Posted by: Adam McCann

Tax season can be stressful for the millions of Americans who owe money to Uncle Sam. Every year, the average U.S. household pays more than $5,700 in federal income taxes, according to the Bureau of Labor Statistics. And while we’re all faced with that same obligation, there is significant difference when it comes to state and local taxes. Taxpayers in the most tax-expensive states, for instance, pay three times more than those in the cheapest states.

Surprisingly, though, low income taxes don’t always mean low taxes as a whole. For example, while the state of Washington’s citizens don’t pay income tax, they still end up spending over 8% of their annual income on sales and excise taxes. Texas residents also don’t pay income tax, but spend 1.86% of their income on real estate taxes, one of the highest rates in the country. Compare these to California, where residents owe a little over 4% of their income in sales and excise taxes, and just 0.79% in real estate tax.

As this year’s tax-filing deadline, April 17, comes closer, it’s fair to wonder which states give their taxpayers more of a break. WalletHub searched for answers by comparing state and local tax rates in the 50 states and the District of Columbia against national medians. To illustrate, we calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income. Scroll down for the complete ranking, commentary from a panel of tax experts and a full description of our methodology.

1. Main Findings
2. Red States vs. Blue States
3. State & Local Tax Breakdown
4. Ask the Experts: Best Tax Advice
5. Methodology

 

Main Findings

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/2416/taxpayer1.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2FLuMd4>  

Taxes by State

Overall Rank (1=Lowest)	State	Effective Total State & Local Tax Rates on Median U.S. Household*	Annual State & Local Taxes on Median U.S. Household*	% Difference Between State & U.S. Avg.**	Annual State & Local Taxes on Median State Household***	Adjusted Overall Rank (based on Cost of Living Index)
1	Alaska	5.67%	$3,164	-47.26%	$4,353	5
2	Delaware	6.11%	$3,407	-43.21%	$3,909	1
3	Montana	7.29%	$4,066	-32.23%	$3,911	4
4	Nevada	7.44%	$4,145	-30.90%	$4,103	6
5	Wyoming	7.45%	$4,155	-30.75%	$4,417	2
6	Tennessee	7.98%	$4,449	-25.84%	$3,667	3
7	Idaho	8.48%	$4,730	-21.16%	$4,216	7
8	California	8.77%	$4,888	-18.51%	$7,167	36
9	Florida	8.83%	$4,921	-17.97%	$4,373	9
10	South Carolina	9.02%	$5,030	-16.16%	$4,278	11
11	Oregon	9.20%	$5,129	-14.51%	$5,677	34
12	Utah	9.23%	$5,144	-14.25%	$5,902	10
13	Colorado	9.27%	$5,170	-13.82%	$6,100	13
14	Alabama	9.40%	$5,241	-12.64%	$4,177	8
15	Arizona	9.50%	$5,299	-11.67%	$4,977	12
16	South Dakota	9.75%	$5,439	-9.34%	$4,757	16
17	North Dakota	9.84%	$5,488	-8.53%	$5,493	18
18	District of Columbia	10.00%	$5,574	-7.09%	$8,811	46
19	New Hampshire	10.27%	$5,725	-4.57%	$7,221	33
20	Hawaii	10.33%	$5,762	-3.96%	$8,277	51
21	West Virginia	10.39%	$5,791	-3.48%	$4,343	19
22	Louisiana	10.39%	$5,795	-3.41%	$4,757	17
23	Georgia	10.54%	$5,876	-2.06%	$5,237	14
24	North Carolina	10.64%	$5,934	-1.09%	$5,167	20
25	Oklahoma	10.75%	$5,993	-0.11%	$4,848	15
26	New Mexico	10.82%	$6,031	0.53%	$5,038	23
27	Virginia	10.87%	$6,061	1.03%	$7,276	27
28	Texas	11.04%	$6,156	2.61%	$5,347	21
29	Vermont	11.04%	$6,158	2.64%	$6,800	41
30	Missouri	11.28%	$6,291	4.86%	$5,435	22
31	Minnesota	11.57%	$6,453	7.56%	$7,085	31
32	Massachusetts	11.61%	$6,470	7.85%	$9,390	45
33	Washington	11.68%	$6,514	8.57%	$8,023	37
34	Maine	11.75%	$6,554	9.24%	$6,133	42
35	Indiana	11.86%	$6,614	10.25%	$5,667	26
36	Maryland	11.96%	$6,666	11.12%	$9,552	44
37	Kentucky	12.06%	$6,723	12.06%	$5,293	29
38	Mississippi	12.21%	$6,810	13.51%	$4,954	24
39	Arkansas	12.30%	$6,858	14.32%	$5,142	25
40	Kansas	12.42%	$6,924	15.41%	$6,104	28
41	Pennsylvania	12.45%	$6,940	15.68%	$6,642	38
42	Michigan	12.81%	$7,145	19.09%	$5,843	30
43	New Jersey	12.87%	$7,175	19.59%	$11,237	47
44	Iowa	12.92%	$7,202	20.05%	$6,354	32
45	Ohio	13.09%	$7,300	21.68%	$6,081	35
46	Wisconsin	13.62%	$7,593	26.56%	$7,193	40
47	Rhode Island	13.69%	$7,634	27.26%	$8,697	48
48	New York	13.72%	$7,648	27.49%	$9,759	50
49	Nebraska	13.83%	$7,712	28.55%	$6,776	39
50	Connecticut	13.85%	$7,720	28.68%	$10,419	49
51	Illinois	14.89%	$8,299	38.34%	$8,330	43

