Setting Virginia taxes higher than neighboring states will result in some wealthy people relocating to those states to avoid Virginia taxes on their investment income. People who work in Danville or Virginia Beach can move their home to nearby North Carolina to avoid higher taxes. That would shrink Virginia’s tax base and leave Virginia worse off. Among the income-tax collecting states, New Hampshire had the lowest income tax burden in 2022. In 2022, the average New Hampshirite paid just $110 — or 0.1% of their income — in state income taxes.
Overview of New York Taxes
Crime and safety are important factors that can impact social, economic, and political stability. This category includes metrics such as homicide retained earnings rate, robbery rate, incarceration rate, and police-to-citizen ratio. Based on the latest data, Collier’s per capita income stood at $134,527 in 2023. Per capita income represents the average income per person (including wages and investments). Collier County ranks the highest for personal income among all counties in the state.
Planning Your Retirement? Here Are 8 BIGGEST Regrets Most Retirees Have
With a slew of other state and local taxes, a Seattle worker making Purchases Journal a million dollars a year would pay more than 57 percent of their salary in taxes. Investors are usually more mobile than wage earners, so raising taxes on investors makes even more of them leave the state, and results in even more shrinkage of the tax base. You may have extra paperwork if you live in New York City or Yonkers, because those cities assess local income tax on top of state tax. Someone earning $75,000 in California saves about $3,000-$4,500 annually by moving to Texas. High earners making $250,000+ can save $15,000-$30,000+ per year by relocating to states with no income tax.
How the 50 States Rank By State and Local Tax Rates in 2025
So before deciding to move out, you should better check out the states with the highest income tax rates. Particularly in the case of retirees with higher-than-average incomes. Furthermore, in addition to the state tax, Appanoose County and more than 200 school districts charge their own local income taxes.
North Dakota was the only other state with a tax burden of less than 1% at $605 per person, or a tax burden of 0.8%. Tax burdens in 2022 were highest in New York, where the average resident paid 5.8% of their personal income to state income taxes. California was second (4.9%), and Washington, DC, was third (4.6%). Illinois was found to have the highest total effective tax rate at 16.58%, with households earning the state’s median income paying roughly $12,270 in state and local taxes each year.
Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. Her award‑winning work has been featured in numerous national and specialty publications. Additionally, we will discuss short-term rates (ordinary income tax rates) and rates for specific capital gains tax situations, including those applicable to collectibles and the Net Investment Income Tax. One idea both Montana and Idaho lawmakers should consider is the use of income tax rates by state automatic triggers to reduce income tax rates based on revenue growth. This would allow the race for income tax relief to continue at full speed without needing to take any pitstops.
- 521 was enacted, retroactively reducing Idaho’s individual and corporate income tax rates from 5.8 to 5.695 percent as of January 1, 2024.
- The revenue collected goes towards funding state-level services and programs, such as education, infrastructure, and public safety.
- This is often the case for people who moved to New York from another state or left New York for another state in the middle of the year.
- Higher deductions reduce taxable income and lower effective tax rates.
- Nationwide, the average rent for a two-bedroom apartment runs $1,154 a month.
Property Taxes by County
Retirees who are concerned about taxes can find some solace in the North Star State. In calendar year 2023 (the most recent data available), New Jersey had the highest effective rate on owner-occupied property at 2.23 percent, followed by Illinois (2.07 percent) and Connecticut (1.92 percent). Hawaii was at the other end of the spectrum with the lowest effective rate of 0.27 percent, followed closely by Alabama (0.38 percent), Nevada (0.49 percent), Colorado (0.49 percent), and South Carolina (0.51 percent). Ferguson proposed using the revenue to expand the Working Families Tax Credit, fund K-12 education, and lower taxes on small businesses.
As a result of this approach, our readers are better informed about the focus of state and local government and its cost to the citizens whose tax dollars fund governmental decisions. Profit and prosper with the best of Kiplinger’s advice on investing, taxes, retirement, personal finance and much more. As mentioned, the most effective strategy is to hold assets for more than one year to qualify for long-term rates (0%, 15%, or 20%), which are lower than ordinary income rates. As with the 28% rate for collectibles, if your ordinary tax rate is below 28%, that rate will apply to taxable QSBS gain. Gains from selling collectibles (art, antiques, precious metals, etc.) are taxed at a maximum rate of 28%. This rate only affects long-term gains; short-term gains from collectibles are taxed as ordinary income.
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This means that regardless of where you are in the state, you will pay an additional 7.25% of the purchase price of any taxable good. Many cities and counties also enact their own sales taxes, so the maximum combined rate is 10.25%. The table below shows the combined state and county tax rates for each of the 58 counties in California.