Month: November 2020

Millions of American families go from one state to another each year. And, as you can imagine, there are many reasons why you might pull up stakes and go to a uncommon state. You might go to start a new job, be closer to relatives, live in a warmer climate, or even – as a sign of the times – escape a coronavirus hotspot.

But no matter why you choose to pack your bags and go across state lines, do your investigate first and check out the cost of living in your destination state. You’ll want to look at the cost of housing, of course, but make sure you thought-out the impact of state and local taxes on your bottom line, too. As our State-by-State Guide to Taxes on Middle-Class Families shows, state tax rates for the average American family are factually all over the map — and the alteration between living in a high-tax or a low-tax state can be thousands of dollars each year, depending on your family’s tax circumstances.

To help you set up how huge of a tax bite each state would take out of your hard-earned cash, we estimated the overall income, sales, and material goods tax burden in each state for a hypothetical married couple with two family, collective wages of $77,000, and $3,000 of other income. Based on our findings, we place collectively the later list of the 10 most tax-forthcoming states for middle-class families (the most-forthcoming state is listed at the end). If you’re taking a job in another state, or relocating your family for other reasons, you’ll want to check it out to see if your state taxes are likely to go up or down after the go.

See the final slide for a perfect description of our ranking slant and sources of in rank.

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10. Delaware

• State Income Tax Range: 2.2% (on taxable income from $2,001 to $5,000) to 6.6% (on taxable income above $60,000)
• Average Collective State and Local Sales Tax Rate: No state or local sales tax
• Median Material goods Tax Rate: $562 per $100,000 of assessed home value

Delaware’s income tax is moderately high for our hypothetical middle-class family. The state’s top income tax rate of 6.6% hits anyone with more than $60,000 of taxable income, which is a to some extent high rate for people in that income range.

But, low sales and material goods taxes earn Delaware a spot on our list of the most tax-forthcoming states for middle-class families. Sales taxes can’t get any lower than they are in The First State – there’s no sales tax in Delaware! So, you can shop ’til you drop in Delaware without paying a single penny of sales tax on your buys.

When it comes to material goods taxes, Delaware has the seventh-lowest median material goods tax rate in the nation. As a result, the tax on a $300,000 home owned by our hypothetical family is estimated to be just $1,686 per year.

For more in rank on these and other Delaware state taxes, see the Delaware State Tax Guide for Middle-Class Families.

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9. Alaska

• State Income Tax Range: None
• Average Collective State and Local Sales Tax Rate: 1.76%
• Median Material goods Tax Rate: $1,182 per $100,000 of assessed home value

Your overall state tax burden is surely going to be low if there’s no state income tax. That’s why six of the 10 states on this list don’t impose an income tax – and Alaska is the first of those states.

But, there’s more to the Last Boundary’s low tax burden than just the lack of an income tax. Alaska is one of five states with no state sales tax. If you’re heading north to Alaska, just dredge up that local sales taxes – up to 7.5% – might apply. But, according to the Tax Foundation, the statewide local sales tax average is only 1.76%.

Material goods taxes are middle-of-the-road in Alaska. If our hypothetical couple were to hold a $300,000 home in the state, their estimated material goods tax bill would come to about $3,546 per year. That’s a small above the U.S. inhabitant average.

There’s one other thing about living in Alaska that’s worth noting: Alaska gives each legal inhabitant who has lived in the state for a full year an annual “Stable Fund Bonus.” The 2020 bonus was $992. (The highest payment ever was $2,072 in 2015.)

For more in rank on these and other Alaska state taxes, see the Alaska State Tax Guide for Middle-Class Families.

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8. North Dakota

• State Income Tax Range: 1.1% (on taxable income up to $40,125 for singles filers; up to $67,050 for joint filers) to 2.9% (on taxable income over $440,600)
• Average Collective State and Local Sales Tax Rate: 6.96%
• Median Material goods Tax Rate: $986 per $100,000 of assessed home value

Even though North Dakota imposes an income tax, its income tax rates are moderately microscopic, mainly for mid-level earners. For our rankings, North Dakota’s income tax on our hypothetical family is the lowest of any state that imposes an income tax.

Sales taxes in the Peace Garden State are below average, too. The state rate is a modest 5%. Local governments can add as much as 3.5%. But, according to the Tax Foundation, the average collective state and local sales tax rate is 6.96%, which isn’t too terrible.