*Assumes “Median U.S. Household” has an annual income of $55,754 (mean third quintile U.S. income); owns a home valued at $184,700 (median U.S. home value); owns a car valued at $24,000 (the highest-selling car of 2017); and spends annually an amount equal to the spending of a household earning the median U.S. income. **National Average of State and Local Tax Rates = 10.78%***Assumes “Median State Household” has an annual income equal to the mean third quintile income of the state; owns a home at a value equal to the median of the state; owns a car valued at $24,000 (the highest-selling car of 2017); and spends annually an amount equal to the spending of a household earning the median state income.

 

Red States vs. Blue States

 

State & Local Tax Breakdown

All effective tax rates shown below were calculated as a percentage of the mean third quintile U.S. income of $55,754 and based on the characteristics of the Median U.S. Household*.

State	Effective Real-Estate Tax Rate	Real-Estate Tax Rank ($)	Effective Vehicle Property Tax Rate	Vehicle Property Tax Rank ($)	Effective Income Tax Rate	Income Tax Rank ($)	Effective Sales & Excise Tax Rate	Sales & Excise Tax Rank ($)	Effective Total State & Local Tax Rates on Median U.S. Household*
Alabama	1.42%	2($791)	0.29%	28($163)	2.68%	28($1,494)	5.01%	39($2,793)	9.40%
Alaska	3.93%	33($2,190)	0.00%	1($0)	0.10%	6($56)	1.65%	4($918)	5.67%
Arizona	2.56%	16($1,427)	0.72%	38($403)	1.57%	13($873)	4.66%	35($2,595)	9.50%
Arkansas	2.08%	10($1,161)	0.43%	29($239)	2.66%	27($1,483)	7.13%	50($3,975)	12.30%
California	2.62%	17($1,461)	0.28%	27($156)	1.40%	11($781)	4.47%	30($2,491)	8.77%
Colorado	1.90%	7($1,058)	0.77%	40($428)	2.54%	25($1,414)	4.07%	24($2,269)	9.27%
Connecticut	6.70%	48($3,733)	1.09%	47($609)	2.25%	19($1,255)	3.81%	18($2,123)	13.85%
Delaware	1.81%	4($1,009)	0.00%	1($0)	3.03%	33($1,689)	1.27%	3($708)	6.11%
District of Columbia	1.84%	5($1,026)	0.00%	1($0)	3.72%	46($2,072)	4.44%	28($2,475)	10.00%
Florida	3.38%	27($1,885)	0.00%	1($0)	0.00%	1($0)	5.45%	44($3,037)	8.83%
Georgia	3.07%	25($1,712)	0.00%	1($0)	3.17%	35($1,768)	4.30%	26($2,396)	10.54%
Hawaii	0.90%	1($501)	0.00%	1($0)	3.85%	47($2,147)	5.59%	46($3,115)	10.33%
Idaho	2.52%	13($1,404)	0.00%	1($0)	2.13%	16($1,185)	3.84%	20($2,141)	8.48%
Illinois	7.69%	50($4,288)	0.00%	1($0)	2.82%	30($1,572)	4.37%	27($2,439)	14.89%
Indiana	2.88%	23($1,606)	0.54%	33($300)	3.71%	45($2,068)	4.73%	36($2,640)	11.86%
Iowa	4.95%	38($2,762)	0.43%	30($240)	3.03%	34($1,691)	4.50%	31($2,509)	12.92%
Kansas	4.63%	37($2,580)	0.89%	43($495)	1.78%	15($994)	5.12%	40($2,855)	12.42%
Kentucky	2.83%	21($1,579)	0.52%	31($292)	4.87%	51($2,716)	3.83%	19($2,135)	12.06%
