Author: Maurie Backman | May 02, 2019
Say goodbye to your hard-earned income
When you earn money, it’s not just the federal government that takes a share of it. The state you live in could dictate how much tax you wind up on the hook for. Of course, income tax is only one type of tax you might pay at the state level. There are also sales and property taxes to think about. Still, here are the states that collect the most state and local individual income tax per resident.
1. New York
New York’s state income tax rates range from 4% to 8.82% across eight different income brackets. New York City, meanwhile, has its own set of tax rates and brackets. Property taxes in New York State are also among the highest in the nation. Salaries in the New York City area, however, are often enough to more than compensate.
Maryland imposes a personal income tax that starts at 2% and climbs all the way up to 5.75%. Baltimore residents are also subject to local taxes. Proximity to the Washington, D.C. area, however, makes it an appealing place to live from a job perspective, and with moderate property taxes, buying a home isn't necessarily prohibitive.
Massachusetts imposes two different tax rates depending on the type of income at play. The state income tax rate for wage earnings is 5.05%, while certain capital gains are taxed at 12%. Though property taxes are on the high side in Massachusetts, the thriving Boston job market makes it an appealing place to live.
With access to New York City minus the cramped apartments, Connecticut’s wide-open spaces make it a desirable place to call home. That said, income taxes can be significant in Connecticut. The state has seven marginal tax brackets that start at 3% and climb all the way up to 6.99%. Homes also aren't cheap in Connecticut, and property taxes are among the highest in the country. And seniors, beware -- Connecticut is one of 13 states that taxes Social Security.
California has 10 marginal tax brackets, ranging from 1% all the way up to 13.3% for higher earners. And while property taxes on a whole are fairly low at the statewide level, home prices in hotspots like San Francisco, Los Angeles, and San Diego can be exorbitant. In fact, cities like San Jose, San Francisco, Oakland, and Santa Cruz all edge out New York City as the most expensive in the nation based on cost of living.
Minnesota imposes a state income tax that begins at 5.35% for its lowest earners and climbs all the way up to 9.85% for its highest earners. Social Security benefits are taxable in Minnesota as well. That said, jobs are plentiful in the Minneapolis-St. Paul vicinity, though with above-average home prices and property taxes, the living isn't all easy.
With some of the most expensive housing in the nation, Oregon is a costly place to live from not just a property perspective, but also, from an income tax perspective. State taxes start at 5% for lower earners and climb all the way up to 9.9% for higher earners. Property taxes, however, are fairly moderate.
8. New Jersey
With the highest property taxes in the nation and relatively hefty home prices, living in New Jersey is an expensive prospect. Proximity to the New York City job market, however, makes it a reasonable alternative for folks seeking high salaries and larger homes. As far as income taxes go, New Jersey has six marginal tax brackets, ranging from 1.4% to 8.97% for the state’s highest earners.
Hawaii might be one of the most beautiful places in the country to live, but it's also one of the priciest. Despite its low property taxes, home prices in Hawaii can be astronomical. Like many other states, Hawaii imposes state income taxes on a marginal basis, with 12 distinct tax brackets ranging from 1.4% all the way up to 11%.
imposes a state income tax that ranges from 2% to 5.75%, depending on earnings
Being D.C.-adjacent makes Virginia a good place to live from an employment
perspective, though home prices near the D.C. area make buying even a starter
property prohibitive for low and middle earners. Property taxes, however, are
fairly low on a statewide level.
The Motley Fool has a disclosure policy.