Your decision of where to live has ramifications across all aspects of your life. Today, we’ll explore taxes, the second of three topics in this series. I’ll also show you a a couple websites to help you decide… or if you are just curious about your state fits in the rankings.
There are two factors to consider when discussing taxes: 1) How much you must pay? 2) How much you can expect to receive? Let’s take a look at each to see if your state is a good value for your money.
Your State Tax Bill: You can expect your federal taxes to be pretty similar, regardless of where you live since the US tax code is fairly uniform. But, state and local taxes vary widely. The team at WalletHub recently tabulated overall tax burdens by adding together property taxes, individual income taxes, and sales and excise taxes in each state. Check out the map (above) showing states with higher taxes as darker shades of green.
The highest taxes are paid by citizens of:
- New York – 12.94%
- Hawaii – 11.27%
- Vermont – 10.75%
- Maine – 10.73%
- Minnesota – 10.24%
Meanwhile, these denizens pay the least in state taxes:
- Delaware – 5.59%
- Alaska * – 6.27%
- Tennessee – 6.45%
- Oklahoma – 6.61%
- New Hampshire – 6.7%
Your Federal Benefits: WalletHub also researched how much each state receives from its federal income tax payments. They compared the 50 states and the District of Columbia on three metrics: 1) Federal spending per capita received compared against federal income taxes paid; 2) the percentage of a state’s annual budget funded by the federal government; and 3) the number of federal employees per capita.
Mississippi and New Mexico receive around $3 in federal spending for each tax dollar they send to the federal treasury. Alabama and Louisiana are close behind. On the other hand, folks in 14 states get back less than $1 for each $1 they spend in taxes. The lowest recipients are Delaware, Minnesota, Illinois, Nebraska, and Ohio.
Full rankings can be found on their website, but here are some of their more interesting findings.
So, do you pay too much in taxes to your state? Do you receive too little money back from the Federal Government? Leave your answers in the comments below.