Louisiana	1.68%	3($934)	0.04%	25($24)	2.17%	18($1,212)	6.50%	49($3,624)	10.39%
Maine	4.38%	35($2,444)	1.03%	45($576)	2.54%	26($1,416)	3.80%	17($2,117)	11.75%
Maryland	3.64%	31($2,030)	0.00%	1($0)	4.30%	49($2,395)	4.02%	23($2,241)	11.96%
Massachusetts	4.01%	34($2,238)	0.97%	44($540)	3.67%	44($2,046)	2.95%	6($1,646)	11.61%
Michigan	5.66%	43($3,158)	0.25%	26($142)	3.32%	37($1,850)	3.58%	11($1,995)	12.81%
Minnesota	3.86%	32($2,155)	0.56%	35($311)	2.94%	32($1,640)	4.21%	25($2,347)	11.57%
Mississippi	2.64%	19($1,470)	1.46%	49($813)	2.34%	21($1,303)	5.78%	47($3,224)	12.21%
Missouri	3.30%	26($1,842)	1.08%	46($600)	2.91%	31($1,625)	3.99%	22($2,224)	11.28%
Montana	2.82%	20($1,570)	0.55%	34($307)	2.76%	29($1,541)	1.16%	2($646)	7.29%
Nebraska	6.05%	45($3,371)	0.69%	36($383)	2.53%	24($1,410)	4.57%	32($2,548)	13.83%
Nevada	2.56%	15($1,425)	0.76%	39($423)	0.53%	8($295)	3.59%	12($2,002)	7.44%
New Hampshire	7.24%	49($4,038)	0.77%	41($432)	0.60%	9($335)	1.65%	5($920)	10.27%
New Jersey	7.96%	51($4,437)	0.00%	1($0)	1.40%	11($781)	3.51%	9($1,957)	12.87%
New Mexico	2.53%	14($1,408)	0.00%	1($0)	2.16%	17($1,204)	6.13%	48($3,419)	10.82%
New York	5.48%	42($3,057)	0.00%	1($0)	3.49%	40($1,945)	4.75%	37($2,647)	13.72%
North Carolina	2.84%	22($1,581)	0.54%	32($299)	3.62%	43($2,018)	3.65%	15($2,035)	10.64%
North Dakota	3.49%	28($1,947)	0.00%	1($0)	0.78%	10($432)	5.58%	45($3,108)	9.84%
Ohio	5.18%	40($2,890)	0.00%	1($0)	3.34%	38($1,862)	4.57%	33($2,548)	13.09%
Oklahoma	2.94%	24($1,638)	0.00%	1($0)	2.44%	23($1,360)	5.37%	42($2,994)	10.75%
Oregon	3.53%	30($1,970)	0.00%	1($0)	4.74%	50($2,640)	0.93%	1($519)	9.20%
Pennsylvania	5.14%	39($2,867)	0.00%	1($0)	3.90%	48($2,174)	3.40%	8($1,898)	12.45%
Rhode Island	5.46%	41($3,047)	2.05%	51($1,144)	2.30%	20($1,282)	3.88%	21($2,162)	13.69%
South Carolina	1.89%	6($1,056)	1.17%	48($651)	2.35%	22($1,310)	3.61%	14($2,013)	9.02%
South Dakota	4.39%	36($2,446)	0.00%	1($0)	0.00%	1($0)	5.37%	41($2,992)	9.75%
Tennessee	2.47%	12($1,376)	0.00%	1($0)	0.10%	6($56)	5.41%	43($3,017)	7.98%
Texas	6.16%	46($3,435)	0.00%	1($0)	0.00%	1($0)	4.88%	38($2,720)	11.04%
Utah	2.22%	11($1,240)	0.00%	1($0)	3.35%	39($1,869)	3.65%	15($2,035)	9.23%
Vermont	5.89%	44($3,285)	0.00%	1($0)	1.61%	14($896)	3.55%	10($1,977)	11.04%
Virginia	2.63%	18($1,467)	1.74%	50($971)	3.49%	41($1,947)	3.00%	7($1,675)	10.87%
Washington	3.52%	29($1,962)	0.00%	1($0)	0.00%	1($0)	8.16%	51($4,552)	11.68%
West Virginia	1.94%	8($1,082)	0.71%	37($398)	3.29%	36($1,833)	4.44%	29($2,478)	10.39%
Wisconsin	6.46%	47($3,602)	0.00%	1($0)	3.56%	42($1,985)	3.60%	13($2,006)	13.62%
Wyoming	2.03%	9($1,130)	0.77%	41($432)	0.00%	1($0)	4.65%	34($2,593)	7.45%

