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US States With Highest and Lowest Total Tax Rates | Financial Advisor | Christy Capital Management

What state has the highest tax burden? What state has the lowest tax burden? We've got the data. WalletHub did a study and put out some information. It’s not just looking at what income tax rates are in a state because there’s more taxes than that. There are property, individual income, total sales, and excise taxes. For some of the key takeaways, New York has the highest overall tax burden when you factor in all of these things while Alaska has the lowest. The top five worst states with the highest tax burden are New York, Hawaii, Vermont, Maine, and California. The five best states with the lowest overall tax burdens are Alaska, then New Hampshire, Wyoming, Florida, and then Tennessee. Just looking at property taxes as a percent of personal income, the highest property taxes are in Maine, then Vermont, New Jersey, New Hampshire, and New York, while the lowest property taxes as a percentage of income would be Alabama, Tennessee, Arkansas, Oklahoma, and Louisiana. If you look at individual income taxes as a percentage of income, the highest, and therefore the worst, would be California, New York, Oregon, Minnesota, and Maryland. While the lowest individual income tax is Alaska, Florida, Nevada, South Dakota, Texas, Wyoming and Washington tied for 44th because they all don’t have a personal income tax for the state. For the total sales and excise taxes, the worst states are Washington, Nevada, Hawaii, New Mexico, and Louisiana. The lowest sales and excise taxes belong to New Hampshire, Delaware, Oregon, Montana, and Alaska. So in total tax burden, the worst is New York with the highest where the residents are paying out around 12% of their income to state and local taxes, which include around 4.6% in income taxes, 4.4% in property taxes, and 3% in sales and excise taxes. Alaska has the lowest total tax burden as residents pay no income tax and pay around 3.5% of their income and property taxes and 1.4% in excise taxes for a total of 4.9%. Another interesting thing they found was looking at blue states versus red states. States are deemed red versus blue, based on how they voted in the 2020 presidential election, have a lower tax burden on average. Taxes make a big difference. Also, something that’s not included is the cost of living. I imagine the states with the highest overall tax burden, New York and Hawaii, their cost of living, real estate, and other things are probably also pretty high there. The lowest states like North Dakota and South Dakota which rank 43rd and 44th, probably have more affordable real estate, etc. that may make them even more attractive to live in besides just the lower taxes. Taxes are key in retirement, especially if you’re doing tax planning by trying to shift traditional money to Roth. When you do a conversion, you have to pay income taxes so some of the states that have higher income taxes can make conversions more costly. If you’re going to be moving to a state with a dramatically different tax rate than the one you’re in now, maybe dramatically better, it may make sense to hold off your conversions until you get to that lower state. It will all depend on your situation. The information provided is not intended as tax or legal advice. Figures shown are for illustrative purposes only furthermore, the information nor the illustrations provided may not be used to avoid any tax penalties. This content represents the general views of Christy Capital Management and should not be regarded as personalized investment advice Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice. Retirement Benefits Institute, Inc., and a portion of its contents merged with Christy Capital Management Inc. Brandon Christy, former President of Retirement Benefits Institute, is also the current President of Christy Capital Management, Inc., a registered investment adviser.