18 States Where Residents Pay the Most in Taxes
Have you ever heard the idea that taxes are like subscription fees for living in a country? Do you feel frustrated by the amount of your earnings that go towards taxes?
U.S. News reported that Americans pay approximately 8.9% of their yearly income to state taxes. These taxes come in different forms, including income, property, sales, license, and other taxes you’d have to pay the state. As a resident, the amount you have to pay depends on where you live.
The report lists states in the United States where residents pay more compared to other states.
1. New York
New York is one of the states with the highest taxes. Residents’ state income tax rates fall between 4% to 10.9%.
Lower your tax by checking out standard and itemized deductions you can use to your advantage. Explore income tax credits you can get in New York, including household, child care, and college tuition credits (up to $400/student).
2. Hawaii
Hawaii has a high state income tax rate between 1.4 to 11%. While the state requires a high tax from its residents, at least you don’t have to pay any sales tax.
Compared to other states, though, Hawaii offers various deductions to reduce your tax liability. Some of these are mortgage interest and medical or dental expenses.
3. District of Columbia
The District of Columbia charges its residents 4 to 10.75% for state income tax. On top of that, they ask for 6% sales tax. These tax rates are fairly high, so you’d want to explore all the credits and deductions if you live in Washington D.C. to decrease your tax liability.
You can file for child and dependent care expenses credit where you’ll get 32% of the federal amount. You can also check the conditions for homeowner and renter property tax credit to take advantage of a maximum credit of $1,250, which depends on your income.
4. Maine
Residents of Maine pay state income tax between 5.8-7.15%. Besides that, there’s also a sales tax of 5.5%.
If you live in Maine, you can reduce your tax liability using deductions and credits like adult dependent care, child care, property tax fairness, and real estate taxes. You can also write off some personal property taxes and eligible medical expenses.
5. Vermont
In Vermont, you pay 6% sales taxes and your state income tax is between 3.35 and 8.75%. The state, known for its progressive views on social issues like income inequality, takes a strict stance on taxing the wealthy.
Lawmakers plan to impose two new wealth taxes on high earners. Those with income over $500,000 face an extra 3% tax, while a new tax will apply to capital gains on assets above $10 million.
6. Connecticut
If you live in Connecticut, expect to pay 3% to 6.99% for income tax. The sales tax rate, at 6.35%, is a bit higher than most other states we discussed so far.
For credits and deductions, the state does not consider standard and itemized deductions, unlike other states. However, you can reduce your tax liability through personal tax credits and property tax credits.
7. Maryland
Income tax rates in Maryland range from 2% to 5.75%, while the sales tax rate is set at 6%. You can reduce tax payments through deductions from standard and itemized elements.
Besides these basic deductions, there are other options to lighten your tax burden. In Maryland, you can get tax deductions for child care, adoption expenses, college savings, classroom supplies, and charitable donations.
8. New Jersey
In New Jersey, income tax ranges from 1.4 to 10.75%, plus a 6.625% sales tax. These rates are higher than in other states, so looking into possible deductions can help reduce your tax liability.
You can deduct medical expenses and alimony payments, and if you’re self-employed, you can also claim credits for health insurance payments.
9. Minnesota
Minnesota’s income tax ranges from 5.35% to 9.85%, with a sales tax of about 6.875%. To reduce your tax bill, consider standard and itemized deductions.
You can get deductions for dental and medical expenses, mortgage interest, real estate taxes, charitable donations, and unreimbursed work expenses. You can also get tax credits on your student loans, education savings, child or dependent care, and if you already paid taxes in another state.
10. Illinois
Illinois residents pay a flat state income tax rate of 4.95%. The sales tax is 1% for food, drugs, and medical appliances and 6% for other items that you buy.
You can reduce your tax bill through tax credits and personal exemptions. Credits include the earned income tax credit and education expenses. While Illinois doesn’t allow itemized deductions, it offers a personal exemption. If you’re over 65 or legally blind, you get an additional amount.
11. Iowa
Iowa’s state income tax rates range from 0% to 8.53%, with a 6% sales tax. You can reduce your tax bill through various deductions and credits, like tuition credits and farm-to-food donation credits.
The state also offers deductions for casualty and theft losses, gambling losses, and adoption expenses, among others.
12. Nebraska
If you live in Nebraska, you pay between 2.46 and 5.84% in state taxes and a 5.5% sales tax.
Its property taxes are a significant burden as well, at 1.44% on the housing value. These rates are much higher than the national average, ranking number 8 in the country.
13. California
California has one of the highest state income tax rates in the country, which range from 1% to 12.3%. Its sales tax rates are also higher than most states, ranging from 7.25% to 10.75%.
Despite the high tax rates, California residents can benefit from tax credits and deductions. You can claim standard and itemized deductions, like medical and dental expenses, job expenses, as well as child and dependent care credits depending on your situation.
14. Rhode Island
If you live in Rhode Island, the state’s income tax rates range from 3.75% to 5.99%, while sales tax is set at 7%.
Besides that, they charge an average property tax of 1.53%, which is higher than the national average rate.
15. New Mexico
New Mexico has income tax rates of 0 to 5.9% and doesn’t charge sales tax. Property taxes are decided on a local level, and New Mexico doesn’t have an inheritance tax at the moment.
Reduce your tax liability using deductions for dependents and credits for medical expenses and special-needs adoption.
16. Kansas
Kansas residents pay 0% to 5.7% of their income in taxes and 6.5% for sales tax. To lessen this tax burden, you can use deductions and credits like adoption, disability, and itemized deductions for medical expenses.
Residents who frequently pay medical expenses have an advantage in Kansas. They can claim returns on insurance premiums, optical care, dentures, hearing aids, and even lodging and transportation related to health care. The caveat is that they have to be greater than 7.5% of your federal adjusted gross income.
17. Wisconsin
Wisconsin requires its residents to pay 0 to 7.65% in state income tax. Its sales tax rate falls at 5%.
Wisconsin gives importance to the future by supporting children through deductions for qualified adoption expenses and credits for college tuition. You can deduct up to $4,000 for private elementary school tuition and up to $10,000 for private secondary school tuition. For adoption expenses, you can claim up to $5,000 per child each tax year.
18. Ohio
Ohio residents pay 2.75% to 3.75% in income tax. The average property tax rate is set at 1.59%, but local rates may vary.
If you want to conduct business in this state, expect to pay 7.24% as the sales tax rate. The amount includes both state (5.75%), and local (1.49%) rates.
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