.44% | 10.27% | |
| High | 3.73% | 1.39% | 4.14% | 9.26% | |
| California | Low | 6.37% | 3.23% | 0.05% | 9.65% |
| Middle | 4.74% | 3.12% | 1.36% | 9.22% | |
| High | 2.56% | 2.96% | 3.61% | 9.13% | |
| Colorado | Low | 5.40% | 2.36% | 1.08% | 8.84% |
| Middle | 4.15% | 2.20% | 1.92% | 8.27% | |
| High | 2.37% | 1.90% | 3.30% | 7.58% | |
| Connecticut | Low | 5.76% | 4.45% | 0.43% | 10.64% |
| Middle | 4.14% | 3.98% | 2.30% | 10.42% | |
| High | 2.42% | 4.41% | 4.31% | 11.13% | |
| Delaware | Low | 2.06% | 1.63% | 1.54% | 5.24% |
| Middle | 1.39% | 1.45% | 2.89% | 5.74% | |
| High | 0.74% | 1.62% | 4.51% | 6.88% | |
| District of Columbia | Low | 5.77% | 2.93% | 0.10% | 8.80% |
| Middle | 4.66% | 1.97% | 2.45% | 9.08% | |
| High | 2.58% | 1.75% | 4.39% | 8.72% | |
| Florida | Low | 7.08% | 2.60% | 0.00% | 9.68% |
| Middle | 5.17% | 2.08% | 0.00% | 7.26% | |
| High | 2.35% | 3.10% | 0.00% | 5.45% | |
| Georgia | Low | 5.84% | 2.32% | 1.92% | 10.08% |
| Middle | 4.39% | 2.30% | 3.00% | 9.70% | |
| High | 2.47% | 2.03% | 3.72% | 8.21% | |
| Hawaii | Low | 8.43% | 2.42% | 2.09% | 12.94% |
| Middle | 5.96% | 1.90% | 3.74% | 11.59% | |
| High | 3.31% | 1.77% | 5.26% | 10.34% | |
| Idaho | Low | 5.29% | 2.85% | 0.67% | 8.81% |
| Middle | 4.23% | 2.21% | 1.84% | 8.28% | |
| High | 2.45% | 1.18% | 4.01% | 7.64% | |
| Illinois | Low | 5.79% | 5.10% | 2.28% | 13.18% |
| Middle | 4.29% | 4.52% | 2.90% | 11.71% | |
| High | 2.62% | 4.60% | 3.80% | 11.01% | |
| Indiana | Low | 6.16% | 2.79% | 2.88% | 11.82% |
| Middle | 4.78% | 2.36% | 3.56% | 10.71% | |
| High | 2.87% | 1.55% | 3.59% | 8.01% | |
| Iowa | Low | 5.66% | 4.10% | 1.21% | 10.97% |
| Middle | 4.51% | 3.14% | 2.89% | 10.54% | |
| High | 2.65% | 2.37% | 4.30% | 9.31% | |
| Kansas | Low | 7.00% | 2.88% | 0.68% | 10.57% |
| Middle | 5.49% | 2.66% | 2.33% | 10.47% | |
| High | 3.38% | 2.50% | 3.92% | 9.81% | |
| Kentucky | Low | 5.10% | 1.87% | 3.40% | 10.37% |
| Middle | 3.94% | 1.73% | 5.01% | 10.68% | |
| High | 2.23% | 1.68% | 6.09% | 10.00% | |
| Louisiana | Low | 8.19% | 1.46% | 1.07% | 10.72% |
| Middle | 6.61% | 1.05% | 2.10% | 9.77% | |
| High | 3.91% | 0.73% | 2.96% | 7.60% | |
| Maine | Low | 5.27% | 3.35% | 0.31% | 8.93% |
| Middle | 4.06% | 3.52% | 2.13% | 9.71% | |
| High | 2.50% | 3.35% | 4.62% | 10.47% | |
| Maryland | Low | 5.03% | 2.70% | 1.92% | 9.65% |
| Middle | 3.69% | 2.38% | 4.05% | 10.12% | |
| High | 2.20% | 2.72% | 5.81% | 10.73% | |
| Massachusetts | Low | 4.10% | 3.98% | 1.22% | 9.30% |
| Middle | 2.96% | 2.81% | 2.83% | 8.60% | |
| High | 1.95% | 2.85% | 3.49% | 8.28% | |
| Michigan | Low | 5.06% | 2.52% | 1.76% | 9.34% |
| Middle | 3.75% | 2.81% | 2.95% | 9.51% | |
| High | 2.00% | 2.63% | 3.26% | 7.89% | |
| Minnesota | Low | 5.64% | 2.54% | 0.84% | 9.03% |
| Middle | 4.17% | 2.70% | 2.75% | 9.62% | |
| High | 2.33% | 2.63% | 4.52% | 9.48% | |
| Mississippi | Low | 6.95% | 2.21% | 1.47% | 10.63% |
| Middle | 5.35% | 1.93% | 2.47% | 9.75% | |
| High | 3.09% | 1.70% | 2.98% | 7.77% | |
