High or Low Tax State? You choose!

April 18th is the deadline for filing our income tax return for 2022. The federal government has given disaster-area taxpayers in most of California and parts of Alabama and Georgia until Oct. 16, 2023, to file various federal individual and business tax returns and make tax payments.

Every year most taxpayers grumble around this time of year about how much they are going to have to pay Uncle Sam this month. WalletHub, a personal finance website, released a report this week analyzing the total tax burden by state. Tax burden is defined as the proportion of a person’s income that goes toward taxes. It measured a combination of property tax, income tax and sales tax that people paid.

No surprise that New York, Hawaii, Maine, Vermont and Connecticut are the states with the highest overall state tax burden. Alaska, Delaware, New Hampshire, Tennessee and Florida have the lowest.

The states that are most appealing to the wealthy are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming as they do not levy state income taxes on capital gains....in California, New Jersey, Washington DC and New York the rate is over 10%!

Here are the highest tax burden states combining income tax, property tax and sales tax rates:

New York - 12.47%

Hawaii - 12.31%

Maine - 11.14%

Vermont - 10.28%

Connecticut - 9.83%

New Jersey - 9.76%

Maryland - 9.44%

Minnesota - 9.41%

Illinois - 9.38%

Iowa - 9.15%

Lowest tax burdens

Alaska - 5.06%

Delaware - 6.12%

New Hampshire - 6.14%

Tennessee - 6.22%

Florida - 6.33%

Wyoming - 6.42%

South Dakota - 6.69%

Montana - 6.93%

Missouri - 7.11%

Oklahoma - 7.12%

The states with the highest sales tax burden are Hawaii (6.71%), Washington, (5.66%) and New Mexico (5.62%), while the states with the lowest sales tax burden are New Hampshire (1.07%), Delaware (1.09%) and Oregon (1.11%).

Often, I hear, particularly if a client is nearing retirement, it is time to evaluate their living situation. Their goal is to stretch their income in a state with a lower tax burden.

If you are evaluating or considering a move, I am happy to help you with a comparative market analysis of your home.

Credits to: Wallethub