States With the Highest and Lowest Overall Tax Rates

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Woman shocked by her tax rate
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When considering where to move, one of the things you might look at is overall tax rates.

Your tax rate isn’t just about what the state levies in income taxes. It can also include other taxes, such as county and local taxes. When figuring your personal overall tax rate, don’t forget to include applicable sales taxes and property taxes.

WalletHub recently completed an analysis of state taxes and came up with a list of each state’s overall tax rate. In doing so, they “calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income.” Here are the states with the highest and lowest overall tax rates.

States with the lowest overall tax rates

5. Wyoming

Wyoming Capitol
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Effective total state and local tax rate for the median U.S. household: 8.05%

Wyoming won’t tax your Social Security benefits, and you don’t have to worry about paying personal income tax. On top of that, Wyoming has one of the lowest property tax burdens in the U.S. However, a projected $1.5 billion shortfall due to shifts in energy production isn’t likely to be made up by the recently passed lodging tax expected to mostly come from tourists.

4. Nevada

Nevada legislature
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Effective total state and local tax rate for the median U.S. household: 7.94%

Another state that won’t tax Social Security benefits or income tax, Nevada ranks as the fourth-lowest for overall tax rates. Additionally, Nevada is one of the friendliest states for property taxes. However, Nevada ranks 13th for sales tax, according to a Tax Foundation analysis, with a combined state and local sales tax rate of 8.23%.

3. Montana

Montana Capitol
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Effective total state and local tax rate for the median U.S. household: 7.11%

Not only is the effective overall rate for Montana relatively low, but it’s one of the states that don’t charge sales tax. Additionally, even though Montana has a relatively high top state tax rate, it’s one of the few states that allows you to deduct federal income taxes on your state return.

2. Delaware

Delaware Capitol
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Effective total state and local tax rate for the median U.S. household: 6.25%

Delaware is one of the states with a low property tax burden. On top of that, Delaware doesn’t charge sales tax, and it also doesn’t charge an estate or inheritance tax. Delaware’s top income tax rate is 6.6% on an income of $60,000 or over.

1. Alaska

Juneau, Alaska
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Effective total state and local tax rate for the median U.S. household: 5.84%

Alaska is one of the most tax-friendly states. Alaska has no income tax, and it doesn’t tax Social Security benefits. Not only that, but Alaska doesn’t levy an inheritance or estate tax, and it has no statewide sales tax (although localities can charge a sales tax).

States with the highest overall tax rates

5. Kansas

KansasCapitol
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Effective total state and local tax rate for the median U.S. household: 13.43%

After tax cuts in Kansas created a budget shortfall of more than $1.3 billion, the state’s effective tax rate is one of the highest in the country. Even though Kansas doesn’t levy inheritance or estate taxes, it ranks eighth-highest for combined state and local sales tax with a rate of 8.69%.

4. Pennsylvania

Pennsylvania Capitol
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Effective total state and local tax rate for the median U.S. household: 13.97%

Even though you’ll pay personal income taxes in Pennsylvania, the state doesn’t levy taxes on Social Security benefits. Additionally, even though you won’t pay estate taxes in Pennsylvania, your heirs could get stuck with an inheritance tax.

3. New York

New York Capitol
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Effective total state and local tax rate for the median U.S. household: 14.08%

Once again, New York is one of the relatively few states that levy an estate tax, although it doesn’t charge an inheritance tax. However, New York does rank in the top 10 for combined state and local sales taxes, with an average of 8.52%.

2. Connecticut

Connecticut Capitol
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Effective total state and local tax rate for the median U.S. household: 14.84%

Even though Connecticut is reducing taxes for pension and annuity income in 2021, it still ranks as one of the highest in the country for overall tax rate, according to the WalletHub report. Additionally, even though the state doesn’t have an inheritance tax, it does levy an estate tax.

1. Illinois

Illinois Capitol
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Effective total state and local tax rate for the median U.S. household: 15.01%

Illinois takes the top spot for effective overall total tax rate. While Illinois doesn’t levy an inheritance tax, it does charge an estate tax. Plus, Illinois ranks as seventh-highest in the country for combined local and state sales taxes, according to the Tax Foundation. The Tax Foundation ranks Illinois as fifth for state and local tax burden.

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