Planning on Moving to a Different State? Check Out the Tax Rate First
Moving to a high-tax state might put significant pressure on your wallet. Here are the states with the highest taxes.
When moving to a different state, it’s important to check out its taxes—the rates could make a difference of hundreds or thousands of dollars. Which states have the highest taxes?
Tax rates vary greatly between the property, state, local, and income tax subcategories. If you're planning to move to a new state, here's what you should know about taxes.
The states with the highest income tax rates
A state's income tax, which comes from the income of its residents, is similar to federal income tax, but goes toward state budgets instead of to the federal government. States take three approaches to income taxation: not taxing at all, imposing a flat tax (the same rate regardless of income), or imposing a progressive tax. The latter means a higher tax bracket for those with higher income—in 2021, there were seven brackets: 10, 12, 22, 24, 32, 35, and 37 percent.
Eight states don’t have income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. The states with the highest income taxes are the following:
- California: 13.30 percent.
- Hawaii: 11.00 percent.
- New Jersey: 10.75 percent.
- Oregon: 9.90 percent.
- Minnesota: 9.85 percent.
- New York: 8.82 percent.
- Vermont: 8.75 percent.
- Iowa: 8.53 percent.
- Arizona: 8.00 percent.
- Wisconsin: 7.65 percent.
The states with the highest sales tax
Sales tax, paid for goods and services, is generally split into two categories: state and local. Most states have a sales tax of between 4 and 7 percent. The average state sales tax rate is 5.09 percent, with 32 states above this average and 18 states below. According to The Tax Foundation, only four states don't have state-wide sales tax: Delaware, Montana, New Hampshire, and Oregon.
The states with the highest sales taxes in 2022 are as follows:
- Tennessee: combined at 9.47 percent.
- Louisiana: combined at 9.45 percent.
- Arkansas: combined at 9.43 percent.
- Washington: combined at 9.17 percent.
- Alabama: combined at 9.14 percent.
- Oklahoma: combined at 8.92 percent.
- Illinois: combined at 8.74 percent.
- Kansas: combined at 8.67 percent.
- California: combined at 8.56 percent.
- New York: combined at 8.49 percent.
The states with the highest property tax and overall tax burden
Property taxes (or real estate taxes) are paid by homeowners to county or tax authorities. The amount is calculated based on a property's and the state’s tax rate. The states with the highest property tax are:
- New Jersey: 2.49 percent.
- Illinois: 2.27 percent.
- New Hampshire: 2.18 percent.
- Connecticut: 2.14 percent.
- Vermont: 1.90 percent.
- Wisconsin: 1.85 percent.
- Texas: 1.80 percent.
- Nebraska: 1.73 percent.
- New York: 1.72 percent.
- Rhode Island: 1.63 percent.
The tax burden is based on property, income, sales, and excise taxes. The states with the highest tax burden are:
- New York: 4.40 percent.
- Oregon: 4.20 percent.
- Maryland: 3.91 percent.
- Minnesota: 3.61 percent.
- California: 3.56 percent.
- Kentucky: 3.23 percent.
- Massachusetts: 3.17 percent.
- Connecticut: 3.09 percent.
- Virginia: 2.80 percent.
- Hawaii: 2.78 percent.