With tax day drawing near, it's the time of year to gripe about why taxes are so darn high in your state. It's as good a time as any to work on a better strategy for the next tax year. Since part of that strategy could be moving to a more tax-friendly state, we set out to find out which states offer the most favorable tax situations.
Over half of all taxes collected by the IRS — $3.1 trillion in fiscal 2014 — comes from income taxes. Like the federal government, state and local governments also rely heavily on income taxes. Very few people in the United States can avoid paying federal income taxes, but there are seven states where individual income is not taxed at all at the state level.
As Americans take stock of their personal finances with Tax Day looming, a new study provides a useful reminder that geography is often destiny when it comes to their overall tax burden.
Illinois was ranked worst, and Iowa wasn’t far behind, when it comes to how much of your income goes to pay taxes. “The average American household pays roughly $17,000 in federal income taxes each year. And while we’re all faced with the same burden in that regard, there is significant disparity when it comes to state and local taxes,” said a WalletHub report on the best and worst states for taxpayers.
California and Hawaii are amazing places to live, but if you’re wealthy they will charge you for the privilege. A new chart created by Nathan Yau of the blog Flowing Data compares each state’s income tax brackets and rates using data from the Tax Foundation. The scale at the bottom shows how much an individual has to make to be subject to each rate. The darker the shade, the higher the rate.
While Texas has no state income tax and no property tax on vehicles, its residents pay one of the nation's highest rates when it comes to taxes on real estate. According to WalletHub, a personal finance website, Texans this year are paying an average of $3,327 in real estate taxes. It's the fifth highest amount in the United States and 59 percent higher than the average American household's real estate property tax bill of $2,089.
A pair of lawmakers in the Alaska House have filed legislation to reinstate an income tax. Rep. Paul Seaton, a Homer Republican, and Rep. Bryce Edgmon, a Dillingham Democrat who caucuses with the majority, filed the bill on Friday, with just two weeks left in the session. The bill would tax Alaskans at 15 percent of their federal tax rate. At the very highest bracket, for those making over $400,000, the state income tax would amount to a six percent levy before deductions.
bigger than housing, transportation, and other costs. So in addition to your federal income tax, how much your state takes from you makes a big difference for your financial picture.
Your state tax refund could take longer to come in than usual. Security measures designed to prevent tax fraud are causing Illinois taxpayers to wait longer for their refund. Terry Horstman of the Illinois Department of Revenue says the agency is working to fix the problem.
With 2015 comes a number of state tax changes effective January 1st..
Compare state tax rates and policies across the U.S.
State-by-State Guide to Taxes on Retirees
There are seven U.S. states with no income tax, while another two states have no income tax on wages but do tax interest and dividends -- an important consideration for retirees. The grass isn't always greener on the other side of the state line, though. These states still need money for government services, and they raise it through other means, namely sales taxes, property taxes, and other fees. Depending on your situation and your willingness to move, with some planning you could start paying less in taxes and keeping more of your income. Read on to find out more.
During the 2011 tax season, Americans paid 9.8% of their income in state and local taxes — on top of taxes collected by the federal government. This number, according to a report by the Tax Foundation, was up from 9.3% in 2000, but was basically unchanged from 2009.
The rates in blue states are higher on average than they are in red states.
When it comes to finding a state to which to retire, there are plenty of factors to consider. There’s the weather, proximity to family and friends, access to health care, quality of life, and the list goes on, according to CCH, Wolters Kluwer. But one factor that you might want to weigh more heavily than others when deciding where to live in retirement is the degree to which your precious income and assets will be taxed.
As the deadline for tax season approaches, the residents of seven states are going to have one less thing to worry about than the rest of the country. People who live and file taxes in these states will have to pay no state income tax, something that costs nearly $2,000 per person in New York, the state with the highest income tax rate. While personal income tax is usually the largest source of tax-based revenue for states, there are other sources of revenue. Some of the states without income taxes make up for the revenue they are missing through sales and corporate taxes. Other states simply spend less on services to keep a balanced budget. Using recently released tax-collection numbers for 2011 from the Tax Foundation, 24/7 Wall St.