Top 10 Worst States for Individual and Business Taxes

There’s a good reason why people are moving out of California and New York—taxes.

According to the 2021 State Business Tax Climate Index put out annually by the Tax Foundation, New York, California, and New Jersey were the worst states for individual and business taxes. They were ranked 48th, 49th, and 50th, respectfully.

Here’s more information on the 10 worst states for taxes.

Residents of the Cotton State pay up to 5 percent in income taxes for single filers earning over $3,000 per year and married couples filing jointly earning over $6,000 per year. The state has a state and local tax burden of 8.7 percent. When it comes to state and local sales tax, the state sales tax is 4 percent and the average local sales tax rate is 5.22 percent, which equals a combined sales tax rate of 9.22 percent. However, property taxes in Alabama are relatively low, with homeowners paying just 0.40 percent of the value of their homes.

The state of Louisiana has a 7.6 percent state and local tax burden. The income tax rates are at most 6 percent for single filers making over $50,000 per year and married couples making over $100,000 per year. As with Alabama, property taxes are relatively low at 0.51 percent of the home value. Louisiana ranks 38th for state and local sales tax at a combined rate of 9.55 percent.

Property taxes in Vermont are one of the highest in the U.S. The state ranks 49th for property tax with a rate of 1.8 percent of the home value. Income taxes are also high in the state at 8.75 percent. However, the state and local tax is lower at 6.22 percent.

Besides a state sales tax of 6 percent, Maryland residents (and visitors) are taxed 36.30 cents per gallon every time they fill up the tank in the state. Under the state’s cigarette tax, smokers also pay an extra $2 on every pack of cigarettes they buy in the state. Maryland ranks 43rd in the country for property taxes, which are 1.04 percent of the home value. Income taxes are a modest 5.75 percent.

Sales taxes are pretty high in Arkansas. The combined state and local sales tax is 9.53 percent, which ranks the state 46th compared to the rest of the country. Arkansas also has a 24.8 cents per gallon gas tax and $1.15 cigarette tax. Property taxes are 0.64 percent of the home value. Income taxes are at most 5.9 percent for single or married filers making over $8,000.

Income taxes in the District of Columbia are on the high end at 8.50 percent for taxpayers earning over $60,000 per year. Residents earning over $1 million pay 8.95 percent in income taxes. Although the property tax rates appear low at 0.59 percent, the state collects about $3,496 per capita due to the high price of homes in the area. In comparison, nearby Maryland collects about $1,623 per capita in property taxes. Sales tax is on par with most of the country at 6 percent, and there's a 23.5 cent gasoline tax. DC really wants to discourage smoking in the state, which taxes almost $5 on a pack of cigarettes.

Minnesota is tied with DC for the 46th rank, primarily for its high-income taxes that reach 9.85 percent for single filers earning over $166,040 and married couples earning over $276,200. Property taxes are also up there at 1.11 percent of the home value. State and local sales tax in the state is 7.46 percent.

Connecticut has the highest property taxes in the country at 1.70 percent. Income taxes in the state are almost 7 percent for singles making over $500,000 and couples making twice that. However, taxpayers making about $50,000 pay 5.5 percent in income taxes. Sales tax in the state is 6.35 percent.

New York is the third-worst state for taxes in the U.S. The state ranks high for income taxes (48th), property taxes (45th), and sales tax (43rd). Residents making about $1.08 million will pay an 8.82 percent income tax, while those making just over $80,000 pay 6.33 percent. Property taxes in the state are 1.4 percent of the home value, and combined state and local sales tax is 8.52 percent. New York residents also pay an extra 45 cents per gallon at the gasoline pump.

Property taxes are pretty low in California, with homeowners just paying about .74 percent of the value of their home. But, what the residents save on property tax, they pay in income taxes. The state has the second-highest income tax in the country, with single taxpayers earning about $58,000 paying 9.3 percent income tax. Those making over $1 million are subject to a 13.3 percent income tax rate. Sales tax in the state is also in the higher end at 8.68 percent combined state and local sales tax.

With the tax rates in New Jersey, it’s a wonder why anyone lives there. Property taxes tip the scale at 2.21 percent of home value. The total state and local tax burden in New Jersey is 12.2 percent. When it comes to income tax, rates are lower for those who make less money. For example, single filers earning about $40,000 will be subject to a 5.525 percent income tax, while those making about $1 million will pay 10.75 percent in income tax. Sales tax in the state is 6.625 percent, and drivers pay an extra 41.40 cents per gallon of gasoline.