United States Of Taxation 2015: Best And Worst States For Income, Sales Tax

The U.S. government pulled in $3 trillion in revenue in 2014 and that amount is set to increase this year as Tax Day rolls around in April. Federal tax receipts inched up from $2.7 trillion in 2013, and are projected to increase another 9 percent in 2015 to roughly $3.2 trillion, according to the Congressional Budget Office.

Individual income taxes comprise the largest component of the United States’ revenue, followed by social insurance taxes and then receipts from sales taxes. In all, $2.2 trillion is expected to come from income taxes, $1.5 trillion from social insurance and $1.3 trillion from sales taxes.

Federal income tax can take away anywhere from 10 percent to 40 percent of a person’s income, depending on how much one earns. At the local level, there are currently 43 states that impose an income tax on individuals, 47 states that tax corporation incomes and 45 states that collect statewide sales taxes.

Highest and lowest state income taxes

The state with the highest upper range taxes is California, taking away an additional 12.3 percent of income from the state’s wealthiest, defined as those who earn over $1 million. The state with the lowest limit is South Carolina, at 0 percent for the first $2,850 of personal income.

There are nine U.S. states that do not levy individual income taxes. They are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. New Hampshire and Tennessee only tax interest earned and dividends from stocks and bonds. Eight other states have a flat rate, including Colorado, Illinois, Indiana, Massachusetts, Michigan, North Carolina, Pennsylvania and Utah.

Highest and lowest state sales taxes

States can impose a sales tax on goods and services purchased. A base sales tax establishes the minimum of the tax, and additional taxes can be added on, for example for food at a restaurant. California has the highest base sales tax at 7.5 percent, but Arkansas has the highest maximum sales tax at 12 percent. The lowest non-zero base sales tax comes from Colorado at 2.9 percent, and the lowest non-zero maximum sales tax goes to Hawaii at 4.5 percent.

The five states that do not impose sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon. Many states generally do not tax groceries and prescription drugs.

Taxes by state

Numbers indicate percentage. Data from Federation of Tax Administrators and salestax.com.