While not dirt cheap, material goods taxes in North Dakota are quite evenhanded. The tax on a $300,000 home is estimated to be $2,958 per year. That’s only vaguely above the inhabitant material goods tax average for a home costing that much.

For more in rank on these and other North Dakota state taxes, see the North Dakota State Tax Guide for Middle-Class Families.

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7. Arizona

• State Income Tax Range: 2.59% (on taxable income up to $27,272 for single filers; up to $54,544 for joint filers) to 4.5% (on taxable income over $163,632 for single filers; over $327,263 for joint filers)
• Average Collective State and Local Sales Tax Rate: 8.4%
• Median Material goods Tax Rate: $617 per $100,000 of assessed home value

Low income taxes are what place the Grand Canyon State on this list. Middle-income families like our hypothetical taxpayers don’t pay the state’s lowest rate (2.59%), but at 3.34% they don’t pay much more. They also avoid the 3.5% surtax on taxable income over $500,000 for joint filers and over $250,000 for single taxpayers that takes effect in 2021. (Note that the surtax can’t boost the overall top rate above 4.5%, which fruitfully nullifies the surtax for the 2021 tax year.)

Arizona residents benefit from low material goods taxes, too. The median material goods tax on a $300,000 home in the state is estimated to be only $1,851 per year, which is well below the U.S. average material goods tax for a home at that price point.

The state’s sales tax is higher than average, though. It starts with a 5.6% state sales taxes. But, all 15 counties levy bonus taxes, as do many municipalities. As a result, the average collective state and local sales tax rate is 8.4%, which is the 11th-highest in the U.S., according to the Tax Foundation.

For more in rank on these and other Arizona state taxes, see the Arizona State Tax Guide for Middle-Class Families.

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6. California

• State Income Tax Range: 1% (on taxable income up to $8,932 for single filers; up to $17,864 for joint filers) to 13.3% (on taxable income over $1 million for single filers; over $1,198,024 for joint filers)
• Average Collective State and Local Sales Tax Rate: 8.68%
• Median Material goods Tax Rate: $729 per $100,000 of assessed home value

Wait, what? California is a tax-forthcoming state? Yes…for middle-class families. If you’re a rich person, California taxes will cut deep into your return. But for other people, the Golden State’s tax hit isn’t really all that terrible.

Our hypothetical middle-class family’s income tax bill was the third-lowest among states that impose an income tax. All makes a huge deal about California’s 13.3% income tax rate, which is the highest top rate in the nation, but only a small percentage of Californians pay that rate. In fact, with 10 uncommon tax rates, California has a very progressive income tax system. Our middle-income family, for reason, only fell into the state’s 6% tax bracket. That’s not too terrible.

Even if material goods taxes are sky high in Silicon Valley and certain other parts of the states, material goods taxes are below average for the state overall. For a $300,000 home in California, the statewide estimated material goods tax is only $2,187, which is the 16th-lowest amount in the country.

Sales tax is one area where Californians might pay more than residents of other states. The California state sales tax rate is 7.25%, which is the highest state rate in the nation. But, local sales taxes – up to 2.5% – aren’t very high. The Tax Foundation calculates the average collective state and local rate to be 8.68%, which is honestly low.

For more in rank on these and other California state taxes, see the California State Tax Guide for Middle-Class Families.

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5. Washington

• State Income Tax Range: None
• Average Collective State and Local Sales Tax Rate: 9.23%
• Median Material goods Tax Rate: $929 per $100,000 of assessed home value

The only reason why Washington makes this list is because it doesn’t have an income tax. Without that tax break, the Evergreen State surely wouldn’t be thorough one of the most taxpayer-forthcoming states in the nation.

Sales taxes in Washington are pretty high. The state sales tax rate is 6.5%, which is well above average. Plus, at 9.23%, the Tax Foundation’s average collective state and local sales tax rate for Washington is the fourth-highest in the country.

Material goods taxes in Washington are more modest. For a $300,000 home, the average tax bill in the state will run you about $2,787 per year. That’s a middle-of-the-pack amount when compared to other states.

For more in rank on these and other Washington state taxes, see the Washington State Tax Guide for Middle-Class Families.

