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The Best and Worst States for Taxes

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Unlike tax rates, tax burdens measure the amount of money taken from your personal income. Tax burdens vary depending on where you live, how much you earn, the property that you own and how you choose to spend your hard-earned paycheck. The different taxes can get confusing and quickly add up, dwindling away your disposable income.

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For example, the Federal Insurance Contributions Act — aka FICA — authorizes a payroll tax that helps fund the Social Security and Medicare programs. When it comes to sales tax, individual states determine which goods and services are taxed. Some states choose not to tax clothing or groceries, whereas others may tax certain products at a lower rate. Many local governments also impose taxes on specific products, which will add to your overall tax bill.

Getting  a better understanding of the average tax burden in your state can help you avoid any nasty shocks when you file your tax returns.

Last updated: Oct. 5, 2021

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1. The Best States for Taxes

Looking to live somewhere where taxes won’t take too much of a bite out of your finances? Here are the states where you’ll keep the most of your money.

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2. Wyoming

  • Median household income: $64,049
  • Total taxes paid: $16,522.03
  • Total tax burden: 25.80%
  • Total annual income tax paid: $11,977.75
  • Total annual property tax paid: $1,422.29
  • Total sales tax paid: $3,121.99

Learn More: States With the Highest Property Taxes

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3. Alaska

  • Median household income: $77,640
  • Total taxes paid: $20,489
  • Total tax burden: 26.39%
  • Total annual income tax paid: $16,007.46
  • Total annual property tax paid: $3,118.15
  • Total sales tax paid: $1,363.38

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4. Delaware

  • Median household income: $68,287
  • Total taxes paid: $18,386.45
  • Total tax burden: 26.93%
  • Total annual income tax paid: $16,510.96
  • Total annual property tax paid: $1,875.50
  • Total sales tax paid: $0

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5. Montana

  • Median household income: $54,970
  • Total taxes paid: $14,932.22
  • Total tax burden: 27.16%
  • Total annual income tax paid: $12,167.21
  • Total annual property tax paid: $2,765.01
  • Total sales tax paid: $0

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6. South Dakota

  • Median household income: $58,275
  • Total taxes paid: $17,004.49
  • Total tax burden: 29.18%
  • Total annual income tax paid: $10,266.04
  • Total annual property tax paid: $2,852.33
  • Total sales tax paid: $3,886.12

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7. Tennessee

  • Median household income: $53,320
  • Total taxes paid: $15,558.83
  • Total tax burden: 29.18%
  • Total annual income tax paid: $8,796.98
  • Total annual property tax paid: $1,513.62
  • Total sales tax paid: $5,248.23
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8. West Virginia

  • Median household income: $46,711
  • Total taxes paid: $13,782.89
  • Total tax burden: 29.51%
  • Total annual income tax paid: $9,451.39
  • Total annual property tax paid: $627.84
  • Total sales tax paid: $3,703.65

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9. North Dakota

  • Median household income: $64,894
  • Total taxes paid: $19,364.37
  • Total tax burden: 29.84%
  • Total annual income tax paid: $12,928.39
  • Total annual property tax paid: $2,269.58
  • Total sales tax paid: $4,166.39

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10. Florida

  • Median household income: $55,660
  • Total taxes paid: $16,702.74
  • Total tax burden: 30.01%
  • Total annual income tax paid: $9,490.99
  • Total annual property tax paid: $2,825.88
  • Total sales tax paid: $4,385.87

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11. Indiana

  • Median household income: $56,303
  • Total taxes paid: $16,957.28
  • Total tax burden: 30.12%
  • Total annual income tax paid: $11,500.18
  • Total annual property tax paid: $1,550.13
  • Total sales tax paid: $3,906.98
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12. The Worst States for Taxes

If you live in one of these states, taxes might be a bit of a harder pill to swallow. Here’s where your tax burden might be higher than you’d expected.

