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Highest Taxed States 2021

Only two things in life are certain: death and taxes, the old adage goes. Aside from federal taxes, every U.S. state determines its own tax rates for income taxes, property taxes, and sales taxes. Because of this, each state's tax burden varies significantly.

Across the board, California, Hawaii, and New Jersey have the highest taxes in the U.S.

Income Tax

For many people in the United States, April 15 – or tax day – is one of the most dreaded days of the year. In addition to paying federal taxes, many people around the nation also have to pay state income taxes.

While some states, including Florida and New Hampshire, are fortunate enough not to have state income taxes, other states have a high state income tax rate. However, don't think that the states without income taxes get off that easy – revenue is raised for the state through other taxation forms, including property taxes and sales taxes.

Of the 50 U.S. states, a total of 42 and D.C. have individual income taxes. Income from wages and salaries are taxes in 41 states, while just two tax income from interest and tax dividends. Eight states do not have an income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Taxes, Washington, and Wyoming. New Hampshire has a 5% income tax rate; however, it is levied on dividends and interest only.

Ten U.S. states use a single-rate tax structure. This means that everyone pays one rate, regardless of the amount of taxable income. Thirty-two states use graduated-rate income brackets, wherein rates are set based on the amount of taxable income and other factors, including marital status at the time of filing.

Of all the states, California has the highest individual income tax rates. Rates range from 1% to 13.30%, based on income. Hawaii also has a high individual income tax rate, ranging from 1.4% to 11%, and spread across 12 different income brackets. New Jersey follows with 1.4% to 10.75%.

Maine has the highest starting tax rate for the lowest income bracket at 5.8%, but it only goes up to 7.15%.

In the states that do not use income brackets, North Carolina has the highest tax rate at 5.25%. Kentucky, Massachusetts, and New Hampshire follow with 5% each.

Sales Tax

A sales tax is a consumption tax imposed by the government on the sales of certain goods and services. A conventional sales tax is levied at the point of sales and collected by the retailer, who then passes it on to the government. A use tax is a sales tax on purchases made outside of one's state of residence for taxable items that will be used, stored, or consumed in one's state of residence.

State sales taxes range from 0.00% to 7.25%, with most states falling between 4% and 7%. In addition to state sales tax, some local jurisdictions also impose a local sales tax. Five states have sales tax rates of 0.00%: Alaska, Delaware, Montana, New Hampshire, and Oregon.

California levies the highest state sales tax of any state of 7.25%. In addition to this, the average local sales tax is 1.31%, equaling a combined rate of 8.56%. Tennessee has the second-highest state sales tax rate of 7.00% and has an average local sales tax rate of 2.47%, resulting in a combined rate of 9.47%. Rhode Island, Mississippi, and Indiana also have a state sales tax rate of 7.00%.

Property Tax

In addition to income tax and sales tax, United States residents also pay property taxes. Property tax is a real estate ad-valorem tax levied by the jurisdiction in which the property is located and paid for by the property owner. Property taxes are recalculated annually and determined by multiplying the property tax rate by the property's current market value.

Unfortunately, every state has property taxes; however, some states have very low property tax rates. There may be higher costs elsewhere in these states, such as high sales taxes, to make up for the costs.

There are 26 states with property tax rates below 1.00%. Hawaii has the lowest property tax rate among states of 0.27%; however, residents can still expect to pay high taxes due to high median home costs in Hawaii. Alabama has the second-lowest property tax rate with 0.42%, coupled with some of the country's lowest home prices. Colorado and Louisiana follow with the third-lowest rate at 0.53%.

On the other end, New Jersey has the highest property tax rate in the United States at 2.47%. One reason for this is that New Jersey's county and municipal governments cannot impose local income or sales tax, so property taxes pay for almost everything in New Jersey. Illinois has the second-highest property tax rate in the U.S. at 2.30%, followed by New Hampshire at 2.20%.

Here are the 10 states with the highest income tax rates:

  1. California (13.30%)
  2. Hawaii (11.00%)
  3. New Jersey (10.75%)
  4. Oregon (9.90%)
  5. Minnesota (9.85%)
  6. New York (8.82%)
  7. Vermont (8.75%)
  8. Iowa (8.53%)
  9. Arizona (8.00%)
  10. Wisconsin (7.65%)

Highest Taxed States 2021

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Highest Taxed States 2021

* Rank based on normalized and combined rates for single filers with no dependents or deductions. Income tax is weighted 70%; sales tax at 30%.
State Weighted Tax Income Tax Sales Tax Property Tax (per $100K)
California11.56%13.30%7.25%$3,818
Minnesota8.96%9.85%6.88%$1,224
Hawaii8.90%11.00%4.00%$1,715
New Jersey8.38%10.75%6.63%$2,530
Iowa8.09%8.53%6.00%$1,678
Vermont8.06%8.75%6.00%$1,908
New York7.37%8.82%4.00%$1,812
Maine7.21%7.15%5.50%$1,424
Idaho6.98%6.92%6.00%$1,456
Oregon6.93%9.90%0.00%$1,121
Arkansas6.85%5.90%6.50%$798
Wisconsin6.85%7.65%5.00%$615
South Carolina6.70%7.00%6.00%$601
Connecticut6.59%6.99%6.35%$5,898
Nebraska6.44%6.84%5.50%$1,855
West Virginia6.35%6.50%6.00%$615
Rhode Island6.29%5.99%7.00%$1,723
Kentucky6.00%5.00%6.00%$925
Maryland5.82%5.75%6.00%$1,125
Mississippi5.60%5.00%7.00%$862
Massachusetts5.51%5.00%6.25%$1,294
Ohio5.50%4.80%5.75%$1,641
North Carolina5.48%5.25%4.75%$894
Missouri5.47%5.40%4.22%$1,026
Georgia5.40%5.75%4.00%$1,623
Louisiana5.40%6.00%4.45%$555
Illinois5.38%4.96%6.25%$4,419
Kansas5.31%5.70%6.50%$1,491
Virginia5.31%5.75%5.30%$858
Oklahoma5.02%5.00%4.50%$974
New Mexico4.97%5.90%5.13%$830
Utah4.91%4.95%6.10%$713
Arizona4.86%8.00%5.60%$1,499
Montana4.83%6.90%0.00%$892
Michigan4.77%4.25%6.00%$1,729
Alabama4.70%5.00%4.00%$587
Delaware4.62%6.60%0.00%$1,431
Indiana4.48%3.23%7.00%$1,207
Colorado4.11%4.55%2.90%$1,756
Pennsylvania3.95%3.07%6.00%$1,674
North Dakota3.75%2.90%5.00%$894
Tennessee2.10%0.00%7.00%$768
Nevada2.05%0.00%6.85%$693
Washington1.95%0.00%6.50%$1,125
Texas1.88%0.00%6.25%$1,993
Florida1.80%0.00%6.00%$1,941
Wyoming1.20%0.00%4.00%$635
South Dakota1.20%0.00%4.50%$1,388
New Hampshire0.00%0.00%0.00%$2,296
Alaska0.00%0.00%0.00%$3,231

Highest Taxed States 2021