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4. Tennessee

• State Income Tax Range: 1% on appeal and dividends
• Average Collective State and Local Sales Tax Rate: 9.55%
• Median Material goods Tax Rate: $636 per $100,000 of assessed home value

There’s no broad-based income tax in the Volunteer State — only appeal and dividends are subject to Tennessee’s limited income tax. The first $1,250 in taxable income for those ($2,500 for joint filers) is also exempt from the 1% tax (for 2020), and it’s waived if you’re at least 100 years ancient. Plus, the tax is being phased out at a rate of 1% per year. So, 2020 is the last year the tax will be imposed.

Material goods taxes in Tennessee are evenhanded, too. Our hypothetical middle-class family can expect to pay only about $1,908 per year for a $300,000 home. That’s well below the inhabitant average.

Tennessee sticks it to you when you’re shopping, though. It starts with a 7% state rate (plus 2.75% on part of the price from $1,600 to $3,200 of single items), but then local governments can tack on up to 2.75% more in taxes on each sale. At 9.55%, Tennessee’s average collective state and local sales tax rate is the highest in the nation, according to the Tax Foundation. Ouch!

For more in rank on these and other Tennessee state taxes, see the Tennessee State Tax Guide for Middle-Class Families.

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3. Florida

• State Income Tax Range: None
• Average Collective State and Local Sales Tax Rate: 7.08%
• Median Material goods Tax Rate: $830 per $100,000 of assessed home value

Florida has no income tax. That keeps the overall state and local tax burden down for middle-class families and all else. But, other taxes in the Sunshine State are just average when compared to other locations.

For reason, material goods taxes are right around the inhabitant average. For a $300,000 home in Florida, our hypothetical middle-class family’s estimated annual material goods tax bill is $2,490. That’s pretty much in the middle when compared to other states.

The state’s average collective state and local sales tax rate is middle-of-the-road, too. It’s 7.08%, according to the Tax Foundation. That’s based on a 6% state tax rate and local rates that can be as high as 2.5%.

For more in rank on these and other Florida state taxes, see the Florida State Tax Guide for Middle-Class Families.

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2. Nevada

• State Income Tax Range: None
• Average Collective State and Local Sales Tax Rate: 8.23%
• Median Material goods Tax Rate: $533 per $100,000 of assessed home value

Middle-class families in Nevada like the fact that there’s no income tax in the state. But that’s not the only tax perk for residents of the Silver State.

Nevada also has the fourth-lowest average material goods tax rates in the country. So, if our hypothetical middle-class family owned a $300,000 home in the state, they would only pay an estimated $1,599 in material goods taxes each year.

Sales taxes in Nevada aren’t so low, though. There’s a moderately high 6.85% state sales tax rate. Then, when you add in local taxes, the average collective state and local sales tax rate shoots up to 8.23%, which is the 13th-highest in the country.

For more in rank on these and other Nevada state taxes, see the Nevada State Tax Guide for Middle-Class Families.

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1. Wyoming

• State Income Tax Range: None
• Average Collective State and Local Sales Tax Rate: 5.33%
• Median Material goods Tax Rate: $575 per $100,000 of assessed home value

Congratulations, Wyoming – you’re the most tax-forthcoming state for middle-class families! One reason why Wyoming earns this honor is because generous revenues from mineral and energy extraction take up again to flow into the state. That allows the Equality State to keep taxes on residents low across the board.

There’s no income tax in Wyoming. As with many of the other states on this list, that’s the driving force behind the state’s favorable ranking. But, what makes Wyoming unique is that it also has both low sales taxes and low material goods taxes.

The state sales tax rate in Wyoming is a modest 4%. Municipalities can tack on up to 2% more, which isn’t that much. As a result, the state’s collective state and average local sales tax rate is the eighth-lowest in the country, according to the Tax Foundation.

People who go to these parts like to own a lot of land, and low material goods taxes make that dream practically priced. The material goods tax on our hypothetical middle-class family’s $300,000 home in Wyoming would be about $1,725, which is tied the 10th-lowest material goods tax amount in our rankings.

For more in rank on these and other Wyoming state taxes, see the Wyoming State Tax Guide for Middle-Class Families.

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About Our Slant

Our tax maps and related tax content include data from a wide range of sources. To breed our rankings, we made a metric to compare the tax burden in all 50 states and the Constituency of Columbia.

Data sources

Income tax – Our income tax in rank comes from each state’s tax agency. Income tax forms and directions were also used. See more about how we calculated the income tax for our hypothetical family below under “Ranking method.”