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13. Minnesota

  • Median household income: $71,306
  • Total taxes paid: $25,647.49
  • Total tax burden: 35.97%
  • Total annual income tax paid: $17,744.91
  • Total annual property tax paid: $3,272.16
  • Total sales tax paid: $4,630.42
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14. Hawaii

  • Median household income: $81,275
  • Total taxes paid: $30,837.23
  • Total tax burden: 37.94%
  • Total annual income tax paid: $22,862.54
  • Total annual property tax paid: $2,707.96
  • Total sales tax paid: $5,266.73
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15. Rhode Island

  • Median household income: $67,167
  • Total taxes paid: $25,621.77
  • Total tax burden: 38.15%
  • Total annual income tax paid: $15,087.28
  • Total annual property tax paid: $5,416.79
  • Total sales tax paid: $5,117.71
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16. Vermont

  • Median household income: $61,973
  • Total taxes paid: $23,760
  • Total tax burden: 38.34%
  • Total annual income tax paid: $13,759.93
  • Total annual property tax paid: $5,529.85
  • Total sales tax paid: $4,470.22

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17. Illinois

  • Median household income: $65,886
  • Total taxes paid: $25,704.91
  • Total tax burden: 39.01%
  • Total annual income tax paid: $15,783.28
  • Total annual property tax paid: $4,760.82
  • Total sales tax paid: $5,160.81
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18. Connecticut

  • Median household income: $78,444
  • Total taxes paid: $30,864.17
  • Total tax burden: 39.35%
  • Total annual income tax paid: $20,109.97
  • Total annual property tax paid: $5,990.97
  • Total sales tax paid: $4,763.23
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19. Massachusetts

  • Median household income: $81,215
  • Total taxes paid: $32,135.91
  • Total tax burden: 39.57%
  • Total annual income tax paid: $21,128.95
  • Total annual property tax paid: $5,927.74
  • Total sales tax paid: $5,079.22
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20. New Jersey

  • Median household income: $82,545
  • Total taxes paid: $34,490.38
  • Total tax burden: 41.78%
  • Total annual income tax paid: $20,595.69
  • Total annual property tax paid: $9,219.19
  • Total sales tax paid: $4,675.49
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21. California

  • Median household income: $75,235
  • Total taxes paid: $31,506.40
  • Total tax burden: 41.88%
  • Total annual income tax paid: $19,037.48
  • Total annual property tax paid: $5,074.17
  • Total sales tax paid: $7,624.23
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22. New York

  • Median household income: $68,486
  • Total taxes paid: $28,742.62
  • Total tax burden: 41.97%
  • Total annual income tax paid: $16,762.18
  • Total annual property tax paid: $4,356.21
  • Total sales tax paid: $7,624.23

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    Jami Farkas contributed to the reporting for this article. 

    Methodology: To generate the tax bill in every state, GOBankingRates surveyed three key taxes: (1) income taxes at both the Federal and State level (including FICA), (2) property taxes, and (3) sales taxes. Incomes are based on 2019 American Community Survey median household figures and income tax estimates were created by using an in-house calculator for a person who was filing their taxes as a single person and using the standard deduction. Property taxes were calculated using each state’s average rate as sourced from Tax Foundation and Zillow’s median home value index data as of March 2021. Sales taxes were calculated using each state’s “state and local combined sales tax rate”, sourced from Tax Foundation, and factored against each state’s average annual consumer expenditure. Estimates on annual consumer expenditure in each state were created by taking the Bureau of Labor Statistics’ 2020 Consumer Expenditure Survey’s national average annual expenditures estimate and factoring it out for each state using the Missouri Economic Research and Information Center’s cost-of-living indices for Quarter 2 of 2021. Once the three above taxes were calculated as an annual amount, GOBankingRates found each state’s (4) total annual taxes paid and (5) total tax burden. States were then ranked exclusively by factor (5). All data was collected on and up to date as of April 26, 2021.