Where You'll Pay the Most in State and Local Taxes

Some states have high sales and property taxes, but no income taxes. Other states do not charge sales taxes, but rather high income taxes. In general, state and local taxes can drastically affect consumers' cost of living. These state tax lists can give you an idea of ​​how the states with the highest and lowest taxes are ranked.

Find out where your status is and ask those who might be considering moving to for one reason or another, like when it's time to retire.

State sales tax

Sales tax is the percentage you pay in addition to the sale price when purchasing certain items. Most states rely heavily on these taxes to meet their tax needs.

Municipalities and counties sometimes have their own sales taxes in addition to those collected at the state level. The Tax Foundation, a leading source of tax information, provides comprehensive annual ratings based on various general taxes.

According to the Tax Foundation, the five states with the highest combined state and local sales taxes as of January 2021 are:

Tennessee: 9.55%
Louisiana: 9.52%
Arkansas: 9.51%
Washington: 9.23%
Alabama: 9.22%

The states with the lowest combined sales tax are:

Alaska: 1.76%
Hawaii: 4.44%
Wyoming: 5.33%
Wisconsin: 5.43%
Maine: 5.5%

Four states do not collect sales tax: Delaware, Montana, New Hampshire, and Oregon.

State income tax

Eight states do not tax residents' income in 2021: Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, Washington, and Wyoming. New Hampshire only taxes interest and dividends (you can keep your earned income tax-free) and Tennessee even repealed that tax effective January 1, 2021.

At the other end of the scale are states with high tax rates at the highest income levels.

2021 Personal Income Tax Rates by State

The top five states by income tax rate in 2021 are:

California: up 13.3%
Hawaii: up to 11%
New Jersey: up 10.75%
New York: up to 8.82%
Oregon: up to 9.90%
You'll notice that none of these states are also on the list for the highest state and local sales taxes, so residents get a little break there.

The last five states by income tax rate in 2020 were:

North Dakota: 2.9% and below
Pennsylvania: 3.07% (stable)
Indiana: 3.23% (flat)
Michigan: 4.25% (flat)
Colorado: 4.55% (flat)
Property tax rates
Property taxes are generally collected locally. New Jersey counties are known to have the highest property taxes, averaging 1.89% in 2021, and Louisiana has the lowest at 0.18%. Half of all property taxes are higher than the median and half are lower.

Average property tax as a percentage of home value by state
Behind New Jersey, but still among the five states with the most onerous property taxes, are:

New Hampshire: 1.86%
Texas: 1.81%
Nebraska: 1.76%
Wisconsin: 1.76%

At the other end of the spectrum, the four states that join Louisiana for the five lowest median property tax rates are:

Hawaii: 0.26%
Alabama: 0.33%
Delaware: 0.43%
West Virginia: 0.49%

Note that Alabama makes up for its ranking here with its high sales tax. Also note that Washington, D.C., while not a state, is near the bottom of the list, with a property tax rate of 0.46%.

We hope you enjoy watching this video about 10 Tax Friendly States

Source: World According To Briggs


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