Material goods tax – The median material goods tax rate is based on the median material goods taxes paid and the median home value in each state for 2019 (the most recent year void). The data comes from the U.S. Census Bureau.

Sales tax – State sales tax rates are from each state’s tax agency. We also cite the Tax Foundation’s figure for average collective sales tax, which is a populace-biased average of state and local sales taxes. In states that let local governments add sales taxes, this gives an assess of what most people in a given state in fact pay, as those rates can vary widely.

Ranking method

The “tax-cordiality” of a state depends on the sum of income, sales and material goods tax paid by our hypothetical family.

To set up income taxes due, we set returns for a married couple with two needy family, an earned income of $77,000, long-term capital gains of $1,500, certified dividends of $1,000, and taxable appeal of $500. They had $4,500 in state income taxes withdrawn from their wages. They also paid $3,000 in real estate taxes, paid $2,800 in finance appeal, and donated $2,300 (cash and material goods) to charity. Since some states have local income taxes, we domiciled our filers in each state’s capital, from Juneau to Cheyenne. We calculated these 2019 returns using software from Credit Karma.

How much they paid in sales taxes was calculated using the IRS’ Sales Tax Calculator, which is contained to zip code. To set up those, we used Zillow to set up zip codes with housing supply close to our sample assessed value.

How much the hypothetical family paid (and deducted on their income tax return) in material goods taxes was calculated by high and mighty a residence with $300,000 assessed value and then applying each state’s median material goods tax rate to that amount.

It’s terrible enough when Uncle Sam hits you with a huge tax bill. But you really go through the roof when your state, county, or city follows that up by taking another huge chunk of your hard-earned cash. That’s why people who are contemplating a go from one state to another need to do their investigate before hiring a moving company. If you can help it, you don’t want to end up in a state with higher taxes than the one you’re in right now.

Moving from a low-tax state to a high-tax state can factually cost you thousands of dollars each year. If you want to prevent this, you need to know which states to avoid. And we can help with that.

To build our State-by-State Guide to Taxes on Middle-Class Families, Kiplinger editors estimated the overall income, sales, and material goods tax burden in each state for a hypothetical married couple with two family, collective wages of $77,000, $3,000 of other income, and a $300,000 home. That also allowed us to make the later list of the 10 least tax-forthcoming states for middle-class families (the least-forthcoming state is listed last). If you and your family are thought of relocating to another state, make sure you check out the list first. It might make you reckon twice before packing your bags.

See the final slide for a perfect description of our ranking slant and sources of in rank.

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10. Michigan

• State Income Tax Range: 4.25% (flat rate)
• Average Collective State and Local Sales Tax Rate: 6%
• Median Material goods Tax Rate: $1,448 per $100,000 of assessed home value

Excellent news first: sales taxes are below average in the Fantastic Lakes State. There’s a 6% state tax on buys in Michigan, which is right around the mid-point as far as state-level sales tax rates go. But local governments don’t add any bonus tax on sales in the state. So, shoppers in Michigan can feel pretty excellent about the overall state and local sales tax burden on them.

But things go downhill from there. The 4.25% flat rate is higher than what you’ll find on middle-class families in most other states. Plus, cities can levy bonus local income taxes. As a result, Michigan’s income tax bill for our hypothetical family is above the inhabitant average. Not by much, but the extra tax burden is enough to nudge the state in the incorrect management.

And there’s more terrible news when we look at material goods taxes in Michigan. For a home worth $300,000, the estimated annual material goods tax in Michigan is $4,344. That material goods tax amount is well over the inhabitant average and pushes Michigan onto this list of the least tax-forthcoming states for middle-class families.

For more in rank on these and other Michigan state taxes, see the Michigan State Tax Guide for Middle-Class Families.

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9. Nebraska

• State Income Tax Range: 2.46% (on taxable income up to $3,290 for single filers; up to $6,570 for joint filers) to 6.84% (on taxable income over $31,750 for single filers; over $63,500 for joint filers)
• Average Collective State and Local Sales Tax Rate: 6.94%
• Median Material goods Tax Rate: $1,614 per $100,000 of assessed home value

While the cost of housing is to some extent low in the Cornhusker State, the average material goods tax rate in the state is quite high. For a $300,000 home, the state-wide average tax in Nebraska comes to $4,842 per year. That’s the ninth-highest material goods tax amount in our U.S. rankings, and it’s the primary reason why Nebraska is on the least tax-forthcoming list.