| Missouri | Low | 5.20% | 2.20% | 1.50% | 8.90% |
| Middle | 4.16% | 2.23% | 2.71% | 9.10% | |
| High | 2.41% | 1.96% | 3.78% | 8.15% | |
| Montana | Low | 1.70% | 3.73% | 1.33% | 6.77% |
| Middle | 1.16% | 2.79% | 2.58% | 6.53% | |
| High | 0.54% | 2.89% | 3.86% | 7.28% | |
| Nebraska | Low | 5.61% | 4.40% | 0.61% | 10.62% |
| Middle | 4.62% | 3.72% | 2.08% | 10.42% | |
| High | 2.64% | 2.82% | 4.14% | 9.60% | |
| Nevada | Low | 5.63% | 1.99% | 1.00% | 8.62% |
| Middle | 4.15% | 1.91% | 1.00% | 7.06% | |
| High | 1.71% | 1.75% | 0.86% | 4.31% | |
| New Hampshire | Low | 2.03% | 5.71% | 0.56% | 8.30% |
| Middle | 1.35% | 5.43% | 0.50% | 7.28% | |
| High | 0.72% | 4.60% | 0.54% | 5.87% | |
| New Jersey | Low | 4.73% | 5.04% | 0.10% | 9.87% |
| Middle | 3.48% | 4.74% | 0.78% | 9.01% | |
| High | 2.32% | 5.20% | 2.35% | 9.88% | |
| New Mexico | Low | 8.35% | 2.61% | 0.10% | 11.06% |
| Middle | 6.23% | 2.17% | 1.56% | 9.96% | |
| High | 3.64% | 1.91% | 2.98% | 8.53% | |
| New York | Low | 6.18% | 5.10% | 0.32% | 11.61% |
| Middle | 4.81% | 4.55% | 3.33% | 12.70% | |
| High | 2.84% | 4.53% | 5.11% | 12.48% | |
| North Carolina | Low | 5.44% | 2.28% | 1.69% | 9.42% |
| Middle | 4.36% | 2.02% | 2.87% | 9.26% | |
| High | 2.52% | 1.78% | 3.77% | 8.07% | |
| North Dakota | Low | 7.22% | 2.07% | 0.41% | 9.70% |
| Middle | 6.06% | 1.68% | 0.59% | 8.33% | |
| High | 3.34% | 1.62% | 1.05% | 6.01% | |
| Ohio | Low | 5.91% | 2.90% | 2.18% | 10.99% |
| Middle | 4.67% | 3.00% | 3.14% | 10.81% | |
| High | 2.88% | 2.61% | 3.90% | 9.39% | |
| Oklahoma | Low | 7.87% | 2.60% | 1.07% | 11.54% |
| Middle | 6.07% | 1.95% | 2.28% | 10.31% | |
| High | 3.44% | 2.22% | 3.06% | 8.72% | |
| Oregon | Low | 1.79% | 4.08% | 2.99% | 8.85% |
| Middle | 1.10% | 3.20% | 4.55% | 8.85% | |
| High | 0.42% | 2.53% | 6.14% | 9.09% | |
| Pennsylvania | Low | 5.55% | 3.15% | 3.36% | 12.06% |
| Middle | 4.31% | 2.69% | 4.21% | 11.22% | |
| High | 2.40% | 3.18% | 4.04% | 9.62% | |
| Rhode Island | Low | 5.56% | 4.06% | 0.38% | 10.01% |
| Middle | 4.02% | 3.57% | 1.83% | 9.42% | |
| High | 2.03% | 3.53% | 3.47% | 9.04% | |
| South Carolina | Low | 4.78% | 2.41% | 0.81% | 7.99% |
| Middle | 3.80% | 2.34% | 2.29% | 8.43% | |
| High | 2.05% | 2.14% | 3.75% | 7.94% | |
| South Dakota | Low | 8.01% | 2.38% | 0.00% | 10.38% |
| Middle | 6.64% | 2.15% | 0.00% | 8.80% | |
| High | 3.60% | 2.16% | 0.00% | 5.76% | |
| Tennessee | Low | 7.72% | 1.63% | 0.10% | 9.45% |
| Middle | 6.17% | 1.82% | 0.10% | 8.09% | |
| High | 3.32% | 1.68% | 0.11% | 5.11% | |
| Texas | Low | 8.46% | 2.88% | 0.00% | 11.34% |
| Middle | 6.60% | 3.19% | 0.00% | 9.80% | |
| High | 3.66% | 3.39% | 0.00% | 7.05% | |
| Utah | Low | 4.67% | 1.65% | 1.31% | 7.63% |
| Middle | 3.75% | 1.56% | 2.44% | 7.75% | |
| High | 2.13% | 1.67% | 4.13% | 7.93% | |
| Vermont | Low | 4.49% | 4.24% | 0.08% | 8.81% |
| Middle | 3.76% | 4.55% | 1.32% | 9.63% | |
| High | 2.02% | 4.91% | 3.69% | 10.62% | |
| Virginia | Low | 4.68% | 2.64% | 2.08% | 9.39% |
