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These Are The States That Are Paying More Taxes Than Everyone Else

by Jessicah Lahitou
Eduardo Munoz Alvarez/Getty Images News/Getty Images

It's tax season, everyone, which means it's time for millions of Americans to hope they're getting a refund — and not a bill — from the government. Depending on the state you live in, the odds of one or the other will fluctuate — the difference between the state with the highest tax rate and the one with the lowest is eye-popping.

A good rule of thumb is to assume that blue state residents will be paying more in state taxes. Of the 10 states with the highest tax rate, just one voted for Donald Trump in the 2016 presidential election (that would be Wisconsin). But politicos will know that the Badger State is more in the purple category than the red-state column. In 2012, they voted for President Obama.

The 10 states with the lowest tax rates are the opposite — all voted for Trump save one (New Hampshire). It's true — residents in red states, generally speaking, pay significantly less in local and state taxes than their fellow Americans in left-leaning geographic enclaves.

Bad news (well, depending on how you look at it) for New Yorkers: the Empire State comes in No. 1 on the list compiled by USA Today of highest taxed states in the nation. But not all researchers agree on exactly how to calculate the states whose residents face the steepest tax bill.

According to the Federation of Tax Administrators (FTA), the state with the highest tax rate is actually California. Taking into account the "personal income tax floor, deductions, exemptions, credits and varying definitions of taxable income," the FTA sets a Californian's actual average tax rate at 13.3 percent. The second-place state is way behind, with Oregon's average tax rate falling at 9.9 percent, followed by Minnesota at 9.85 percent, Iowa at 8.98 percent, and New Jersey at 8.97 percent.

And according to FTA, New York comes in eighth for the top 10 most taxed states. Part of the discrepancy may be that the data analyzed by USA Today takes sales tax into account, whereas the FTA numbers do not. FTA's numbers are mapped out based on income tax payments alone.

Residents in seven states pay no state income tax at all — Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Hillary Clinton won just two of those states in 2016 — Washington and Nevada — keeping with the theme here of lower taxes for redder states.

Of the top 10 taxed states on USA Today and FTA's lists, just half overlap — New York, New Jersey, California, Wisconsin, and Minnesota. FTA has Oregon, Iowa, Vermont, the District of Columbia, and Hawaii rounding out its top-taxed states list, compared with Connecticut, Illinois, Maryland, Rhode Island, and Massachusetts on USA Today's list.

But those who live in high-tax states do have some perks. Carl Davis at Fortune outlined the results of a 2017 study that showed real benefits for residents in high-tax states — including economically. According to Davis, the nine states with the highest state income tax rate recorded 25.8 percent economic growth per person over the last 10 years. That's compared with just 17.4 percent in the nine states with "no broad-based personal income tax." People living in high-tax states had the added perk of faster growing take-home pay and better job opportunities.

And as recent teacher strikes in West Virginia, Kentucky, and now Oklahoma show, the low-tax model can seriously harm publicly funded projects — like education.

Still, it's a fact of life that few people want to pay more in taxes. And residents in New Jersey, California, Wisconsin, Minnesota, and New York have been paying the highest taxes of late.