Sales taxes in Nebraska are middle-of-the-road. There’s a 5.5% state tax, and localities can add as much as 2.5%. That works out to an average collective state and local rate of 6.94%, according to the Tax Foundation.

Finally, on the bright side, income taxes are below average in Nebraska for our hypothetical middle-class family. But, they’re not low enough to balance out the state’s high material goods taxes.

For more in rank on these and other Nebraska state taxes, see the Nebraska State Tax Guide for Middle-Class Families.

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8. Maryland

• State Income Tax Range: 2% (on taxable income up to $1,000) to 5.75% (on taxable income over $250,000 for single filers; over $300,000 for joint filers)
• Average Collective State and Local Sales Tax Rate: 6%
• Median Material goods Tax Rate: $1,057 per $100,000 of assessed home value

Middle-class families in the Ancient Line State get killed when it comes to state and local income taxes. (Baltimore City and every county in Maryland imposes a local income tax.) For our hypothetical family, Maryland’s income tax bill is the second-highest is the country.

The news is better when it comes to material goods taxes. If our made-up family went into a $300,000 home in Maryland, they’d pay an estimated $3,171 in tax each year if the state’s median material goods tax rate were applied. That material goods tax amount is right around the inhabitant average that we’re seeing in our survey.

The Maryland tax system is in fact quite forthcoming to shoppers, though. Like Michigan, there’s a 6% state sales tax, but that’s it – there are no bonus local sales taxes to pay. That means the overall state and local sales tax burden on Marylanders is below average.

For more in rank on these and other Maryland state taxes, see the Maryland State Tax Guide for Middle-Class Families.

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7. Kansas

• State Income Tax Range: 3.1% (on taxable income from $2,501 to $15,000 for single filers; from $5,001 to $30,000 for joint filers) to 5.7% (on taxable income over $30,000 for single filers; over $60,000 for joint filers).
• Average Collective State and Local Sales Tax Rate: 8.7%
• Median Material goods Tax Rate: $1,369 per $100,000 of assessed home value

Most people don’t reckon of the farm belt as a high-tax area, but here’s another state from that region on our least tax-forthcoming list (Nebraska was the first). With Kansas, its sales tax is the main culprit behind its poor (from a taxpayer standpoint) showing. According to the Tax Foundation, the collective average state and local sales tax rate is 8.7% (the state rate is 6.5%). That’s the ninth-highest collective sales tax rate in the country.

The news gets a small better when it comes to other taxes in the Sunflower State. For reason, income taxes are only vaguely above average for middle-class families. But, hundreds of local governments in Kansas also impose a tax on appeal, dividends, and other return from indefinable material goods. The local rates range from 0.125% to 2.25%. Even though the local taxes aren’t on all income, they surely push up the overall tax burden for many families in the state.

Material goods taxes in Kansas are above average, too. If our hypothetical family went to Kansas and bought a $300,000 home in the state, they would pay about $4,107 in material goods taxes each year based on the state’s median tax rate. That’s the 15th-highest amount in the country for a home at that value.

For more in rank on these and other Kansas state taxes, see the Kansas State Tax Guide for Middle-Class Families.

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6. Wisconsin

• State Income Tax Range: 3.54% (on taxable income up to $12,120 for single filers; up to $16,160 for joint filers) to 7.65% (on taxable income over $266,930 for singles; over $355,910 for joint filers)
• Average Collective State and Local Sales Tax Rate: 5.43%
• Median Material goods Tax Rate: $1,684 per $100,000 of assessed home value

The Badger State owes its spot on our list of the least tax-forthcoming states for middle-class families to high material goods taxes. And we assess that material goods taxes for a $300,000 home in Wisconsin would run about $5,052 per year. That’s the eighth-highest material goods tax amount in our nation-wide rankings.

Income taxes are above average for middle-class families in Wisconsin, too. The state did reduce the 2020 income tax rates for people with lower incomes. But, the rate cut didn’t help our imaginary middle-class family, because their income place them in a higher Wisconsin tax bracket that wasn’t adjusted.

The excellent news is that sales taxes are in fact low in Wisconsin. There’s a 5% state sales tax, but local governments can add their own tax to it. But, overall, Wisconsin has the ninth-lowest collective average state and local tax rate in the nation, says the Tax Foundation.

For more in rank on these and other Wisconsin state taxes, see the Wisconsin State Tax Guide for Middle-Class Families.