*Assumes “Median U.S. Household” has an income equal to $55,754 (mean third quintile U.S. income); owns a home valued at $184,700 (median U.S. home value); owns a car valued at $24,000 (the highest-selling car of 2017); and spends annually an amount equal to the spending of a household earning the median U.S. income.

 

Ask the Experts: Best Tax Advice

For more insight into the impact state and local taxes have on migration and public policy, we turned to a panel of leading tax and policy experts. You can check out their bios and responses below.

1. Do people usually consider taxes when deciding where to live? Should they?
2. How can state and local tax policy be used to attract new residents and stimulate growth?
3. Which states have particularly complicated tax rules for families?
4. How has the total amount families pay in state and local taxes changed as a result of the new tax code?
5. Which states have the best mix of taxes and government services?
6. Should people pay taxes based on where they live or where they work?

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• Trent Batchelor Assistant Professor of Tax and Advanced Accounting in the Cohodas College of Business at Northern Michigan University
• Vicky C. Dominguez Doctor in Business Administration and Professor of Accounting at the College of Southern Nevada
• John Bird President and Principal & Co-founder of Net Worth Advisory Group
• Anjali Jariwala Founder of FIT Advisors
• Bryan K. Lee Owner of Strategic Financial Planning

Trent Batchelor Assistant Professor of Tax and Advanced Accounting in the Cohodas College of Business at Northern Michigan University

Do people usually consider taxes when deciding where to live? Should they?

Normally, from a socio-economic perspective, people consider the job first, then the area, then, maybe at the timing of their first paycheck, the state tax income tax rate. When purchasing a property, the regressive property tax (as a number, rather than a rate) is considered.

How can state/local tax policy be used to attract new residents and stimulate growth?

By the outcomes of collection or utility thereof. Meaning, if the county levying and collecting personal property taxes develops placement services for citizens, business acquisition services (money used to attract employers), parks, community events, and other community activities, such as maintenance and social services.

Which states have particularly complicated tax rules for families?

Ohio and California.

How has the total amount families pay in state and local taxes changed as a result of the new tax code?

There are yet changes to salt (state and local) taxation. Though referencing the second question, I believe the difference will be accounted for in utility of taxation. With less deduction available for property tax and sales tax, the state and local governments will be required to allocate tax collections with an emphasis upon utility.

Which states have the best mix of taxes and government services?

Arizona, California, Texas, Oregon, Colorado, and Nevada. Notice the best states have large corporate or excise tax resources from which to draw.

Should people pay taxes based on where they live or where they work?

The age-old question of domicile. I would answer in this way. Citizens should pay taxes when there is an unmet need. Normally, the needs of the state are met when economic activity exists. Thus, the citizen should pay tax where they spend the majority of their time.

Disclaimer : Opinions expressed are my own and do not necessarily reflect the opinions of Georgia State University.

Vicky C. Dominguez Doctor in Business Administration and Professor of Accounting at the College of Southern Nevada

Do people usually consider taxes when deciding where to live? Should they?

I personally do not think that the younger generations of earners usually consider taxes when deciding where to live. They are willing to move where employment pays high wages for the qualifications that they have accomplished. They seek better opportunities for employment, even if there are state income taxes that have to be paid. However, the seniors or retired taxpayers are more inclined to consider locations where there are better medical facilities, good weather, and happy and healthy environment. Having to pay state income taxes or higher sales taxes may also be considered to a certain extent, if their retirement or other sources of income are limited.

How can state/local tax policy be used to attract new residents and stimulate growth?

