Tax Cost of Living

us-map-with-statesWe all pay federal taxes under the same rules, but the state regimes are wildly different, and there are a lot of moving parts that make up the cost to live in a state. Which of them take the most money out of the pockets of their residents, and where is living cheapest, from a tax standpoint?

The Wallet Hub website recently looked at three tax variables—property taxes; individual income taxes; and total sales and gross receipts taxes—all as a fraction of total state personal income, added them up and determined the highest and lowest-tax states.

The results? Most readers won’t be surprised that New York came in first overall, with property taxes equal to 4.65% of total personal income for all residents, plus individual income taxes of 4.76% (by far the highest overall percentage of any state) and a 3.71% sales and receipts tax burden. Add them up, and New Yorkers are paying, in aggregate, 13.12% of their total personal income for the privilege of living in the state.

Hawaii (11.86%), Maine (11.13%), Vermont (11.13%), Connecticut (10.91%), Minnesota (10.46%), New Jersey (10.38%), Rhode Island (10.36%), Wisconsin (10.32%) and Illinois (10.19%) all drained more than 10% of total income into their state coffers.

The cheapest states? Alaska (5.18%) and Delaware (5.91%) were the only two that came in under 6%, followed by Tennessee (6.56%), New Hampshire (6.88%), South Dakota (6.94%) and Oklahoma (6.95%). You can see how your state compares in each category, and in the overall rankings, here.

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