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5. New York

• State Income Tax Range: 4% (on taxable income up to $8,500 for single filers; up to $17,150 for joint filers) to 10.9% (on taxable income over $25 million)
• Average Collective State and Local Sales Tax Rate: 8.52%
• Median Material goods Tax Rate: $1,692 per $100,000 of assessed home value

For our hypothetical middle-class family, New York’s income tax bill is only in the “average” range when compared to the taxes imposed by other states. But, New York City and Yonkers tack on their own income taxes, and there’s a tourist tax for people working in and around New York City. So, the overall state and local income tax bill is higher for people living in those parts of the state.

While income taxes in the Empire State aren’t too high for middle-class families, things start to get terrible when you look at sales taxes. The state sales tax rate is only 4%. But local taxes can add as much as 4.875% more. At 8.52%, New York’s average collective state and local sales tax rate is the 10th-highest in the country, according to the Tax Foundation.

And then things go from terrible to worse when material goods taxes are added to the mix. The average material goods tax on a $300,000 home in New York is about $5,076, which is tied for the seventh-highest material goods tax amount in the country for a home worth that much. But in some high-cost parts of the state, such as Westchester County, homeowners pay more than twice that amount, which means they’re pinched even more by the $10,000 cap on the federal deduction for state and local taxes.

For more in rank on these and other New York state taxes, see the New York State Tax Guide for Middle-Class Families.

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4. New Jersey

• State Income Tax Range: 1.4% (on taxable income up to $20,000) to 10.75% (on taxable income over $1 million)
• Average Collective State and Local Sales Tax Rate: 6.6%
• Median Material goods Tax Rate: $2,417 per $100,000 of assessed home value

For middle-class families in the Garden State, income taxes are moderately low when compared with other states. New Jersey checked with the fourth-lowest income tax total out of all the states with a broad-based income tax when we calculated income tax bills for our hypothetical family. (There’s also a payroll tax in Newark.)

Sales taxes are below average in New Jersey, too. The state sales tax rate is 6.625%. But because some areas charge only half the state rate on certain sales, the Tax Foundation says that New Jersey’s average state and local collective sales tax rate is only 6.6%.

But while New Jersey gives residents a break on income and sales taxes, it brings the hammer down when they buy a home. New Jersey’s material goods taxes are the highest in the U.S. The state-wide average material goods tax on a $300,000 home in New Jersey comes to a monstrous $7,251.

For more in rank on these and other New Jersey state taxes, see the New Jersey State Tax Guide for Middle-Class Families.

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3. Iowa

• State Income Tax Range: 0.33% (on taxable income up to $1,676) to 8.53% (on taxable income over $75,420)
• Average Collective State and Local Sales Tax Rate: 6.94%
• Median Material goods Tax Rate: $1,529 per $100,000 of assessed home value

Which do you reckon is higher in Iowa: the corn or taxes? It might be taxes, thanks to staggering income and material goods taxes in the state. Iowa’s income tax on our hypothetical middle-class family is the third-highest in the country. One reason why income taxes are on the high end in the state is because over 200 school districts and Appanoose County add their own income taxes on top of the state-level tax. (Admittance in 2023, the lowest Iowa private income tax rate will be 4.4%, while the highest rate will be 6.5%.)

Our survey also shows that the average material goods tax rate in the Hawkeye State is the 11th-highest in the nation. If our hypothetical family bought a $300,000 home in the state, they can expect to pay about $4,587 per year in material goods taxes. That surely doesn’t help middle-class families in Iowa.

While sales taxes in Iowa aren’t low, at least they’re not as high as the state’s income and material goods taxes. The state sales tax rate is 6%, and localities can add as much as 1%. That puts Iowa’s collective average state and local sales tax rate (6.94%, according to the Tax Foundation) in the middle-of-the-pack when compared to the rates in other states.

For more in rank on these and other Iowa state taxes, see the Iowa State Tax Guide for Middle-Class Families.

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2. Connecticut

• State Income Tax Range: 3% (on taxable income up to $10,000 for single filers; up to $20,000 for joint filers) to 6.99% (on taxable income over $500,000 for single filers; over $1 million for joint filers)
• Average Collective State and Local Sales Tax Rate: 6.35%
• Median Material goods Tax Rate: $2,139 per $100,000 of assessed home value

The Constitution State is an pricey place to live. Connecticut’s material goods taxes are the third-highest in the U.S., so the $10,000 cap on the federal tax deduction for state and local taxes stings a bit more here. The state-wide average material goods tax for a $300,000 home is $6,417 per year. But, residents in high-income areas such as Fairfield County typically pay more than $10,000 in material goods taxes each year, so their federal tax deductions for state and local taxes have been shortened.

