States tend to vary in their tax laws: Oregon, for instance, has no sales tax, but it makes up the difference in high property taxes (which vary by county), causing it to be a state that is attractive to tourists, but not necessarily homeowners.
Overall, there are certain states that have higher tax rates than others. All of these states also offer a variety of deductions that can decrease the burden on the tax payer; even so, what the government collects, on average, remains high. Here are 10 of the most expensive states for filing taxes:
1. California State Taxes
Californians pay a lot in sales tax, among the highest in the nation with a base statewide rate of 7.50% (which could be higher depending on district). The state’s income tax is also high, at 13.3 percent. Tax payers who own pools might be in a bit of luck: They could be deductible if the pool is used for medical purposes.
Related: IRS Reports This Year’s Average Tax Refund is $3,034
2. Hawaii State Taxes
Despite no inheritance tax and a low sales tax, Hawaii makes its money through income tax: Tax payers on the high end pay 11 percent. Hawaii is also working on taxing online sales. Per the Miami Herald, the state is attempting to advance a bill that would require online retailers to collect taxes and pay them back to the state. But, it’s not all bad news: Hawaii offers deductions for those who maintain Norfolk Pines on their property.
3. New Jersey State Taxes
New Jersey residents pay 8.97 percent in income tax, 7 percent in sales tax and, depending on the county, quite a lot in property taxes. According to the Tax Foundation, New Jersey has the highest property tax per capita, at $2,625. Additionally, New Jersey does not tax social security benefits.
4. Vermont State Taxes
Vermont isn’t tax friendly, particularly if you are a retiree. The state not only taxes most retirement income — including Social Security — but it also levies a high income tax (8.95 percent) and sales tax (6 percent). As for property taxes, Vermont’s are among the top ten highest in the nation.
Keep reading: How to Find Free Tax Preparation in Your City
5. New York StateTaxes
According to a 2013 USA Today article, it’s not so much the increase in taxes that is hurting New Yorkers; it’s the increase in taxes coupled with the decrease in average wages. While New Yorkers have seen, in recent years, their taxes rise by more than $200 (the income tax stands at 8.82%), the average income fell by more than $1,100, per capita. On the bright side, New York’s state sales tax is relatively low at 4 percent, and social security benefits aren’t taxed.
6. Minnesota State Taxes
While its property taxes vary drastically, the sales and income taxes in Minnesota are both on the high end, at 6.875 percent and 7.85 percent, respectively. Minnesotans must also pay a “use tax” on some items purchased outside of the state, but used inside of the state.
7. Wisconsin State Taxes
Wisconsin has no inheritance tax, but its property taxes rank among the highest, according to the Lincoln Institute of Land Policy and Minnesota Taxpayers Association. The Badger State’s sales tax is middling, at 5 percent, with some exemptions, including prescriptions drugs. The state’s income tax ranks among the worst, at 7.75%.
8. Maryland State Taxes
As lawmakers try to balance the budget, Maryland residents have seen their taxes on a continual climb, with 5.5 percent in income tax, 6 percent in sales tax and $1,171 in per capita property taxes. Sales taxes have increased in recent years, with heavy taxation on gasoline, medicine and online shopping.
9. Massachusetts State Taxes
Those who live in Massachusetts are encumbered with the highest rate of debt per person, according to the Tax Foundation, and the tax burdens don’t help. Residents pay 5.25 percent in income tax, 6.25 percent in sales tax and per capita property taxes of $1,789.
10. Connecticut State Taxes
Connecticut residents are taxed highly, but they are also paid highly: Their $56,001 in per-person income is the nation’s highest, according to 2010 data from the Bureau of Economic Analysis. In regards to taxes, residents pay 6.7 percent in income tax, 6.35 percent in sales tax and $2,381 in per capita property taxes. Connecticut doesn’t charge an inheritance tax, but does impose an estate tax beginning at 7.2 percent.
Although these states currently have a few of the highest taxes, that doesn’t mean there aren’t plenty of invaluable resources for taxpayers. To make the most of their money, filers in every state should take advantage of charitable deductions, deductions for school loans and first-time home buyers, and more, when filing their taxes.
About This Study
This list was compiled using 2012 income tax rates from the Federation of Tax Administrators, Bloomberg’s 2012 investigation of the most and least expensive states for paying taxes, sales tax rate information from the Tax Foundation, and a 2013 Kiplinger state-by-state analysis of taxes for retirees.