Most and least friendly states for taxes

Posted by RJ & Makay on April 4, 2012

alaska, connecticut, energy-industry, gaming-industry, income-tax, nevada, new-jersey, property-taxes, sales-tax, state-taxes


Most and least friendly states for taxes

There is a lot to consider when judging the best and worst states for taxes, and for individuals it becomes a matter of what is applicable to their own specific circumstances.  The main considerations are taxes on income, property and consumption.  In other words, the total tax burden.  Some states are similar in these regards and some vary widely.  A closer look at the particulars reveals the differences.

The state that has the coldest weather is actually the warmest environment for taxes. Alaska does not tax personal income, including Social Security benefits and pension income. Also there are no state-imposed sales taxes.  Property taxes are the main tax burden at an average $1,559 per capita tax rate, a relatively high property tax when compared to other states around the nation.  Energy industry taxes take the tax burden off of Alaskan citizens.

For warm-weather enthusiasts, Nevada also does not tax income, Social Security benefits or pension income.  Property taxes are reasonable at $1,241 per capita though sales taxes are relatively high at 6.85%.  Gaming industry taxes keep rates low for Nevada residents.

Wyoming and Florida round out the top four tax-friendly states. See the MarketWatch article Most Tax-friendly States for Retirees for more tax details on those states.

On the other end of the spectrum, New Jersey consistently ranks as one of the most unfriendly tax states in the nation.  State income tax is 6.37%.  Sales tax is 7%. The state has the dubious distinction of having the highest property tax per capita at $2,625, according to the Tax Foundation.  Also, it is one of only 14 states that tax Social Security income.

Connecticut is also one of the least friendly states for taxes.  State income tax is 5%, and sales tax is 6.35%.  The state imposes the third highest property tax per capita at $2,381.  Also, inheritance taxes range from 7.3% to 16% with a $2 million exemption.

For more information on the least-friendly states for taxes, see 5 Highest, 5 Lowest States for Taxes.

For a comprehensive state-by-state compilation of state tax characteristics, see the Bloomberg article Most & Least Taxing States 2012.

RJ & Makay

 

Source:

 

Most and least taxing states 2012 (http://www.bloomberg.com/money-gallery/2011-09-14/most-least-taxing-states.html).  Bloomberg, April 3, 2012

Most tax-friendly states for retirees (http://articles.marketwatch.com/2012-03-29/finance/31250336_1_tax-burden-sales-taxes-income-tax).  MarketWatch, March 29, 2012

5 highest, five lowest states for taxes (http://money.msn.com/taxes/5-highest-5-lowest-states-for-taxes).  MSN Money, February 19, 2012



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