Lots of people like to complain about taxes. But do you really know what the tax burden in your state is like, compared to people in other states?
Howmuch.net offers a really interesting set of graphics including all fifty states and Washington D.C. ranked according to how they tax their populations. There’s also some good information to help understand why different states and areas have different revenue requirements.
The Big Picture
Income tax is probably the first thing that comes to mind when you think of taxes. Some states do charge a high level of income taxes, while others raise more revenue from property taxes, sales tax or taxes on specific commodities like wireless service, alcohol and tobacco, or fuel.
It’s good to know how tax laws in your state affect your personal finances. For example, property taxes are going to have a bigger impact on a real estate investor, while income taxes will matter more to a factory worker. Sales tax affects everyone, but even that will vary depending on your shopping and consuming habits. Some states have special tax laws for retirees. If you have the flexibility, a big enough difference in your tax situation might just be a reason to consider moving to a state that’s friendlier to your needs.
Running from Taxes?
So are people moving to avoid taxes? This article says yes, and backs it up with a telling infographic from the moving company United Van Lines. (Remember the least tax-friendly tax states from the Howmuch.net article? Six of the ten worst show as yellow—medium to high outbound–on the map below.) The article here shares some good thoughts about how to decide whether moving is worth it.
The 10 Least Friendly States for Taxation
2. New York
3. New Jersey
This is also a great article by WalletHub showing their measure of each state’s ranking from worst (lower numbers) to best (higher numbers) in terms of their tax burden, which also means your tax burden, if you live there.
Top 10 Most Tax-Friendly States
6. New Hampshire
8. North Dakota
Whether you’re moving or staying put, a little knowledge is a good thing. Knowing how your state’s tax laws work can help you make good financial decisions. And whatever state you live in, federal tax laws make owning a home one of your best investments.