State income taxes on are the high end, too. Connecticut income taxes for our make-believe middle-class are above average, but not sky high.

Sales taxes are also evenhanded in Connecticut. There are no local sales taxes in Connecticut, so you’ll pay only the statewide rate of 6.35% (vaguely below average) on most of your buys. But luxury items, such as cars valued at $50,000 or more or jewelry worth more than $5,000, are taxed at 7.75%.

For more in rank on these and other Connecticut state taxes, see the Connecticut State Tax Guide for Middle-Class Families.

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1. Illinois

• State Income Tax Range: 4.95% (flat rate)
• Average Collective State and Local Sales Tax Rate: 8.83%
• Median Material goods Tax Rate: $2,165 per $100,000 of assessed home value

Sorry, Illinois, but you’re the least tax-forthcoming state in the country for middle-class families. For all three taxes we’re tracking – income, sales, and material goods taxes – you tax middle-income residents at an above average rate (at least). And for one of those taxes, the rates are exceptionally high. That’s enough to place the Land of Lincoln in the most undesirable spot on our list.

At first blush, the state’s 4.95% flat income tax rate doesn’t seem that steep when compared to other states’ top tax rates. And that’s right if you’re talking about wealthy residents. But for middle-class taxpayers, the income tax rate is on the high end. Also note that Illinois voters second-hand a bid on the November 2020 ballot that would have dumped the flat tax in favor of a graduated income tax. If it had passed, the marginal tax rate for most middle-income residents would have dropped vaguely to 4.9%.

Sales taxes in Illinois are high, too. There’s a 6.25% state tax on buys in Illinois (1% on groceries and prescription drugs). Plus, up to 4.75% in local taxes are tacked on in certain places within the state. All told, the average collective state and local sales tax in Illinois is 8.83%, which is the seventh-highest collective sales tax rate in the U.S.

The tax circumstances really goes downhill quick for Illinois residents when you look at the material goods taxes they have to pay. Material goods taxes in Illinois are the second-highest in the nation. If our hypothetical family bought a $300,000 home in the state, their average annual material goods tax bill would be an eye-popping $6,495.

For more in rank on these and other Illinois state taxes, see the Illinois State Tax Guide for Middle-Class Families.

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About Our Slant

Our tax maps and related tax content include data from a wide range of sources. To breed our rankings, we made a metric to compare the tax burden in all 50 states and the Constituency of Columbia.

Data sources:

Income tax – Our income tax in rank comes from each state’s tax agency. Income tax forms and directions were also used. See more about how we calculated the income tax for our hypothetical family below under “Ranking method.”

Material goods tax – The median material goods tax rate is based on the median material goods taxes paid and the median home value in each state for 2019 (the most recent year void). The data comes from the U.S. Census Bureau.

Sales tax – State sales tax rates are from each state’s tax agency. We also cite the Tax Foundation’s figure for average collective sales tax, which is a populace-biased average of state and local sales taxes. In states that let local governments add sales taxes, this gives an assess of what most people in a given state in fact pay, as those rates can vary widely.

Ranking method

The “tax-cordiality” of a state depends on the sum of income, sales and material goods tax paid by our hypothetical family.

To set up income tax, we set returns for a married couple with two needy family, an earned income of $77,000, long-term capital gains of $1,500, certified dividends of $1,000, and taxable appeal of $500. They had $4,500 in state income taxes withdrawn from their wages. They also paid $3,000 in real estate taxes, paid $2,800 in finance appeal, and donated $2,300 (cash and material goods) to charity. Since some states have local income taxes, we domiciled our filers in each state’s capital, from Juneau to Cheyenne. We calculated these 2019 returns using software from Credit Karma.

How much they paid in sales taxes was calculated using the IRS’ Sales Tax Calculator, which is contained to zip code. To set up those, we used Zillow to set up zip codes with housing supply close to our sample assessed value.

How much the hypothetical family paid (and deducted on their income tax return) in material goods taxes was calculated by high and mighty a residence with $300,000 assessed value and then applying each state’s median material goods tax rate to that amount.