Do you think taxes are high where you live? You might not be so sure after you compare the tax rates in your area with some of the high-burden cities on this list.
GOBankingRates used the household median income for each of the 20 largest cities in the U.S. plus effective and marginal tax rates to determine the average American’s tax bill, including federal and state income taxes plus Federal Insurance Contributions Act (FICA) tax, which is a federal payroll tax.
Last updated: Jan. 20, 2021
- Total tax bill: $23,303
One of only a handful of cities on GOBankingRates’ list to be burdened with an average tax bill of over $20,000, District of Columbia residents get to enjoy a median income of $86,420. Federal income taxes amount to over half of the expected total tax bill for those living in D.C.
- Total tax bill: $15,927
The Mile High City has an average tax bill that lives up to Denver’s nickname. Median household incomes top $68,000, which means state, federal and FICA taxes end up approaching $16,000 — or over 25% of income.
- Total tax bill: $20,343
Even though Seattle residents enjoy having no state income tax, residents still have the fifth-highest overall tax liability among the largest cities in the country. There’s a good reason for this, however — Seattle has the third-highest median income on this list at $92,263, resulting in high federal and FICA taxes.
Charlotte, North Carolina
- Total tax bill: $14,347
The tax situation for Charlotte residents is about the same as that in Austin, Texas or Los Angeles. Median incomes of $62,817 result in $2,734 in state taxes as well as $14,347 in total income tax liability.
What’s Yours? Here’s the Average IRS Tax Refund Amount
- Total tax bill: $9,991
Among the 20 biggest U.S. cities, Indianapolis has the second-lowest effective federal tax rate, at just 4.88%. This is due to the low median income in the city of just $47,873.
Fort Worth, Texas
- Total tax bill: $11,426
Fort Worth and Dallas might be considered twin cities, but Fort Worth residents are much better off, earning nearly $10,000 more than their Dallas neighbors on average. Although there aren’t any state or local income tax liabilities in either city, the higher Fort Worth salaries result in much larger overall tax bills.
San Francisco, California
- Total tax bill: $33,803
If you want to live in the city by the Bay, you’d better prepare to pay a significant portion of your salary in taxes. With a whopping $33,803 in total income taxes, San Francisco residents face over $7,200 in state taxes and an effective federal tax rate of 16%. The bright spot is that these taxes derive from a median income of $112,449, the highest of any city in the top 20. However, the San Francisco area is one of the worst offenders in terms of income inequality in the U.S.
- Total tax bill: $11,294
Columbus residents don’t have particularly high incomes, but their overall tax liability is significant due to both state and local income taxes. The total marginal income tax rate of 25.61% is a bit above average.
- Total tax bill: $9,207
There aren’t any state or local income taxes in Jacksonville, keeping overall tax obligations low. In fact, Jacksonville is one of only 5 cities in the top 20 that has a total average tax bill below $10,000.
- Total tax bill: $14,210
Austin is one of the fortunate cities in the top 20 that doesn’t have any state income taxes adding to the overall bill. However, Austin residents earn a lot of money: The median income of $71,576 is the sixth-highest on this list, resulting in high federal and FICA taxes.
San Jose, California
- Total tax bill: $32,633
Silicon Valley gem San Jose has the second-highest overall tax bill among the largest cities in America — although it’s not much more less in nearby San Francisco. At $109,593, the extraordinarily high median income on this list is the culprit, because high incomes trigger heavy state, federal and FICA taxes.
San Jose residents might need every penny of their padded paychecks — it’s one of the major cities that cost the most to live comfortably.
- Total tax bill: $8,627
Dallas residents earn nearly $5,000 per year more than those living in Indianapolis, but they pay more than $1,300 less in annual taxes. The math works out because Dallas residents don’t have to pay any state or local income taxes.
San Diego, California
- Total tax bill: $20,767
With an annual median income of $79,673, residents in sunny San Diego enjoy both high salaries and great weather. However, they do have to pay the piper in terms of a combination of high state and federal income taxes, in addition to FICA taxes.
San Antonio, Texas
- Total tax bill: $8,603
As residents of Texas, San Antonians don’t pay state or local income taxes. Coupled with a relatively low median income of $52,455, the tax situation for San Antonio residents is one of the lowest in the country.
- Total tax bill: $10,531
Residents of Philadelphia might not feel the brotherly love that the city is named for when it comes paying their taxes. Although residents have the lowest average income of any city in the top 20, at just $45,927, its tax burden is quite high, amounting to 22.93% of income.
- Total tax bill: $11,330
In the Sun Belt, Phoenix residents enjoy a median household income above $57,000. Arizona does levy state tax on its residents, bringing the total average tax burden in Phoenix to 19.72% of income.
- Total tax bill: $8,580
Houston is another Texan city that benefits from low overall taxes due to the lack of state income tax liability and a low median household income, coming in at $52,338. The overall tax burden of just over $8,500 gives Houston the lowest overall tax burden of any city in the top 20.
- Total tax bill: $13,141
High state income taxes are responsible for pushing up Chicago ‘s average tax burden over $13,000. A resident earning Chicago’s median income of $58,247 will face a significant $2,883 in state taxes.
Los Angeles, California
- Total tax bill: $13,941
Los Angeles shares the same burden as most of the top 20 cities with the biggest tax bills: high state income taxes. Overall, California is one of the worst states for the middle class. Although residents in the City of Angels enjoy decent incomes, average state taxes of over $2,500 contribute to a high total tax rate.
- Total tax bill: $17,161
Although New York only has about half the annual tax bill of San Francisco, state taxes exceeding 10% push the overall income tax burden in the city to 26.82% of income. Though it might come as a surprise, the median income in New York is not excessively high, at just $63,998. This means that New Yorkers pay more than double the tax of Houston residents while earning just over $11,000 more in income.
The Most and Least Tax-Friendly Cities in America
The most expensive cities in America, such as San Jose and San Francisco, levy annual tax bills nearly four times that of cities with lower taxes, such as Houston.
Although much of this tax discrepancy is due to higher median incomes, the worst cities also carry higher state tax rates. If you’re counting on a tax refund to cover some of your expenses, you might be better off living in a city with lower taxes.
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Methodology: In order to find the tax burden on the average American in the nation’s 20 largest cities, GOBankingRates first found the 20 largest cities in terms of (1) total population as well as the (2) median household income of these cities, sourced from the 2019 American Community Survey conducted by the US Census Bureau. With these 20 cities isolated, GOBankingRates used an in-house calculator and Tax Foundation’s 2021 tax data to find both the (3) effective and (4) marginal tax rate as well as (5) total spent on income taxes for the average American in each of the 20 largest cities. These calculations were done for a person filing their taxes as a single person and for a married couple filing jointly. To figure out the total tax burden, GOBankingRates combined total spent on federal and state income tax plus FICA. The standard deduction was used when calculating income tax rates at both the state and federal level. All data was collected on and up to date as of January 5th, 2021.