Top 10 Most Expensive States to File Taxes

When it comes to taxes, federal rates and the IRS tend to grab all the headlines. For starters, national news typically covers federal taxes far more often than state taxes, particularly in the wake of 2020 and the pandemic’s implications on federal borrowing, spending, and taxation. State tax rates are also typically far below federal rates, so some taxpayers might overlook them until tax filing time.

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When you file your tax return, you might be footing a tax bill larger than you’d thought, however, unless you’re lucky enough to live in one of the states that have no state income tax.

States are given the freedom to generate tax revenue as they see fit. State taxes generally fall into three main categories: income tax, sales tax, and property tax. In some states, a low rate in one category is made up for with high rates in the other categories. In others, you might face high tax rates across the board.

GOBankingRates used the Tax Foundation’s 2020 state income tax bracket data to find each state’s top income tax rate, combined state and average local sales tax, and average property tax. 

Here are the 10 most expensive states for filing taxes, ranked by highest state income tax rates.

Last updated: Jan. 12, 2021

1. California

• Top individual income tax rate: 13.30%
• Combined state and average local sales tax: 8.66%
• Average property tax: 0.74%

When it comes to taxes, California is king. With a top income tax rate of 13.3 percent, California is more expensive than the No. 2 state by more than two full percentage points. Only two other states are in the double-digits. The pain doesn’t stop there for state residents, as California also claims one of the top rates for sales tax as well.

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2. Hawaii

• Top individual income tax rate: 11.00%
• Combined state and average local sales tax: 4.44%
• Average property tax: 0.30%

As recently as 2018, Hawaii was barely clinging to a spot in the top 10 most expensive tax states. Today, it’s one of only three states with a double-digit top income tax rate, which is enough to land it the No. 2 spot behind only California despite Hawaii’s forgiving sales and property tax rates.

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3. New Jersey

• Top individual income tax rate: 10.75%
• Combined state and average local sales tax: 6.60%
• Average property tax: 2.21%

The last of the three states with double-digit income taxes, New Jersey is no stranger to the top five in lists of states whose residents suffer from high tax bills. Its property tax rate was already the highest in the nation when it was 2.19% in 2018, so New Jersey raised it just to play it safe.

Related: How Much You’re Really Paying in Property Taxes

4. Oregon

• Top individual income tax rate: 9.90%
• Combined state and average local sales tax: 0.00%
• Average property tax: 0.98%

Although not reaching the lofty heights of its neighbor California, Oregon ranks No. 4 on the list of highest state income tax rates. Residents enjoy big tax relief when it comes to sales taxes, as Oregon has neither state nor local sales taxes. Oregonians recently got a break when property taxes there dropped from 1.076% in 2018 to less than 1% now.

5. Minnesota

• Top individual income tax rate: 9.85%
• Combined state and average local sales tax: 7.46%
• Average property tax: 1.11%

Another regular in the top five is the only one so far that doesn’t touch an ocean–Minnesota. Although its income tax is brutal, the state’s property and sales taxes are only slightly higher than average.

6. New York

• Top individual income tax rate: 8.82%
• Combined state and average local sales tax: 8.52%
• Average property tax: 1.40%

New York has a reputation for being a high-tax state, and to some degree, this is true. Its state income tax is among the highest in the nation and its property taxes and sales taxes are well above the national average.

7. Vermont

• Top individual income tax rate: 8.75%
• Combined state and average local sales tax: 6.22%
• Average property tax: 1.80%

Vermont is another state that has high taxes across the board, which is hardly unusual in New England. It’s income taxes and property taxes are especially burdensome.

8. Iowa

• Top individual income tax rate: 8.53%
• Combined state and average local sales tax: 6.94%
• Average property tax: 1.50%

The second Midwestern state on the list is Iowa, where income and property taxes are high. Sales tax there is above the national average, but not by as much as the other two categories.

9. Wisconsin

• Top individual income tax rate: 7.65%
• Combined state and average local sales tax: 5.46%
• Average property tax: 1.73%

Wisconsin is next to Minnesota both on the map and on this list. There, both income and property taxes are high. Combined sales tax, however, is actually lower than the national average.

10. Maine

• Top individual income tax rate: 7.15%
• Combined state and average local sales tax: 5.50%
• Average property tax: 1.27% 

Rounding out the top 10 is Maine, where the top income tax rate drops to a much more manageable 7.15%. Combined sales tax there is slightly lower than the national average while property taxes are a bit above.

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John Csiszar contributed to the reporting for this article.

Methodology: In order to discover the 10 most expensive states to file taxes, GOBankingRates used Tax Foundation’s 2020 state income tax bracket data to find each state’s (1) highest individual income tax rate. Factor (1) was the only factor that was used to determine overall rankings. GOBankingRates also found each state’s (2) combined state and average local sales tax and (3) average property tax rate all sourced from Tax Foundation for supplemental data. All data were collected on and up to date as of January 4, 2021.

About the Author

Andrew Lisa

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street’s investment community in New York City.

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