Tax season can be stressful for the millions of Americans who owe money to Uncle Sam. Every year, the average U.S. household pays nearly $14,000 in federal income taxes. And while we’re all faced with that same obligation, there is significant difference when it comes to state and local taxes. Taxpayers in the most tax-expensive states, for instance, pay over two times more than those in the cheapest states.
Surprisingly, though, low income taxes don’t always mean low taxes as a whole. For example, while the state of Washington’s citizens don’t pay income tax, they still end up spending nearly 9% of their annual income on sales and excise taxes. Texas residents also don’t pay income tax, but spend 1.58% of their income on real estate taxes, one of the highest rates in the country. Compare these to California, where residents owe almost 6% of their income in sales and excise taxes, and just 0.71% in real estate tax.
As this year’s tax-filing deadline, April 15, comes closer, it’s fair to wonder which states give their taxpayers more of a break – which is especially helpful during this period of high inflation. WalletHub searched for answers by comparing state and local tax rates in the 50 states and the District of Columbia against national medians. To illustrate, we calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income.
