Is The State You Live In Tax Friendly?

As tax season approaches, MoneyGeek has conducted a study to determine how “tax friendly” each state is by analyzing the tax burden placed on the typical resident. States with modest tax loads received grades of A, while those with heavy tax burdens received grades of F. Why do people have tax obligations this year? A tax expert discusses the typical causes.

MoneyGeek conducted a study to determine how much a hypothetical family would pay in taxes if they were a married couple with one dependent, a gross income of $87,432, and a home worth $375,000. The average that a family would receive a better grade if their taxes were lower. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming were among the states with the highest scores that do not impose state income taxes. While Tennessee has the highest sales taxes, citizens of several other states ultimately pay more taxes.

The states with the highest top personal income tax rates are California, Hawaii, New Jersey, Oregon, and Minnesota, but that doesn’t necessarily mean people in those states are getting hit hardest. Every state has its own intricate system of regulations on tax breaks, deductions, and income ceilings. Only a hypothetical household earning roughly $87,000 a year and owning a $375,000 home may apply MoneyGeek’s approach of evaluating states on their tax burden. In Texas, a single person making $40,000 would pay less in taxes than a family who recently purchased a $1 million home in California (Martichoux, 2023).