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Many Americans, especially those who haven’t moved around much, are often surprised at the range of tax burdens there are across the United States. States with the highest property taxes, for example, have average rates that are more than four times that of the states with the lowest property taxes.
Income taxes vary even more. On one hand, there are seven U.S. states with no individual income taxes whatsoever, and two more that are close. On the other end of the spectrum, some states have rather high income taxes, especially for high earners. Here’s a closer look at the seven U.S. states with the highest individual income tax burdens, according to a report by WalletHub.
1. New York: 4.76% overall individual income tax burden
New York’s individual income tax brackets range from a low of 4% to a high of 8.82% on taxable income over $1,070,350 (for single taxpayers) or $2,140,900 (for married taxpayers filing jointly). In addition, New York allows for local income taxes to be assessed, and the statewide average is 2.11%.
In addition to a high individual income tax, New York is also ranked as the least tax-friendly state overall. According to WalletHub’s report, New York state’s total average tax burden adds up to 12.94% including property taxes, income taxes, and sales and excise taxes.
New York’s average state sales tax rate is 8.49%, including local taxes. And New York has some of the highest excise taxes in the U.S., including its highest-in-the-nation $4.35-per-pack cigarette tax (with an additional $1.50 in New York City).
2. Oregon: 4.02%
Oregon is home to one of the country’s highest state income tax brackets with a 9.9% top rate on taxable income over $125,000 and $250,000, respectively, for single and joint filers. In fact, the state’s lowest tax bracket of 5% would be considered a high rate in many parts of the country.
Despite having one of the highest effective income tax rates in the nation, Oregon is actually a rather tax-friendly state in many respects. For one thing, the lack of a state sales tax helps to offset the income tax burden, and Oregon’s property taxes are on the low end of the spectrum.
3. Maryland: 3.88%
At first glance, Maryland’s income tax brackets, with rates ranging from 2% to 5.75%, don’t look all that bad. However, Maryland’s counties are allowed to add their own income taxes, and these can add as much as 3.2% to the statewide income tax rate, and the average additional tax rate is 2.9%.
Maryland also has a 6% state sales tax rate, although there are no local sales taxes added on top of this. In addition, Maryland has an estate tax that is imposed on estates over $3 million in value for 2017, with rates of up to 16%.
4. Minnesota: 3.59%
Minnesota’s 9.85% top income tax rate is one of the highest rates imposed on higher earners, and its lowest rate of 5.35% is high all by itself.
Minnesota is a tax-unfriendly state overall, with above-average taxes in many categories. Property taxes are on the higher end of the spectrum, and the state sales tax rate is 6.875%, with up to 1.5% added by local governments. Minnesota also has an estate tax with a maximum rate of 16% and a value threshold that’s significantly lower than the threshold where the IRS’ estate tax kicks in.
5. California: 3.44%
California is not particularly tax-friendly, especially when it comes to high-income households. Its income tax brackets start out at a rate of just 1% but go as high as 13.3% for taxable income above $1 million (individuals) or $1,052,886 (married filing jointly).
In addition, California’s 7.25% state sales tax is already on the high end, and local governments add as much as 2.5%, making for a total average sales tax of 8.48%. However, California’s property taxes aren’t especially high, and there is no estate or inheritance tax other than what is imposed at the federal level.
6. Massachusetts: 3.29%
Massachusetts is something of a rarity in that it doesn’t have several tax brackets. Rather, all federal adjusted gross income is taxed at a flat 5.1% rate. In addition, Massachusetts’ property taxes are above average, and the state has an estate tax that is imposed on estates valued at $1 million or more — one of the lowest thresholds in the country.
7. Connecticut: 3.24%
Connecticut’s income tax rates range from a low of 3% to a high of 6.99%, which are significantly lower than the rates of some of the other states on this list but are still high enough to earn Connecticut the No. 7 spot.
In addition to its high income taxes, Connecticut has some of the highest property taxes in the country. Connecticut has an estate tax that is imposed on estates valued at $2 million or more, and it is the only state that has a gift tax.