Top Five States with the Highest Tax Burden in the United States
Taxes are an integral part of every society. They serve as a means of funding public services and infrastructure that benefit everyone. However, there are instances where the tax burden becomes too high, affecting the average citizen’s ability to carry out their daily activities. In this article, we will rank the top five states with the highest tax burden.
1. New York
New York is renowned for its high tax burden, mostly due to the high cost of living in the state. The state imposes some of the highest income, property, and sales taxes in the country. Apart from that, New York City imposes an additional personal income tax, with a maximum rate of 3.876%.
New York’s highest earners face a top state tax rate of 8.82%, and the average property tax in the state is 1.4%. With the high cost of living in the state, the tax burden on individuals and businesses is immense. The state’s tax burden has resulted in an exodus of wealthy residents, with Florida being a top destination for tax reduction purposes.
2. California
California’s tax burden is second to New York, mainly due to its high living expenses and high-income earners. The state imposes among the highest income, property, and sales taxes in the country. The state also has additional local taxes imposed on businesses and individuals, further raising the state’s tax burden.
California’s top earners face a personal income tax rate of 13.3%, the highest in the country, and businesses face Corporation Tax of 8.84% of net income. The average property tax rate in the state is 0.77%, which is high compared to most states. The high taxes have resulted in some businesses moving to tax-friendly states, such as Texas.
3. Connecticut
Connecticut comes in third in the states with the highest tax burden. The state imposes high income and property taxes, and sales taxes are above the national average. The state’s tax burden is further raised due to its high living expenses and its proximity to New York.
Connecticut’s top earners face a personal income tax rate of 6.99%, with the average property tax rate standing at 2.07%, the third highest in the country. With Connecticut’s real estate market being among the most expensive, the property taxes add up to a considerable tax burden for individuals.
4. Illinois
Illinois ranks fourth among the states with the highest tax burden, mainly due to its high sales tax and property tax rates. The state’s personal income tax rate is also high, making the tax burden even more significant.
Illinois’ residents face an average property tax rate of 2.32%, the second highest in the country. The state also has one of the highest state and local tax burdens on businesses, further impacting the state’s economic growth. Illinois’ tax burden has resulted in an outflow of residents to neighboring states.
5. New Jersey
New Jersey rounds up the top five states with the highest tax burden. The state imposes high income and property taxes, and sales taxes are above the national average. The state’s tax burden is further raised due to its proximity to New York City, which has higher tax rates.
New Jersey’s highest earners face a personal income tax rate of 10.75%, the highest for any state except California. The average property tax rate in the state is 2.47%, the highest in the country. With the high taxes, many residents have moved to neighboring states such as Pennsylvania.
Conclusion
Taxes are inevitable in every society, and the revenue generated funds public services and infrastructure that benefits everyone. However, a high tax burden can negatively impact businesses and individuals’ growth and development. In this article, we have ranked the top five states with the highest tax burden in the United States. Understanding these states’ tax burden helps businesses and individuals plan and make informed decisions about their financial future.
————————————