By Dan Caplinger, The Motley Fool
7. Minnesota, April 23
Minnesota has a relatively high combination of individual income and sales taxes, with a top income tax rate of 7.85% and a 6.875% sales tax. But its corporate income tax of 9.8% is especially high, despite the fact that top private employer Target is headquartered in Minneapolis. Even relatively low property taxes averaging just over $1,400 aren’t enough to give residents much relief.
6. California, April 24
California is notorious for having retroactively raised its income tax rates on high-income taxpayers last year, imposing a top rate of 13.3%, the highest of any state. State sales taxes of 7.5% and a fairly high corporate income tax rate also add to Californians’ tax burden, even though it hasn’t stopped many high-profile technology companies from calling the state home. Limitations on property tax increases have kept many residents from bearing the full burden of skyrocketing property values during the housing boom.
4 (tie). Massachusetts, April 25
Massachusetts has a relatively low flat income tax of 5.25%, but a recent increase in its sales tax to 6.25% boosted overall revenue. With property taxes averaging nearly $2,000, homeowners get a triple tax burden, although many financial companies maintain a strong presence in the state.
4 (tie). Illinois, April 25
Illinois closely resembles its peer Massachusetts, with a 5% flat income tax rate and the same 6.25% sales tax. A higher corporate rate offsets slightly lower property taxes, although corporate taxes didn’t stop Boeing from relocating its corporate headquarters to the state from Seattle more than a decade ago. A gasoline tax that’s in the top five in the country helps push its overall burden higher.
3. New Jersey, May 4
As we get to the three most heavily taxed states, rates for various taxes go up considerably. New Jersey boasts a top income tax rate of nearly 9%, sales taxes of 7%, and property taxes averaging more than $2,800. In addition, with a high concentration of businesses, corporate tax collections are also among the highest in the nation.
2. New York, May 6
New York‘s tax rates are actually lower than New Jersey‘s, with a top rate of about 8.8% and a 4% sales tax. Yet because of the high average income of New Yorkers, the state collects more in income tax revenue than any other state. Most cities tack on an average of nearly 4.5% in additional sales taxes, and with plenty of high-income businesses calling New York home, including Wall Street‘s most profitable institutions, the state’s corporate tax brings in the second most revenue of any state.
1. Connecticut, May 13
Again, tax rates don’t tell the whole story for Connecticut, with a modest 6.7% top income tax rate and just over $2,500 in property taxes. But high gasoline taxes combined with the 6.35% sales tax, as well as high average incomes resulting from its proximity to the New York City metropolitan area, make Connecticut the costliest state in the U.S. for taxes. The state is a center for the insurance industry, with Hartford Financial among the leading employers, and defense-related companies United Technologies and General Dynamics also have substantial operations there.
Think twice about where you live
It’s important to remember that the Tax Foundation‘s calculations are all based on aggregate measures, and they won’t necessarily reflect your personal Tax Freedom Day. But as a general rule, choosing where to live can make a big impact on your total tax liability, and while taxes aren’t necessarily the most important factor in making that choice, they definitely deserve at least some consideration.
Boeing’s choice of Illinois for a headquarters doesn’t change the fact that the aircraft-maker has a huge opportunity in front of it. But the 787 Dreamliner debacle has some wondering
Filed under: Investing
There’s nowhere you can go in the United States to escape taxes entirely. But where you live can make a big difference in when you can declare independence from your tax burden every year.
Tax Freedom Day is an easy-to-understand concept that the nonprofit Tax Foundation has developed to help people understand just how much they have to pay in federal, state, and local taxes. By taking the total amount of taxes that people have to pay and then dividing it by their income, you can figure out what percentage of the year you spend working for Uncle Sam and your state and local tax authorities.
This year, Tax Freedom Day for the nation as a whole falls on April 18. But people in some states will have to wait quite a while longer before they’ve paid off their tax burden for 2013. Here are the seven most heavily taxed states in the U.S., along with a brief explanation of what makes their taxes so much higher than the rest of the country.
7. Minnesota, April 23
Minnesota has a relatively high combination of individual income and sales taxes, with a top income tax rate of 7.85% and a 6.875% sales tax. But its corporate income tax of 9.8% is especially high, despite the fact that top private employer Target is headquartered in Minneapolis. Even relatively low property taxes averaging just over $1,400 aren’t enough to give residents much relief.
6. California, April 24
California is notorious for having retroactively raised its income tax rates on high-income taxpayers last year, imposing a top rate of 13.3%, the highest of any state. State sales taxes of 7.5% and a fairly high corporate income tax rate also add to Californians’ tax burden, even though it hasn’t stopped many high-profile technology companies from calling the state home. Limitations on property tax increases have kept many residents from bearing the full burden of skyrocketing property values during the housing boom.
4 (tie). Massachusetts, April 25
Massachusetts has a relatively low flat income tax of 5.25%, but a recent increase in its sales tax to 6.25% boosted overall revenue. With property taxes averaging nearly $2,000, homeowners get a triple tax burden, although many financial companies maintain a strong presence in the state.
4 (tie). Illinois, April 25
Illinois closely resembles its peer Massachusetts, with a 5% flat income tax rate and the same 6.25% sales tax. A higher corporate rate offsets slightly lower property taxes, although corporate taxes didn’t stop Boeing from relocating its corporate headquarters to the state from Seattle more than a decade ago. A gasoline tax that’s in the top five in the country helps push its overall burden higher.
3. New Jersey, May 4
As we get to the three most heavily taxed states, rates for various taxes go up considerably. New Jersey boasts a top income tax rate of nearly 9%, sales taxes of
From: http://www.dailyfinance.com/2013/04/13/these-7-states-get-taxed-like-no-others/
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