"When it comes to tax season, it's always an annual reminder that where you live does determine how much of your paycheck actually stays in your pocket. While federal taxes apply equally across state lines, state and local taxes can vary, often dramatically, and for residents of the highest-taxed states, the difference can amount to thousands of dollars every year."
"What's also notable is that the gap between the most and least taxed states is pretty staggering. Hawaii, unsurprisingly, has the highest total tax burden, with residents paying out nearly 14% of their income to state and local governments. Meanwhile, Alaska residents keep far more of what they earn, paying only 4.9% of their income in combined state and local taxes. This 9% difference, on a $100,000 income, translates to approximately $9,000 more in annual taxes simply for choosing a different address."
"What "Tax Burden" Actually Measures Unlike tax rates, which apply to specific transactions or income tax brackets, a tax burden measures the total proportion of income residents pay toward all state and local taxes combined. This includes not just income taxes, but also taxes on property, sales taxes, and excise taxes on things like gasoline, alcohol, and tobacco. This comprehensive view matters because states use different strategies to raise revenue."
State and local taxes produce significant variation in how much of income residents pay beyond federal taxes. Tax burden measures the total share of income surrendered to state and local governments, including income, property, sales, and excise taxes. Hawaii has the highest combined state and local tax burden at nearly 14%, while Alaska has the lowest at about 4.9%. That 9 percentage-point gap can equal roughly $9,000 annually on a $100,000 income. Different states offset revenue with varying mixes of taxes, so comparing percentages shows the real impact on take-home pay.
Read at 24/7 Wall St.
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