In the United States, federal income taxes remain consistent nationwide, but there is a great deal of variation between state and local governments, with some levying taxes that can be financially crippling for some taxpayers. This article explores the 18 states where residents must contend with high tax burdens—places to avoid settling if you want to avoid such a drain!
California
The Sunshine State may have beautiful beaches and an enviable climate, but it consistently tops the list for states with the highest overall tax burden. Residents face a progressive structure based on their income, with rates ranging from 1% to an extortionate 13.3% for top earners! Sales taxes are also high, at a whopping average of 7.25%.
New Jersey
New Jersey residents contend with the second-highest overall tax burden in the nation, with graduated marginal rates reaching 10.75% for the highest earners. The average combined state and local sales tax rate sits at 6.68%, with some localities adding further surcharges on top of that! Property taxes are also one of the highest nationwide, at 2.38% of a home’s value.
Hawaii
You might want to avoid this tropical paradise if you have a high income. The Hawaii Department of Taxation states, “Hawaii has the highest tax burden for very high-income taxpayers making over $500,000 filing single and $1,000,000 filing jointly.” It also has the highest average combined state and local sales tax rate, at 4.44%, although property tax is over half that of New Jersey.
New York
Given its reputation for wealth, shopping, and urbanization, it’s perhaps not surprising that the Empire State has expensive tax rates. New York has a progressive income tax structure, with rates climbing as high as 8.82% for the highest earners. Property taxes don’t match the New Jersey rates, but they come close—with taxes payable at 1.68% of a home’s value.
Massachusetts
The overall tax burden for residents of Massachusetts is high, especially for those in the highest income bracket, who face tax rates of 12%. The combined average state and local sales tax rate is relatively high, at 6.25%, and many people also have to pay additional fees levied by their specific counties, further increasing the burden.
Connecticut
Like most other states on our list, Connecticut has a progressive income tax, with marginal rates for top earners not exceeding 7%. This is nowhere near as high as some other states, like Hawaii and California, but it is still above the national average. Sales taxes add another financial stressor, with a combined rate of 6.35%. Property taxes are quite significant as well, averaging 1.17%.
Minnesota
Residents of the Land of 10,000 Lakes face a high overall tax burden, with top earners having to pay up to 9.85% of their income to the state. Property taxes aren’t the highest in the country, but they aren’t minimal, with property sellers having to pay around 1.19% of their home’s value after a sale. The combined average state and local sales tax rate is also elevated, at 6.87%.
Maryland
According to the Tax Foundation, “Maryland has a 6.00 percent state sales tax rate and does not levy any local sales taxes.” The state enforces a progressive income tax rate, with marginal rates reaching 5.75% for top earners. This isn’t as high as in many other states, but top earners tend to earn a lot less in Maryland than they do in New York or California.
Vermont
The Green Mountain State has a high overall tax burden, with a progressive income tax rate that plateaus at 8.95% for top earners, which can be financially debilitating. Property taxes aren’t the highest, but are still fairly substantial, at 1.17% of a home’s value, which is above the national average of 1.10% for the whole of America.
Illinois
Residents of Illinois face a flat income tax rate of 4.95%, which can be disproportionately unfair for low-income households or for those workers supporting a number of dependents. Local taxes are quite high, too, with a combined average state and local sales tax rate of 6.25% and several extra charges depending on locality. Property tax isn’t cheap either, at 1.73%.
Rhode Island
The maximum income tax rate paid by people living in the Ocean State is a hefty 10.97%, and the combined average state and local sales tax rate is an extremely high 7%, although it doesn’t levy local sales tax on top of this. Property taxes are above the national average, too, with property sales necessitating a tax payment of 1.23% of a home’s value.
Delaware
Delaware can appeal to high earners because it has a flat income tax rate of only 6.6%, but this makes life harder for workers in the lowest socio-economic groups and increases inequality. The state may have no sales tax, but localities can (and do) impose their own, leading to a patchwork system. The corporate income tax is also very high here.
Oregon
Willamette Week reports that the Beaver State has an unfair taxation system: “Oregon’s poorest families pay about 12% of their income in taxes, while the 1% highest earners pay 10.4%.” This unfair allocation of tax burdens can make life especially tough for low-income households, despite the fact that marginal rates reach 9.9% for top earners.
Nebraska
Like Oregon, this cold-weather northern state has an ‘upside-down’ taxation system that taxes lower-income earners at a higher overall rate than wealthier, high-salary residents. Nebraska has a single, flat income tax rate of 5.5% regardless of salary tier, and residents also face high property taxes, averaging a substantial 1.57% of a total home’s value.
Iowa
Iowa residents don’t have a blanket tax rate but face a progressive income tax structure, with marginal rates reaching 8.53% for top earners. The combined average state and local sales tax rate is 6.8%, which is quite high compared to the national average. Property taxes aren’t excessive (at 1.12%), but some localities levy extra charges on top of these tax percentages.
Wisconsin
The Badger State has a high overall tax burden—although no one area seems particularly excessive, the total adds up to a significant percentage. Wisconsin has a progressive income tax structure with marginal rates up to 7.65%, and its combined average state and local sales tax rate is 5.5%. Property taxes are slightly above the national average, at 1.14%.
Maine
The Pine Tree State is not particularly welcoming for high-income earners, and the Maine Policy Institute reports that high-salary, potential immigrants are being ‘put off’ by the crippling taxes for those in the highest brackets. Changes set to occur in 2025 will reduce the burden for mid-level earners, but even higher rates will be imposed for the most affluent working residents.
Kansas
There are few southern states on our list, but Kansas is perhaps the most expensive in terms of tax burden. Residents face a flat income tax rate of 5.7%, which doesn’t sound too bad but disproportionately impacts the lowest-income workers. Property taxes are surprisingly high, at 1.81% of a home’s value, making selling property in Kansas especially expensive.
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