# A Comparison of State Tax Rates

## See how your state's tax burden compares with other states.

Do you think your state's tax burden is too high? If so, where can you move with lower taxes? This question is harder to answer than you might think.

Each of the 50 states has its own tax system that is completely separate from the federal tax system administered by the IRS. State taxes can include:

• income taxes
• state sales taxes
• property taxes (imposed at the state level by 36 states)
• excise taxes--for example, taxes on gasoline, cigarettes, and liquor
• user fees--for example, fees to camp in state parks or to drive on state highways, and
• other taxes, such as death and gift taxes, and documentary and stock transfer taxes.

The mix of taxes the states utilize to finance their activities can vary markedly from state to state. For example, seven states don't have income taxes: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming; while five have no state sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon.

To determine which states have the highest and lowest taxes you have to look at all of the taxes each state charges. For example, the fact that Washington state has no income tax doesn't necessarily mean it has lower taxes overall than Oregon, which has income tax, but no sales tax.

So how do you tell whether Oregon has lower taxes than Washington? There are various ways to measure state tax burdens. The simplest way is to figure out each state's taxes per capita--that is, divide the total taxes paid by the total number of people. The following chart shows the per capita taxes for each state in 2011:

 State Tax Revenue Per Capita,Fiscal Year 2011 State Revenue Per Capita Rank Ala. \$4,855 37 Alaska \$17,630 1 Ariz. \$4,195 47 Ark. \$5,957 16 Calif. \$5,634 23 Colo. \$4,302 45 Conn. \$6,570 12 Del. \$8,091 5 Fla. \$3,974 48 Ga. \$3,807 50 Hawaii \$7,453 7 Idaho \$4,654 41 Ill. \$4,527 42 Ind. \$4,836 38 Iowa \$5,921 17 Kans. \$5,242 30 Ky. \$5,409 26 La. \$5,908 18 Maine \$6,213 14 Md. \$5,683 21 Mass. \$6,832 9 Mich. \$5,541 24 Minn. \$6,279 13 Miss. \$5,987 15 Mo. \$4,511 43 Mont. \$5,800 20 Nebr. \$5,113 32 Nev. \$3,848 49 N.H. \$4,746 40 N.J. \$5,865 19 N.M. \$7,208 8 N.Y. \$7,660 6 N.C. \$4,773 39 N.D. \$9,838 3 Ohio \$5,371 28 Okla. \$5,347 29 Ore. \$5,400 27 Pa. \$5,459 25 R.I. \$6,788 11 S.C. \$4,893 35 S.D. \$5,028 33 Tenn. \$4,313 44 Tex. \$4,209 46 Utah \$4,947 34 Vt. \$8,988 4 Va. \$4,863 36 Wash. \$5,156 31 W.Va. \$6,818 10 Wis. \$5,636 22 Wyo. \$10,694 2

However, this chart can be deceiving. It shows Alaska and Wyoming as the highest per capital tax states. But most of the tax revenue these states collect comes from severance taxes charged on oil and gas extractors, not taxes imposed on individuals.

A different way to rank state tax burdens is by the percentage of state residents' total income goes to state taxes. As you can see in the following chart, when this is done it becomes clear that Alaska and Wyoming impose very low taxes on individuals--in fact, Alaska is dead last, while Wyoming is 46th lowest.

 State and Local Tax Burden as a Percentage of State Income, Fiscal Year 2010 State Tax Burden Rank Ala. 8.2% 43 Alaska 7.0% 50 Ariz. 8.4% 40 Ark. 10.0% 15 Calif. 11.2% 4 Colo. 9.1% 32 Conn. 12.3% 3 Del. 9.2% 31 Fla. 9.3% 27 Ga. 9.0% 33 Hawaii 10.1% 14 Idaho 9.4% 25 Ill. 10.2% 11 Ind. 9.6% 23 Iowa 9.6% 24 Kans. 9.7% 22 Ky. 9.4% 26 La. 7.8% 47 Maine 10.3% 9 Md. 10.2% 12 Mass. 10.4% 8 Mich. 9.8% 18 Minn. 10.8% 7 Miss. 8.7% 37 Mo. 9.0% 34 Mont. 8.6% 38 Nebr. 9.7% 21 Nev. 8.2% 42 N.H. 8.1% 44 N.J. 12.4% 2 N.M. 8.4% 39 N.Y. 12.8% 1 N.C. 9.9% 17 N.D. 8.9% 35 Ohio 9.7% 20 Okla. 8.7% 36 Ore. 10.0% 16 Pa. 10.2% 10 R.I. 10.9% 6 S.C. 8.4% 41 S.D. 7.6% 49 Tenn. 7.7% 48 Tex. 7.9% 45 Utah 9.3% 29 Vt. 10.1% 13 Va. 9.3% 30 Wash. 9.3% 28 W.Va. 9.7% 19 Wis. 11.1% 5 Wyo. 7.8% 46

So which state has lower taxes: Oregon or Washington? Oregon ranks higher than Washington on both charts--good evidence the state tax burden is lower in Washington.