The 5 States With the Highest Tax Burdens (And the 5 Lowest)

Individual tax burdens vary wildly across the U.S.; some taxpayers lose just 4.5% of their income to individual taxes, while others pay a huge 30.5%. These differences don’t just make for interesting dinner-table debates; understanding them is vital if planning your financial future or eyeing a move.

“Knowing which states hit hardest—and which let you keep more of your hard-earned cash—is imperative,” says Dawn Delia of Delia Law, a firm of experienced IRS tax attorneys. That’s why she and the team used data from the Tax Foundation and the census to determine which states have the highest and lowest individual tax burdens.

They’ve calculated what percentage of an individual’s total income is paid in taxes on average, as well as the average annual individual tax payment. 

The Top Five States With the Lowest Individual Tax Burdens

New Jersey

New Jersey might charm you with its proximity to NYC and beautiful suburbs, but it comes at a cost—an average tax burden of 30.52%, driven primarily by the nation’s highest property taxes. “While the state boasts excellent schools and infrastructure, the steep taxes often prompt retirees to consider moving elsewhere,” says Ms Delia.

California

California has it all—stunning beaches, Hollywood, and sky-high taxes. The average individual tax burden in the Golden State is 30.09%. With progressive income tax rates for the wealthiest paired with high sales tax, the state is not shy about taking a hefty cut. 

Many younger professionals stay for the tech and entertainment opportunities, while others – including Elon Musk – are heading to Nevada or Texas for a lower cost of living.

Massachusetts

Known for its top-notch education and healthcare, Massachusetts also has an individual tax burden of 24.23%. Its flat income tax of 5% and higher-than-average property taxes keep it near the top of the list. 

Minnesota

Minnesota might lure you in with its lakes and quality of life, but the 27.51% tax burden, driven by high-income taxes, can feel daunting. It has a booming job market that attracts younger people, but the tax pressures often lead retirees to warmer, tax-friendly states like Florida or Arizona.

Maryland

With a tax burden of 20.81%, Maryland residents pay for their proximity to D.C. Dual state and local income taxes, paired with moderate property taxes, leave Marylanders digging deep into their wallets. “Still, Maryland’s economy is thriving, and many stick around to take advantage of all the well-paying federal jobs on offer,” says Ms Delia.

The Top Five States With the Lowest Individual Tax Burdens

Wyoming

Wyoming residents enjoy the lowest tax burden in the nation at 4.53%. Thanks to robust revenues from their natural resource industries like oil and gas, the state has decided it has no need for income taxes, keeping more money in residents’ pockets. Its wide-open spaces and affordability attract people who are seeking peace and savings.

South Dakota

South Dakota’s lack of state income tax and low sales taxes make it a haven for businesses and individuals alike. Its low 5.21% tax burden is perfect for families and retirees, especially combined with the state’s low cost of living.

Nevada

Nevada might be famous for its gambling haven, Las Vegas, but its low tax burden of 7.33% makes it a jackpot for residents. With no income tax, the state relies on sales and tourism taxes, meaning locals keep more earnings. This attracts retirees and Californians looking for tax relief.

Texas

Texas’s no-income-tax policy keeps its tax burden at 7.45% despite slightly higher property and sales taxes than other states. Its booming economy and affordability make it a magnet for businesses and families fleeing higher-tax states like California.

Ohio

Ohio rounds out the top five low-tax states with a burden of 10.87%. With moderate property taxes and relatively low-income taxes, the state offers a budget-friendly option for those who want to avoid the financial strain of higher-tax states.

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