State Taxes - Part 2 - Recap of the Best States

State Taxes – Part 2 – Recap of the Best States

Previously, we discussed North Carolina’s tax ranking on The Tax Foundation site. We highlighted the worst states for taxes.

Just to recap, the WORST states according to The Tax Foundation were as follows (#1 being the worst):

10. Iowa (Income Tax 8.98%, Sales Tax 6%, Per Capita Property Tax $1,430)

9. Connecticut (Income Tax 6.7%, Sales Tax 6.35%, Per Capita Property Tax $2,580)

8. Wisconsin (Income Tax 7.65%, Sales Tax 5%, Per Capita Property Tax $1,724)

7. Ohio (Income Tax 5.33%, Sales Tax 5.75%, Per Capita Property Tax $1,140)

6. Rhode Island (Income Tax 5.99%, Sales Tax 7%, Per Capita Property Tax $2,161)

5. Vermont (Income Tax 8.95%, Sales Tax 6%, Per Capita Property Tax $2,197)

4. Minnesota (Income Tax 9.85%, Sales Tax 6.88%, Per Capita Property Tax $1,535)

3. California (Income Tax 13.3%, Sales Tax 7.5%, Per Capita Property Tax $1,426)

2. New York (Income Tax 8.82%, Sales Tax 4%, Per Capita Property Tax $2,338)

1. New Jersey (Income Tax 8.97%, Sales Tax 7%, Per Capita Property Tax $2,896)

What are the BEST states for taxes? Here is a list (#1 being the best):

10. Texas (Income Tax 0%, Sales Tax 6.25%, Per Capita Property Tax $1,555)

9. Utah (Income Tax 5%, Sales Tax 5.95%, Per Capita Property Tax $912)

8. Indiana (Income Tax 3.4%, Sales Tax 7%, Per Capita Property Tax $971)

7. New Hampshire (Income Tax 5%, Sales Tax 0%, Per Capita Property Tax $2,518)

6. Montana (Income Tax 6.9%, Sales Tax 0%, Per Capita Property Tax $1,347)

5. Florida (Income Tax 0%, Sales Tax 6%, Per Capita Property Tax $1,369)

4. Alaska (Income Tax 0%, Sales Tax 0%, Per Capita Property Tax $2,077)

3. Nevada (Income Tax 0%, Sales Tax 6.85%, Per Capita Property Tax $1,109)

2. South Dakota (Income Tax 0%, Sales Tax 4%, Per Capita Property Tax $1,196)

1. Wyoming (Income Tax 0%, Sales Tax 4%, Per Capita Property Tax $2,173)

It’s important to note how The Tax Foundation arrives at this data. As you can see in the information above, some factors include income tax, sales tax, and per capital property tax. Other factors that are not listed are corporate income tax rates. Rates vary among states and play a role in the determination of ranking. As shown above, Wyoming ranks as number 1 overall, yet has a fairly high per capital property tax rate. Because there are various inputs involved in the calculation, The Tax Foundation does the best they can to weight them and rank with the overall taxes in mind.

With all of that being said, North Carolina is not far behind the “best” states ranking at 16 (up from 44).

A few important factors that The Tax Foundation does not take into account are quality of life and personal preferences. You should consider all factors when deciding where you would like to be.

Topics to consider: Will you own a business? Are you in a young professional, in retirement age, somewhere in between, etc? What are your interests? Are you purchasing a home in the state? What are your preferences on climate? The Tax Foundation’s rankings gives you some insight to the best and worst states from a taxation standpoint, but as you can see, there is much more to it. This type of decision simply cannot be based on taxes alone. We hope you find this information useful.