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Effective Total State & Local Tax Rate on Median Household: 13.38 percent
Effective Income Tax Rate: 3.49 percent
Effective Real Estate Tax Rate: 5.15 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 4.75 percent
Effective Total State & Local Tax Rate on Median Household: 13.48 percent
Effective Income Tax Rate: 2.25 percent
Effective Real Estate Tax Rate: 6.23 percent
Effective Vehicle Property Tax Rate: 1.19 percent
Effective Sales & Excise Tax Rate: 3.81 percent
For many taxpayers, federal income taxes are largely non-negotiable. Professionals are adept at massaging, deferring and otherwise attempting to minimize such costs, but regardless of where a citizen lives, their federal obligation is effectively the same. State taxes, however, are a different story. With the harshest states demanding roughly three times the taxes of the most lenient ones, choosing the correct domicile can make an enormous difference in terms of tax savings, particularly for wealthy clients. (Hence the enduring popularity of Florida- and Texas-based professional sports teams among free agents—income tax breaks go a long way when you draw such a large salary.)
This disparity is laid bare in a recent survey, performed by WalletHub, which compared state and local tax rates in the 50 states and the District of Columbia against the Median U.S. Household* to determine whose relative income tax obligations were the highest. Here are the states with the 10 highest and lowest tax rates.
*For the purposes of this data, WalletHub assumed the “Median U.S. Household” has an income equal to $53,889 (mean third quintile U.S. income); owns a home valued at $175,700 (median U.S. home value); owns a car valued at $23,070 (the highest-selling car of 2015); and spends annually an amount equal to the spending of a household earning the median U.S. income. All effective tax rates shown below were calculated as a percentage of the mean third quintile U.S. income of $53,889 and based on the characteristics of the Median U.S. Household.
Effective Total State & Local Tax Rate on Median Household: 8.80 percent
Effective Income Tax Rate: 1.40 percent
Effective Real Estate Tax Rate: 2.65 percent
Effective Vehicle Property Tax Rate: 0.28 percent
Effective Sales & Excise Tax Rate: 4.47 percent
Effective Total State & Local Tax Rate on Median Household: 9.03 percent
Effective Income Tax Rate: 0 percent
Effective Real Estate Tax Rate: 3.59 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 5.45 percent
Effective Total State & Local Tax Rate on Median Household: 13.85 percent
Effective Income Tax Rate: 2.53 percent
Effective Real Estate Tax Rate: 6.12 percent
Effective Vehicle Property Tax Rate: 0.63 percent
Effective Sales & Excise Tax Rate: 4.37 percent
Effective Total State & Local Tax Rate on Median Household: 13.09 percent
Effective Income Tax Rate: 3.32 percent
Effective Real Estate Tax Rate: 5.98 percent
Effective Vehicle Property Tax Rate: 0.22 percent
Effective Sales & Excise Tax Rate: 3.58 percent
Effective Total State & Local Tax Rate on Median Household: 6.02 percent
Effective Income Tax Rate: 3.03 percent
Effective Real Estate Tax Rate: 1.72 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 1.27 percent
Effective Total State & Local Tax Rate on Median Household: 6.92 percent
Effective Income Tax Rate: 2.76 percent
Effective Real Estate Tax Rate: 2.84 percent
Effective Vehicle Property Tax Rate: 0.16 percent
Effective Sales & Excise Tax Rate: 1.16 percent
Effective Total State & Local Tax Rate on Median Household: 7.72 percent
Effective Income Tax Rate: 0.53 percent
Effective Real Estate Tax Rate: 3 percent
Effective Vehicle Property Tax Rate: 0.60 percent
Effective Sales & Excise Tax Rate: 3.59 percent
Effective Total State & Local Tax Rate on Median Household: 7.45 percent
Effective Income Tax Rate: 0 percent
Effective Real Estate Tax Rate: 2.03 percent
Effective Vehicle Property Tax Rate: 0.77 percent
Effective Sales & Excise Tax Rate: 4.65 percent
Effective Total State & Local Tax Rate on Median Household: 12.75 percent
Effective Income Tax Rate: 3.03 percent
Effective Real Estate Tax Rate: 4.79 percent
Effective Vehicle Property Tax Rate: 0.43 percent
Effective Sales & Excise Tax Rate: 4.5 percent
Effective Total State & Local Tax Rate on Median Household: 14.54 percent
Effective Income Tax Rate: 2.82 percent
Effective Real Estate Tax Rate: 7.35 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 4.37 percent
Effective Total State & Local Tax Rate on Median Household: 5.69 percent
Effective Income Tax Rate: 0.10 percent
Effective Real Estate Tax Rate: 3.94 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 1.65 percent
Effective Total State & Local Tax Rate on Median Household: 8.80 percent
Effective Income Tax Rate: 2.35 percent
Effective Real Estate Tax Rate: 1.87 percent
Effective Vehicle Property Tax Rate: 0.97 percent
Effective Sales & Excise Tax Rate: 3.61 percent
Effective Total State & Local Tax Rate on Median Household: 13.46 percent
Effective Income Tax Rate: 2.3 percent
Effective Real Estate Tax Rate: 5.25 percent
Effective Vehicle Property Tax Rate: 2.04 percent
Effective Sales & Excise Tax Rate: 3.88 percent
Effective Total State & Local Tax Rate on Median Household: 8.48 percent
Effective Income Tax Rate: 2.13 percent
Effective Real Estate Tax Rate: 2.51 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 3.84 percent
Effective Total State & Local Tax Rate on Median Household: 12.97 percent
Effective Income Tax Rate: 3.34 percent
Effective Real Estate Tax Rate: 5.06 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 4.57 percent
Effective Total State & Local Tax Rate on Median Household: 7.95 percent
Effective Income Tax Rate: 0.10 percent
Effective Real Estate Tax Rate: 2.44 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 5.41 percent
Effective Total State & Local Tax Rate on Median Household: 13.58 percent
Effective Income Tax Rate: 3.56 percent
Effective Real Estate Tax Rate: 6.42 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 3.60 percent
Effective Total State & Local Tax Rate on Median Household: 12.39 percent
Effective Income Tax Rate: 1.4 percent
Effective Real Estate Tax Rate: 7.48 percent
Effective Vehicle Property Tax Rate: 0 percent
Effective Sales & Excise Tax Rate: 3.51 percent
