States With The Highest And Lowest Tax Rates

March 16, 2016

Taxes are inescapable; just ask Wesley Snipes, Martha Stewart, and Nicolas Cage. But just because we can’t legally avoid paying taxes, doesn’t mean there aren’t things that can be done to reduce the amount owed. Moving to another state, for example, is a good place to start.

The states with the lowest taxes allow their residents to pay three times less taxes than those in the most expensive states. Numbers like that add up. In order to determine the best and worst states to be a taxpayer in, WalletHub analyzed the state and local tax rates in the 50 states plus Washington, D.C. and compared them to the national median. They then calculated the relative income-tax obligations by using the income-tax rates in each state to the average American’s income.

Alaska ranked as the number one state to be a taxpayer in with a 5.69 percent tax rate on the median U.S. household, a -46.85 percent difference between the state and the national average. When adjusted for cost of living, Alaska drops to the rank of 6th overall. Delaware (the number one ranked state when adjusted for cost of living), Montana, Wyoming, and Nevada round out the top five states with the lowest tax rates.

On the other, more unfortunate end of the spectrum, Illinois came in last place with a tax rate of 14.54 percent, 35.83 percent higher than the national average. Nebraska, Wisconsin, Connecticut, and Rhode Island are not far behind.

The study also found that Republican States impose lower taxes than Democratic states.

For a full look at the main findings, red states vs. blue states, and state and local tax breakdowns, click the link below.

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