Top 10 States in America With the Highest Taxes in 2016

paying taxes to Uncle Sam

Taxes and Uncle Sam | Spencer Platt/Getty Images

Benjamin Franklin once wrote, “In this world nothing can be said to be certain, except death and taxes.” If you’re like most Americans, paying Uncle Sam is your largest financial burden. In fact, the nation as a whole doesn’t earn enough money to pay its total tax bill for the year until April. Making matters worse for some individuals, taxes can vary significantly between states.

Highest state taxes

WalletHub recently analyzed how state and local tax rates compare to the national median in all 50 states as well as the District of Columbia. The purpose was to determine which states pay the highest and lowest tax rates, and to see how each state stacks up against the national median. This comparison was based on four different types of taxation: real estate taxes (based on a median home price of $175,700), vehicle property taxes (based on a 2016 Toyota Camry LE), income taxes (based on mean third quintile income of $53,889), and sales and excise taxes.

Taxpayers in the states with the highest taxes pay three times more than those in the states with the lowest taxes. We previously took a look at the cities with the highest taxes – now, let’s take a look at the 10 states with the highest state and local taxes, according to WalletHub.

10. New Jersey

  • Average Annual State and Local Taxes: $6,675
  • Difference from National Average: 15.7%
  • Adjusted Rank by Cost of Living: 47

The Northeast is not particularly kind to taxpayers. New Jersey ranks as the No. 10 worst state when it comes to tax bills. The state doesn’t charge a vehicle property tax, but its real estate taxes are worst in class, with the average bill totaling $4,029. However, a cheaper option is nearby. Delaware ranks as the second best state in the country for taxes. In fact, the average annual state and local tax bill in Delaware is less than half of New Jersey’s tax bill.

9. Iowa

Downtown

Iowa | Justin Sullivan/Getty Images

  • Average Annual State and Local Taxes: $6,872
  • Difference from National Average: 19.12%
  • Adjusted Rank by Cost of Living: 31

Iowa ranks as the No. 9 worst state for taxes, and has few solutions for taxpayers looking to stay close to home. Out of the six bordering states, South Dakota has the lowest average tax bill at $5,275. That is a decent difference, but few people are willing to move to South Dakota primarily for tax reasons. Missouri might be the most practical option. The state ranks roughly in the middle at $6,091.

8. Ohio

Dayton, Ohio

Ohio | Source: Thinkstock

  • Average Annual State and Local Taxes: $6,991
  • Difference from National Average: 21.19%
  • Adjusted Rank by Cost of Living: 36

Ohio ranks as the No. 8 worst state for taxes. The average tax bill totals $6,991, which is 21% above the national average. The state ranks poorly on real estate taxes (No. 40 in America), but better than average on income taxes. It also ranks comparable to its neighbors Pennsylvania and Indiana. Like New Jersey, Ohio doesn’t have a vehicle property tax.

7. Michigan

City of Detroit

Detroit | Spencer Platt/Getty Images

  • Average Annual State and Local Taxes: $7,054
  • Difference from National Average: 22.28%
  • Adjusted Rank by Cost of Living: 35

Michigan is the first state on the list to crack the $7,000 level. The state ranks as the No. 7 worst state for taxes with an average bill of $7,054. Real estate taxes and income taxes rank poorly compared to the rest of the country, while its vehicle property taxes are in the middle of the pack. On the positive side, the state’s sales and excise taxes rank better than average.

6. New York

New York City at night

New York | Source: iStock

  • Average Annual State and Local Taxes: $7,211
  • Difference from National Average: 25%
  • Adjusted Rank by Cost of Living: 51

Living in America’s largest city comes at a steep price. New York ranks as the No. 6 worst state for taxes. Its tax bill of $7,211 is among the highest in the country, and the worst when adjusted for cost of living. New York ranks poorly on real estate taxes, income taxes, and sales and excise taxes, as it has some of the highest taxes on gasoline and cigarettes you’ll find. You’re in luck if you own a vehicle, as there is no vehicle property tax.

5. Rhode Island

Rhode Island shore

Rhode Island | Source: iStock

  • Average Annual State and Local Taxes: $7,255
  • Difference from National Average: 25.77%
  • Adjusted Rank by Cost of Living: 48

Rhode Island’s land mass is small, but its taxes more than make up for it. The state ranks as the No. 5 worst state for taxes. In fact, you won’t find much relief anywhere. Rhode Island ranks dead last for vehicle property taxes, near the bottom on real estate taxes, and only about average on income taxes and sales and excise taxes. Neighboring Connecticut doesn’t rank any better, but at least Massachusetts comes in at No. 31 overall.

4. Connecticut

Connecticut

Connecticut | Source: Thinkstock

  • Average Annual State and Local Taxes: $7,262
  • Difference from National Average: 25.89%
  • Adjusted Rank by Cost of Living: 50

Connecticut ranks as the No. 4 worst state for taxes, with the average tax bill only $7 more than Rhode Island’s. The state’s real estate taxes and vehicle property taxes are almost dead last in the country, but its income taxes and sales and excise taxes are slightly better than average. Aside from New York and Rhode Island, almost every state in the Northeast has significantly lower tax bills.

3. Wisconsin

Wisconsin

Wisconsin | Source: The American Club via Facebook

  • Average Annual State and Local Taxes: $7,316
  • Difference from National Average: 26.82%
  • Adjusted Rank by Cost of Living: 41

High real estate and income taxes make Wisconsin the No. 3 worst state for taxes. The average real estate tax bill is a whopping $3,459, while income taxes add another $1,918 to the overall tax burden. However, there is no vehicle property tax, and the state’s sales and excise taxes rank quite low.

2. Nebraska

Nebraska football

Nebraska | Eric Francis/Getty Images

  • Average Annual State and Local Taxes: $7,466
  • Difference from National Average: 29.41%
  • Adjusted Rank by Cost of Living: 39

Nebraska ranks as the No. 2 worst state for taxes. The average tax bill of $7,466 is 29.41% above the national average. Real estate taxes ($3,301), vehicle property taxes ($340), and sales and excise taxes ($2,462) are all a major blow to taxpayers. The state’s income tax is right in the middle of the pack at $1,363. Overall, every state bordering Nebraska ranks better when it comes to taxes.

1. Illinois

Chicago, Illinois

Illinois | Scott Olson/Getty Images

  • Average Annual State and Local Taxes: 7,836
  • Difference from National Average: 35.83%
  • Adjusted Rank by Cost of Living: 43

Illinois ranks as the worst state in America for taxes. The state’s average tax bill of $7,836 is almost 36% higher than the national average. It ranks dead last for real estate taxes ($3,959), and No. 30 for income taxes ($1,520). On a positive note, there is no vehicle property tax.

Follow Eric on Twitter @Mr_Eric_WSCS

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