The state and local governments must lower some state tax rates to attract new residents and stimulate the economy, with consideration of age and income bracket. The younger wage earners making above-average income should be paying more to offset the state taxes collected from seniors, whose income sources are limited and just coming from social security and retirement funds. These states must consider restructuring their state tax reporting to attract new residents, which will contribute to economic growth and development.

Which states have particularly complicated tax rules for families?

California seems to have complicated state tax rules that are not clearly benefiting low-income families.

How has the total amount families pay in state and local taxes changed as a result of the new tax code?

For this year, 2018, the current tax filing season is following the 2017 tax codes. I have prepared some returns for families with children, showing more refunds than the prior years, and I think that the changes in the new tax code will result in additional refunds because of the Child Tax Credits and Child Care Credits. But, I have prepared some returns where families with no children are now paying a little bit more because of the income bracket structure. So, I think that the economy will continue to progress and will balance the tax contributions from those taxpayers who had the means and ability to pay. And taxpayers who have bigger families will benefit more because of the increase in child tax and other credits, thereby resulting in higher refunds. These families will have the ability to use more funds to further the needs of their children and create a more wholesome and happy family.

Should people pay taxes based on where they live or where they work?

Yes, people should pay taxes based on where they live or where they work, in order to have a balanced distribution of population and growth within the nation. This will also assist the state and local governments to better serve the needs of their residents, based on the economic development and contributions they receive. When funds are appropriated well, the state will find ways to build infrastructures and maintain growth and economic development, which eventually will mirror the GNP of the whole nation.

John Bird President and Principal & Co-founder of Net Worth Advisory Group

Do people usually consider taxes when deciding where to live? Should they?

I cannot speak to the tax policies of the fifty states (plus D.C. and Puerto Rico), but can share my experience working with families who are contemplating a move. In my experience, people choose where they are going to live by proximity of family, lifestyle, cost of living, and finally, taxes. Taxes are almost always last, though they do tie into the cost of living. It’s worth noting that many of our clients -- as well as more than 40 million Americans -- choose to live in California, even though they must bear a very high tax burden. This alone makes it clear that taxes are not the primary driver of where to live.

Anjali Jariwala Founder of FIT Advisors

Do people usually consider taxes when deciding where to live? Should they?

Taxes may come into play for some individuals when deciding where to live, what job offer to take, etc. However, many of my clients already know where they want to live, and they usually base the decision on non-financial factors -- it is closer to family, in a state they would enjoy living, etc. I do not believe that taxes should be the sole reason why someone picks to live in one state over another. However, I am keenly aware of the differential in taxes among states, so tax planning becomes even more important if someone is going to live in California versus Texas. Usually, incomes are adjusted to account for a state that has a higher cost of living, so the hope is that the increase in income will help offset some of the increased tax burden. However, this is not usually the case with physicians, as you can earn more living in an area that is more remote, less competition, etc.

How can state/local tax policy be used to attract new residents and stimulate growth?

Many states offer incentives to businesses if they create and maintain job growth in the state. The incentives can range from tax credits, exemptions, lower rates and more. These types of incentives are a great way to attract people and businesses to an area. If states or municipalities offer these types of incentives to individuals/families for moving to a certain location, that would help attract new residents and stimulate growth. Another idea is to offer a more generous homestead exemption for property tax, so that people are incentivized to buy a home instead of rent. If someone owns a home, they may be less likely to relocate to another city or state.

Which states have particularly complicated tax rules for families?

The complexity of state tax rules comes up when a state does not conform to a Federal rule. If a state adopts all of the Federal rules, then the return tends to be more straightforward. An issue we will start to see in 2018 is whether states will adopt most/all of the Federal tax changes that went into effect this year. To the extent a state "decouples" from the Federal rule, that will create more complexity with the state tax filing. It is a matter of waiting to see how the states will respond.

How has the total amount families pay in state and local taxes changed as a result of the new tax code?

The amount that families pay in state and local taxes has not necessarily changed as a result of the new law, but rather they are going to receive less deductions on their Federal return. Since state and local taxes are now capped at $10K per individual/family, many taxpayers who live in states where they pay high income tax as well as property tax (e.g., California) will see a large drop in their itemized deductions. The lower marginal tax rates are supposed to help offset the loss of deductions, but for many in California, New York and other similar states, they may not see a true offset. The unfortunate part is that this is a form of double taxation without a corresponding offset. You pay Federal tax on your income, and then pay state tax on that same income. Prior to the law change, you could get a deduction for the state and local taxes you paid (if you itemized) but going forward, that deduction is severely limited.

