Many of us look to make a move when we retire. Warm weather shouldn’t be the only factor when deciding. One of the things you might look at is overall tax rates.
Your tax rate isn’t just about what the state levies in income taxes. It can also include other taxes, such as county and local taxes.
When figuring your personal overall tax rate, don’t forget to include applicable sales taxes and property taxes.
WalletHub recently completed an analysis of state taxes and came up with a list of each state’s overall tax rate. In doing so, they “calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income.”
Below are the states with the lowest overall tax rates. Then for a flip side the Top 5 are shared.
Be Well,
Anisa
States With The Lowest Overall Tax Rates…
5. Wyoming
Effective total state and local tax rate for the median U.S. household: 8.05%
Wyoming won’t tax your Social Security benefits, and you don’t have to worry about paying personal income tax. On top of that, Wyoming has one of the lowest property tax burdens in the U.S. However, a projected $1.5 billion shortfall due to shifts in energy production isn’t likely to be made up by the recently passed lodging tax expected to mostly come from tourists.
4. Nevada
Effective total state and local tax rate for the median U.S. household: 7.94%
Another state that won’t tax Social Security benefits or income tax, Nevada ranks as the fourth-lowest for overall tax rates. Additionally, Nevada is one of the friendliest states for property taxes. However, Nevada ranks 13th for sales tax, according to a Tax Foundation analysis, with a combined state and local sales tax rate of 8.23%.
3. Montana
Effective total state and local tax rate for the median U.S. household: 7.11%
Not only is the effective overall rate for Montana relatively low, but it’s one of the states that don’t charge sales tax. Additionally, even though Montana has a relatively high top state tax rate, it’s one of the few states that allows you to deduct federal income taxes on your state return.
2. Delaware
Effective total state and local tax rate for the median U.S. household: 6.25%
Delaware is one of the states with a low property tax burden. On top of that, Delaware doesn’t charge sales tax, and it also doesn’t charge an estate or inheritance tax. Delaware’s top income tax rate is 6.6% on an income of $60,000 or over.
1. Alaska
Effective total state and local tax rate for the median U.S. household: 5.84%
Alaska is one of the most tax-friendly states. Alaska has no income tax, and it doesn’t tax Social Security benefits. Not only that, but Alaska doesn’t levy an inheritance or estate tax, and it has no statewide sales tax (although localities can charge a sales tax).
States With The Highest Overall Tax Rates…
5. Kansas
Effective total state and local tax rate for the median U.S. household: 13.43%
4. Pennsylvania
Effective total state and local tax rate for the median U.S. household: 13.97%
3. New York
Effective total state and local tax rate for the median U.S. household: 14.08%
2. Connecticut
Effective total state and local tax rate for the median U.S. household: 14.84%
1. Illinois
Effective total state and local tax rate for the median U.S. household: 15.01%.
I don’t mind saying this is very depressing as it is where I live! I’ve been considering being a snowbird when I retire and spending many months in Arizona. This just might push me to make it a permanent move!
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