| Middle | 3.54% | 2.37% | 2.77% | 8.68% | |
| High | 2.16% | 2.62% | 3.88% | 8.66% | |
| Washington | Low | 11.14% | 3.45% | 0.00% | 14.59% |
| Middle | 8.65% | 2.61% | 0.00% | 11.26% | |
| High | 4.84% | 2.48% | 0.00% | 7.32% | |
| West Virginia | Low | 5.22% | 1.88% | 1.93% | 9.02% |
| Middle | 3.98% | 1.48% | 3.04% | 8.50% | |
| High | 2.51% | 1.25% | 4.68% | 8.44% | |
| Wisconsin | Low | 5.13% | 3.88% | 1.10% | 10.11% |
| Middle | 3.88% | 3.40% | 2.96% | 10.25% | |
| High | 2.27% | 3.18% | 4.69% | 10.15% | |
| Wyoming | Low | 6.24% | 2.69% | 0.00% | 8.92% |
| Middle | 5.25% | 2.50% | 0.00% | 7.75% | |
| High | 2.76% | 2.27% | 0.00% | 5.03% |
Note: The small difference that might exist in some cases when adding up the sub-components is the consequence of rounding to two decimal points the results.
Ask the Experts
Fairness is a central issue of the current tax season. For additional insight on the most pressing tax problems, possible solutions and other tax-related matters, we asked a panel of experts to weigh in. Click on the experts’ profiles to read their bios and responses to the following key questions:
- What is the most efficient way to distribute tax burden across income levels?
- Which state and local tax instruments are the most and least fair?
- What makes some state and local tax systems better able to weather economic downturns?
- How do American notions of economic mobility inform tax preferences and tax policy?
Ask the Experts
JD, CPA – Associate Professor- Accounting, Endicott College
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Ph.D. – Department Chair and Professor, Humanities, Faulkner University
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Professor of Economics, Harvard University
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Assistant Professor of Law, University of San Diego
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Assistant Professor (Taxation & Accounting), George W. Daverio, School of Accountancy, College of Business Administration, The University of Akron
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Methodology
In order to identify the best states to be taxed according to one’s income group, WalletHub generated estimates of the state-specific tax burden on residents at three income levels — low ($25,000), medium ($50,000) and high ($150,000) — in each of the 50 U.S. states and the District of Columbia. We did so using data from the Institute on Taxation & Economic Policy's 2018 report, which published estimates of tax burden at seven points in the state-specific income distribution.
As we were interested in comparing tax burdens for households at the same income level across states, we fit a regression model to estimate the relationship between income and tax burden for each state and the District of Columbia using log transformations to improve model fit and using this model to generate predicted tax burdens at the income levels we examined.
Image: Rawpixel.com / Shutterstock.com
