How “Tax Friendly” is Indiana? The degree gives each state a grade
(NEXSTAR) – The least cheerful of all seasons, tax season is upon us. If you apply this year, you may pay a very different amount than your neighbors in a state next door.
An updated analysis from personal finance website MoneyGeek ranks how “tax friendly” each state is by assessing the average citizen’s tax burden. Low-tax states earned an A, while those with the highest tax burden earned Fs.
To conduct the study, MoneyGeek looked at how much a hypothetical family would pay in taxes if they were a married couple with one dependent, gross income of $87,432 (the median national income) and a home valued at approximately $375,000 (the median price of a new home). The lower the taxes for this hypothetical average family, the better the grade.
Not surprisingly, states with no state income taxes end up doing high. These eight states are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.
However, residents of some of these states pay higher sales taxes. According to TurboTax, the states with the highest sales taxes are Tennessee (9.55%), Louisiana (9.52%), Arkansas (9.51%), Washington (9.23%) and Alabama (9.22%).
The states with the highest personal income tax rates are California, Hawaii, New Jersey, Oregon, and Minnesota, TurboTax reports, but that doesn’t necessarily mean people in those states end up being hit the hardest. Each of these states has its own complex rules for tax credits, deductions, and income thresholds to even pay state taxes.
MoneyGeek’s system for ranking states by tax burden applies only to this hypothetical family, who make about $87,000 a year from a $375,000 home. A family that just bought a $1 million home in California would likely pay a lot more in taxes, while a single person earning $40,000 in Texas would pay less.
https://www.wane.com/news/how-tax-friendly-is-it-where-you-live-study-gives-every-state-a-grade/ How “Tax Friendly” is Indiana? The degree gives each state a grade