Today's tax day, and hopefully your taxes are done. Taxes are a hassle to put together and can be quite complicated. While many states have progressive income taxes, some states have a flat tax, making what you owe far simpler to calculate
There are seven U.S. states with a flat income tax, or 14 if you include the 7 states with no income tax.
The 7 States With a Flat Income Tax
- Colorado
- Illinois
- Indiana
- Massachusetts
- Michigan
- Pennsylvania
- Utah
In examining a state's tax situation, you can't just look at a state's income tax. You should research and consider all the taxes in a state and how those will affect your particular situation. A good place to start out is the Tax Foundation, which has been collecting data on taxes since 1937 and takes into consideration an average of both state and local taxes.
The 7 states with a flat income tax
Let's go through the states with a flat income tax one by one using the Tax Foundation's most recent data, which is from July 2012.
1. Colorado
Colorado makes residents pay individual income taxes at a flat rate of 4.63%. The state also has a flat 4.63% income tax on corporations and charges a 2.9% sales tax. In 2010, per capita property tax was $1,601, and combined with all other taxes, the per capita state and local tax paid was $4,104, according to the Tax Foundation.
2. Illinois
Illinois makes residents pay individual income taxes at a flat rate of 5%. The state also has a flat 9.5% income tax on corporations and charges a 6.25% sales tax. In 2010, per capita property tax was $1,827, and combined with all other taxes, the per capita state and local tax paid was $4,512, according to the Tax Foundation.
3. Indiana
Indiana makes residents pay individual income taxes at a flat rate of 3.4%. The state also has a flat 8% income tax on corporations and charges a 7% sales tax. In 2010, per capita property tax was $1,182, and combined with all other taxes, the per capita state and local tax paid was $3,294, according to the Tax Foundation.
4. Massachusetts
Massachusetts makes residents pay individual income taxes at a flat rate of 5.25%. The state also has a flat 8% income tax on corporations and charges a 6.25% sales tax. In 2010, per capita property tax was $1,986, and combined with all other taxes, the per capita state and local tax paid was $5,422, according to the Tax Foundation.
5. Michigan
Michigan makes residents pay individual income taxes at a flat rate of 4.35%. The state also has a flat 6% income tax on corporations and charges a 6% sales tax. In 2010, per capita property tax was $1,453, and combined with all other taxes, the per capita state and local tax paid was $3,503, according to the Tax Foundation.
6. Pennsylvania
Pennsylvania makes residents pay individual income taxes at a flat rate of 3.07%. The state also has a flat 9.99% income tax on corporations and charges a 6% sales tax. In 2010, per capita property tax was $1,261, and combined with all other taxes, the per capita state and local tax paid was $4,183, according to the Tax Foundation.
7. Utah
Utah makes residents pay individual income taxes at a flat rate of 5%. The state also has a flat 5% income tax on corporations and charges a 5.95% sales tax. In 2010, per capita property tax was $837, and combined with all other taxes, the per capita state and local tax paid was $3,181, according to the Tax Foundation.
It's not all about taxes
There's more to consider before moving than just tax rates, but it doesn't hurt to start there, especially if you are living off interest and dividends.
