Highest Taxes In The US: New York, Nebraska, Illinois And Wisconsin Top The List

The administration of President Donald Trump may be planning to overhaul the federal tax code by the end of the coming summer, but for many Americans, moving to a different state could substantially lower what they fork over to the government.

Illinois residents suffered the largest effective total tax rate—a combination of median household income, sales, real estate and property rates—in the U.S. as of 2017, at 14.76, percent according to a study released Tuesday by the consumer finance site WalletHub. Trailing Illinois were Nebraska, with 13.8 percent, Wisconsin, with 13.6 percent, and New York, with 13.58 percent. When taking cost of living into account, however, New York beat the other three states by at least eight rankings.

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Alaskans paid, on average, the least to their state government, with a total rate of 5.64 percent, followed by Delaware, with 6.07 percent, Montana, with 6.89 percent, and Wyoming, with 7.43 percent. Those looking to beat the Republican-dominated Congress to the task by giving themselves a tax cut should consider moving to Delaware, which ranked the lowest when WalletHub factored in the cost of living.

The study, which used data from the U.S. Census, several trade groups and a nonpartisan research organization known as the Tax Foundation, also listed the states with the highest so-called "sin taxes." Smokers may want to avoid living in Hawaii or the Northeast, as the island state, along with New York, Rhode Island, Connecticut and Massachusetts, had the highest cigarette tax rates. Owners of gas-guzzlers may find it worthwhile to move to Alaska, South Carolina or Oklahoma, where the gasoline taxes were lowest, as opposed to Pennsylvania, Washington and Hawaii, where they were highest.

The rankings lined up for the most part with the Tax Foundation’s 2017 report, released Monday, which named New York, followed by New Jersey and Connecticut, as the states with the largest tax burdens, while Alaska, trailed by South Dakota and Wyoming, had the smallest ones.

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A look at state residents’ socioeconomic statuses, however, tells a different story. The non-profit Institute on Taxation and Economic Policy measures the impact of state and local sales, income, property and excise taxes on families of different income levels, and found that the total tax rate tends to grow as the household becomes poorer. In New York, for example, the poorest 20 percent of residents coughed up 10.4 percent of their disposable income, while the richest 1 percent paid 8.1 percent of theirs. In Alaska, by contrast, the lowest-earning group paid 7 percent, while those at the top paid 2.5 percent.