Which states have the best mix of taxes and government services?

I can't think of any that have a "best" mix. Most states are running large deficits and are looking for income wherever they can find it. States are becoming more aggressive with their audits, so I don't know if there really is a place that has a good balance.

Should people pay taxes based on where they live or where they work?

Generally, you are subject to tax on all of your income in the state that you live in for the year. However, if you end up paying tax in the state you work in and the state you live in, you receive a deduction for taxes paid to another state. I have a client who lives in a state that does not impose income tax (Washington), but works in a state that does (Pennsylvania). Unfortunately for her, she has to file and pay taxes in Pennsylvania, even though she lives in Washington. Since Washington does not have an income tax, there is no offset with the Pennsylvania tax. I do not necessarily believe that a distinction should be made as to where taxes are assessed -- whether it is where you work or where you live. I think having that distinction will just create abuse in a system that is already overly complicated.

Bryan K. Lee Owner of Strategic Financial Planning

Do people usually consider taxes when deciding where to live? Should they?

I find that some of my clients do, and others do not. I find it’s rarely a top three consideration, but often in the top ten. Family and friends’ location, weather, economy/job, education, crime rate, recreation, and things to do are often ahead of tax considerations. I do believe all people should be aware of the impact that state and local, sales, property, as well as federal income taxes will have on their savings and investment nest egg. Whether they do and how much they weigh that factor in deciding where they live should vary based on their personal situation and personal preferences.

How can state/local tax policy be used to attract new residents and stimulate growth?

My city (Plano) and my state (Texas) have both made considerable efforts to woo companies to move their headquarters and create jobs here. There have been many examples of success, with Toyota being a prime one. The area is also still in the running for Amazon’s new location and word is they visited here in February to further evaluate Dallas/North Texas as a potential location.

Which states have particularly complicated tax rules for families?

I would say that Texas does a reasonably good job of limiting the complications of its tax rules.

How has the total amount families pay in state and local taxes changed as a result of the new tax code?

I think this is still being debated amongst states. I have heard of states like California trying to come up with creative ways to potentially assess taxes, to limit the impact their residents would experience by the SALT limitations.

Which states have the best mix of taxes and government services?

24/7 Wall St. recently reviewed the states with the lowest taxes to be: Alaska, Wyoming, South Dakota, Tennessee, Louisiana and Texas. Now weighing which of these provides the best “bang for the buck,” in terms of what government services they get for the least amount of taxes, is certainly subjective, but I would have to rank Texas at least in the top three, and one of the reasons I believe Texas has four of the five fastest growing cities in the country with a population of 50,000 or more residents.

Should people pay taxes based on where they live or where they work?

It would certainly be nice if it were one or the other, but currently, the answer is usually both. Most likely, they will need to file a resident return in the state they live, and a non-resident return in the state they work. When a U.S. citizen lives or works outside of the U.S. for some or all of the year, it can be even more complicated, and can vary from country to country, which may require the help of an accountant to make sure you’re properly paying all tax owed.

 

Methodology

In order to identify the states with the highest and lowest tax rates, WalletHub compared the 50 states and the District of Columbia across four types of taxation:

1. Real-Estate Tax: We first divided the “Median Real-Estate Tax Amount Paid” by the “Median Home Price” in each state. We then applied the resulting rates to a house worth $184,700, the median value for a home in the U.S., in order to obtain the dollar amount paid as real-estate tax per household.
2. Vehicle Property Tax: We examined data for cities and counties collectively accounting for at least 50 percent of the state’s population and extrapolated this to the state level using weighted averages based on population size. For each state, we assumed all residents own the same car: a Toyota Camry LE four-door sedan, 2017’s highest-selling car, valued at $24,000, as of March 2018.
3. Income Tax: We used the percentage of income (middle income rate) spent on income tax from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $55,754.
4. Sales & Excise Tax: We used the percentage of income (middle income rate) spent on sales and excise taxes from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $55,754.

 

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Tax Foundation, Federation of Tax Administrators, American Petroleum Institute, National Automobile Dealers Association, each state’s Department of Motor Vehicles and WalletHub research.

from Wallet HubWallet Hub


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