2016’s States with the Highest & Lowest Tax Rates
by John S Kieran

Tax season can be stressful for many Americans, especially those who still owe money to Uncle Sam at the end of it. Every year, the average U.S. household pays more than $5,700 in federal income taxes, according to the Bureau of Labor Statistics. And while we’re all faced with that same obligation, there is significant disparity when it comes to state and local taxes. Taxpayers in the most expensive states, for instance, pay three times more than those in the cheapest states to meet their civic burden.

As you might expect, differences in state tax obligations — as well as the services for which tax dollars are allocated — can drive residents out of or draw them in to a state and thus impact the strength of local economies. Such trends are evident among professional athletes and retirees, for example, groups that often relocate to Florida or Texas for the income-tax breaks they offer.

As this year’s tax-filing deadline — April 18 in most states — looms closer, it’s fair to wonder which states have the most and least burdensome tax rates. WalletHub’s analysts searched for answers, comparing state and local tax rates in the 50 states and the District of Columbia against the national median. To illustrate, we calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income. This approach contrasts with our methodology for the Best States to Be Rich & Poor from a Tax Perspective, which considers tax obligations relative to the average income in each state.

Scroll down for the complete ranking, commentary on state- and local-tax insights from a panel of leading minds in the field, as well as a full description of our methodology.

1 Main Findings
2 Red States vs. Blue States
3 State & Local Tax Breakdown
4 Ask the Experts: Best Tax Advice
5 Methodology
Main Findings
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Overall Rank
State
Effective Total State & Local Tax Rates on Median U.S. Household*
Annual State & Local Taxes on Median U.S. Household*
% Difference Between State & Nat’l. Avg.**
Annual State & Local Taxes on Median State Household***
Adjusted Overall Rank (based on Cost of Living Index)
1 Alaska 5.69% $3,066 -46.85% $4,237 6
2 Delaware 6.02% $3,246 -43.74% $3,830 1
3 Montana 6.92% $3,728 -35.37% $3,561 3
4 Wyoming 7.45% $4,015 -30.40% $4,312 2
5 Nevada 7.72% $4,161 -27.86% $4,028 7
6 Tennessee 7.95% $4,284 -25.75% $3,523 4
7 Idaho 8.48% $4,569 -20.80% $4,074 5
8 California 8.80% $4,741 -17.81% $6,803 33
9 South Carolina 8.80% $4,742 -17.80% $4,009 9
10 Florida 9.03% $4,868 -15.62% $4,305 11
11 Oregon 9.17% $4,943 -14.32% $5,392 34
12 Colorado 9.41% $5,070 -12.11% $5,854 15
13 Alabama 9.43% $5,080 -11.94% $4,081 8
14 Utah 9.53% $5,133 -11.02% $5,802 10
15 Arizona 9.69% $5,224 -9.44% $4,878 14
16 South Dakota 9.79% $5,275 -8.57% $4,550 17
17 New Hampshire 9.88% $5,325 -7.69% $6,902 30
18 District of Columbia 10.02% $5,401 -6.37% $8,281 45
19 Louisiana 10.24% $5,516 -4.39% $4,603 13
20 North Dakota 10.33% $5,568 -3.49% $5,276 25
21 Hawaii 10.34% $5,575 -3.37% $7,876 49
22 West Virginia 10.38% $5,594 -3.03% $4,203 26
23 Georgia 10.59% $5,706 -1.08% $5,111 16
24 North Carolina 10.61% $5,720 -0.86% $5,025 19
25 Oklahoma 10.64% $5,734 -0.61% $4,631 12
26 New Mexico 10.65% $5,741 -0.48% $4,912 20
27 Vermont 10.76% $5,797 0.50% $6,536 42
28 Virginia 10.89% $5,868 1.73% $7,144 21
29 Texas 11.17% $6,022 4.38% $5,122 23
30 Missouri 11.30% $6,091 5.58% $5,297 22
31 Massachusetts 11.44% $6,163 6.83% $8,935 46
32 Maine 11.51% $6,202 7.50% $5,864 40
33 Minnesota 11.59% $6,244 8.23% $6,865 32
34 Washington 11.69% $6,302 9.25% $7,722 37
35 Maryland 11.85% $6,387 10.71% $9,320 44
36 Indiana 11.86% $6,390 10.77% $5,506 24
37 Kentucky 11.97% $6,449 11.78% $5,104 27
38 Mississippi 12.11% $6,525 13.11% $4,782 18
39 Pennsylvania 12.22% $6,583 14.12% $6,388 38
40 Arkansas 12.25% $6,603 14.46% $4,975 29
41 Kansas 12.29% $6,625 14.84% $5,853 28
42 New Jersey 12.39% $6,675 15.70% $10,891 47
43 Iowa 12.75% $6,872 19.12% $6,071 31
44 Ohio 12.97% $6,991 21.19% $5,892 36
45 Michigan 13.09% $7,054 22.28% $5,717 35
46 New York 13.38% $7,211 25.00% $9,342 51
47 Rhode Island 13.46% $7,255 25.77% $8,497 48
48 Connecticut 13.48% $7,262 25.89% $10,131 50
49 Wisconsin 13.58% $7,316 26.82% $7,065 41
50 Nebraska 13.85% $7,466 29.41% $6,525 39
51 Illinois 14.54% $7,836 35.83% $8,100 43