No one likes to send over a percentage of their hard-earned money to the government in taxes. Not only do we have to deal with the federal tax laws, but we are also affected by the state that we reside in tax laws. While some states are more sympathetic and have no state income taxes, other states charge a relatively high amount. Here is the list of the top 5 highest income taxing states in the country.
5. Vermont- Income Tax: 8.95%
Vermont lands in at number 5 for the highest taxing state. In 2010, Vermont actually lowered its top income bracket from 9.5% to 8.95%. It also has one of the higher sales taxes at 6%, and is one of 14 states to tax Social Security income.
4. Iowa- Income Tax: 8.98%
Not only does this state has high income taxes, it also levies taxes on Social Security, has a sales tax of 6%, and has one of the highest excise tax rates on table wine and spirits.
3. California- Income Tax: 9.55%
California’s income tax rate might not be the highest out of all the states, but in raw numbers it collects more tax than any other. Californians not only have to pay the second highest gas tax rates in the country at 35.3 cents per gallon, but they also have the burden of paying the highest sales tax in the nation at 7.25%.
2. Oregon- Income Tax: 10.8% (11% on income over %500,001)
To lessen the burden of being one of the highest income taxing states, Oregon imposes no sales tax on it residents, and also grants a humorous tax credit of $50 for those who have lost the use of two or more limbs.
1. Hawaii- Income Tax: 11%
Hawaii comes in at number 1 for the highest income tax rate in the country. The income tax includes capital gains and estate taxes. However, if residents have an “exceptional tree” (trees valuable for their beauty and ecological functions) on their property, then they may be able to deduct up to $3,000 a year to take care of it.
So what about our home state of North Carolina? It seems like NC barely escaped this dreaded list as it taxes its residents 7.75% on income and 6.75% on sales. However, property tax per capita is one of the lower ones in the nation at $860, compared to Washington D.C who pays almost $3,000 per capita. So even though our state does charge pretty high in taxes, at least we have some comfort in knowing North Carolina is not one of the top 5 highest taxing states.