New York State’s national television ad campaign, which aired for the first time during the 2013-14 NFL playoffs, raised some interesting questions. The purpose of the ad was to encourage people to move their existing business or start a new one in New York State.
The bait the state is using to lure business owners in? State tax free zones.
The idea leads to some interesting questions such as which states have the highest tax rates, which are the median states and which states leave their residence with the most income after taxes? What might surprise you is that there is no geographic relation to the tax brackets most state governments fall into.
For example, three of the five states with the highest tax rates are in the northeast, one is in the Midwest and the last is California, the state farthest west of those which are contiguous. So which states burden their residence and business owners with the highest tax rates and which states demand the least? Below is a breakdown of all 50 states in respect to the amount of their residence income they consume in taxes.
States with Highest State and Local Taxes
While the state of New York is trying to reduce the tax burden it puts on its residence and business owners, it a March 2012 report, New Yorkers paid almost 13% in local and state taxes alone.
Not far behind, New Jersey and Connecticut taxed their residence 12.4% and 12.3% respectively.
California and Wisconsin were both at least an entire percent lower, but still came in at 11.2% and 11.1%.
States Taxing Residence Between 10.1% and 11%
All the states in this tax bracket were either in the New England or Great Lakes areas.
Minnesota was the closest to being in the extreme high tax bracket at 10.8%.
Maine taxed residence 10.3% and both Pennsylvania and Illinois taxed at a rate of 10.2%.
The Median States – Those Taxing Between 9.1% and 10%
The following were the states that tax in the middle of the road in relation to the rest of the republic. At between 9.1% and 10%, they were neither on the extremely high end nor on the low end of the spectrum. As you might have guessed, this was where a majority of the states fell.
Oregon and Arkansas taxed at 10% and North Carolina and Michigan were not far behind at 9.9% and 9.8% respectively.
There were four states taxing at 9.7%: Ohio, West Virginia, Kansas and Nebraska.
Iowa and Indiana taxed residence at 9.6% and Idaho and Kentucky are at 9.4%.
9.3% was the state and local tax percentage of Washington, Utah, Virginia and Florida.
Delaware taxed at 9.2% and Colorado was 9.1%.
States with Low Tax Rates Relative to the Rest of the U.S.
Missouri, North Dakota, Georgia, Oklahoma and Mississippi all taxed residence between 9.0% and 8.7%.
Montana, New Mexico, Arizona and South Carolina taxed between 8.6% and 8.4%.
Nevada, Alabama and New Hampshire all taxed 8.2% or less.
Those States in the Union with the Lowest State and Local Taxes
State and local taxes for Texas, Wyoming, Louisiana, Tennessee and South Dakota were all between 7.9% and 7.6%
During the same period, Alaska taxed residence 7%.