Editor’s note: This story has been updated to correct the tax burden of a median family in Nevada.
(NEXSTAR) –Tax season isn’t really fun for anyone, but some states’ residents have it harder than others this time of year.
As families around the country collect their paperwork and get ready to file, people in Connecticut, Illinois, Iowa and New Jersey may find themselves with a heftier tax bill than their neighbors in other states.
Anupdated analysis by MoneyGeek, a personal finance site, evaluates how “tax friendly” each state is by calculating the tax burden on the average citizen. States with low tax burdens earned an A, while those with the highest tax burden earned Fs.
The state that scored worst overall was Illinois, where taxes represent about 13% of a median family’s income.
Unsurprisingly, the states with no state income taxes at all ended up scoring pretty highly. Those eight states are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
But in some of those states, higher sales tax rates or property tax rates are in place to make up for the lower income tax revenue. Tennessee and Washington have some of the highest sales tax rates in the country, the Tax Foundation says.
According to the updated MoneyGeek analysis, the most “tax friendly” state overall was Nevada, where the median family owes about 3% of its income in taxes.
Meanwhile, 13 states earned either a D or F grade for tax burdens. For some of those states, like Oregon, high personal income tax rates are to blame. In others, like Illinois, high property taxes are a major factor. New Jersey, which earned an F from MoneyGeek, residents have a double whammy of high income and property taxes.
The states with the highest top personal income tax rates are California, Hawaii, New Jersey, Oregon and Minnesota, TurboTax reports, but that doesn't necessarily mean people in those states are getting hit hardest in the end. Each of those states has its own complex set of rules of tax credits, deductions and income floors to pay any state taxes at all.
To conduct the study, MoneyGeek looked at how much a hypothetical family would pay in taxes if they were a married couple with one dependent, a gross income of $94,003 (the median national income at the time of research), and a home worth about $320,900 (the median price of a new home). The lower the taxes on this hypothetical average family, the better the grade.
MoneyGeek’s system of grading states on tax burden only holds true for that hypothetical family. A family who just bought a $1.5 million house in California would probably be paying a lot more in taxes, while a single person who earns $40,000 and is a renter in Texas would pay less.
If you haven't filed taxes yet, you've still got time. The federal deadline to file – or request an extension –is Monday, April 15.
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FAQs
Unsurprisingly, the states with no state income taxes at all ended up scoring pretty highly. Those eight states are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Does it matter what state you live in for taxes? ›
Your physical presence in a state plays an important role in determining your residency status. Usually, spending over half a year, or more than 183 days, in a particular state will render you a statutory resident and could make you liable for taxes in that state.
Where is the best place to live for tax purposes? ›
If you're looking for a lighter tax backpack, these states stand out for their low overall tax burden:
- Alaska: 5.06%
- Delaware: 6.12%
- New Hampshire: 6.14%
- Tennessee: 6.22%
- Florida: 6.33%
- Wyoming: 6.42%
- South Dakota: 6.69%
- Montana: 6.93%
Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming do not levy state income taxes, while New Hampshire doesn't tax earned wages. States with no income tax often make up the lost revenue with other taxes or reduced services.
What is the most heavily taxed state? ›
New York has the highest overall tax burden, while Alaska has the lowest. Maine has the highest property tax burden, while Alabama has the lowest. California has the highest individual income tax burden, while seven states (including Texas, Florida and Washington) have the lowest.
What is the best state to retire in 2024? ›
A: The best state to retire in 2024 is sunny Florida, according to WalletHub, thanks to its relative affordability and high quality of life for seniors. That's followed by Colorado, Virginia, and Delaware.
Can I have dual residency in two states? ›
You can be a resident of two states at the same time, usually by maintaining a domicile in one state and spending 183 days or more in another. It is not advisable, as you will be liable to file income taxes in both states, rather than in only one.
How does the IRS determine state residency? ›
Most states will consider you a resident for tax purposes if you spend 183 days or more in that state.
Can I have two primary residences in two different states? ›
Under RTC 17014(c), an individual may only claim one domicile at a time. This follows the logic that you can only be the most settled and have a permanent connection to one place.
What state has the best property taxes? ›
Hawaii. Hawaii has the lowest property tax rate in the U.S. at 0.29%. The Aloha state has a home median value of $662,100.
1. Bridgeport, Connecticut. As one of the wealthiest cities in America, Bridgeport carries the highest overall tax rate in the nation. Wealthy taxpayers earning over $150,000 per year are on the hook for up to 22% in state and local taxes.
Where is the cheapest place to live tax free? ›
Among the countries with the lowest tax rates in the world are Malta, Cyprus, Andorra, Montenegro and Singapore. Aside from zero income tax, in Antigua and Barbuda, individuals are also free from paying taxes on wealth, capital gains, and inheritance.
Which state has no income tax? ›
Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — do not levy a state income tax. New Hampshire Department of Revenue Administration. Frequently Asked Questions - Interest & Dividend Tax.
What state has no sales tax? ›
There are five states with no general statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
What are the sticky states for taxes? ›
Sticky states for tax purposes include California, New Mexico, New York, South Carolina, and Virginia. These states all define residency in a way that makes it more difficult to prove you no longer maintain ties there.
What state has the lowest property taxes? ›
States With the Lowest Property Taxes in 2024
- Hawaii has the lowest property tax rate in the U.S. at 0.29%. ...
- Alabama is generally one of the more affordable states in the country. ...
- Colorado has the third-lowest property tax rate at 0.51%. ...
- Nevada has the fourth-lowest property tax rate in the nation (0.55%).
To determine which states are the most affordable, the research team at USA TODAY Homefront looked at the cost of living by state. Utah came out on top as the most affordable state, thanks to manageable health care costs. On the other hand, the high homeownership costs landed New York as the least affordable state.
What state has the lowest tax percent? ›
Alaska is the state with the lowest tax rate, while Illinois is the state with the highest, according to personal finance site WalletHub. In a report released March 5, WalletHub determined the states with the highest and lowest tax rates.
Which state has the lowest sales taxes? ›
Which States Have the Lowest Sales Tax?
- As of 2024, five states impose a 0.000% sales tax including Alaska, Delaware, Montana, New Hampshire, and Oregon. ...
- Whether or not a state imposes a state sales tax, local municipalities and counties may impose excise or surtaxes.
