There are always reasons to spend money, but when one of those reasons is taxes, people tend to get pretty riled up. And since each state has its own rules on what gets taxed, at which rate and when, that means there’s a lot of variation across the U.S.
Kiplinger took a look at the complex tax picture, using information from state tax departments, the American Petroleum Institute, the Tax Foundation, the American Hotel & Lodging Association and the Distilled Spirits Council of the United States to see just how much of your money will be gobbled up by taxes from state to state.
(Related: 9 New 2018 Tax Numbers to Know)
If you get mad enough at the taxes where you live to want to move, you can check out our list of the 10 most tax-friendly states.
Here are the 10 least tax-friendly states in the U.S:
10. New Jersey
It’s gonna cost you to live in the Garden State (you might want to consider growing your own food to help make ends meet). Property taxes are the highest in the country, and while income taxes aren’t horrible, they’re not cheap either — the average effective rate is 2.1% for individuals and 3.6% for joint filers. And fuel taxes went up 23% to push the state closer to most-expensive status. State sales tax is 7%, but most clothing and footwear are tax-exempt.
Gasoline tax is $0.38 per gallon; diesel, $0.42 per gallon. Property taxes on a median home priced at $315,900 (yeah, that’s high) is $7,410 (yeah, that’s high too). Vehicles are subject to sales tax, but there’s no ongoing tax. Oh, by the way, cars costing more than $45,000 or with a combined EPA fuel-mileage average of 19 or below will cost extra — a 0.4% surcharge will be on your bill.
Beer will cost you an extra $0.12 per gallon and hard cider $0.15 per gallon, while wine is $0.88 per gallon and liquor is $5.50 per gallon. Cigarettes cost an extra $2.70 per pack. Wireless is taxed at 8.9%, and if you think you’re getting out of New Jersey without paying estate or inheritance taxes, think again. And it’s not cheap, either.
Real estate taxes here are the fourth highest in the country, and the sales tax is 6.35%. In addition, jewelry valued at more than $5,000 and clothing, footwear and accessories priced at more than $1,000 per item are taxable at 7.75%. It also levies not just a gift tax (the only state in the country to have one), but a luxury tax. And despite all that, its financial condition at the moment is none too good.
The effective income tax rate is 3.1% for individuals and 5% for joint filers. Gasoline is taxed at $0.38 per gallon, diesel at $0.42, and vehicles are taxed at 6.35% for those under $50,000 and 7.75% for those over. In addition, vehicles are subject to a stiff annual levy, whether or not they’re registered for use (can you say Uber?).
When it comes to sin taxes, cigarettes are taxed at $3.65 per pack, snuff at $1 per ounce; chewing and smoking tobacco, 50% of the wholesale price; and cigars, 50% of the wholesale price with a cap of $0.50. Beer is taxed at $0.23 per gallon, wine at $0.72 per gallon and liquor at $5.40 per gallon. And there’s a 15% lodging tax. Wireless is taxed at 7.4%.
And then there’s the estate tax on the transfer of estates valued at $2 million or more at a progressive rate starting at 7.2% and rising to a maximum of 12% for an estate valued above $10.1 million. There’s no inheritance tax, but the gift tax applies to real and tangible personal property in Connecticut and intangible personal property anywhere for permanent residents.
High income tax on big earners marks California, which has a 13.3% bracket that kicks in at $1 million of taxable income for single filers. Yet it’s not the worst. It also has high sales taxes (7.25% state, plus local levies), high fuel taxes and high property taxes.
Gasoline is taxed at $0.38 per gallon, diesel at $0.39 per gallon; there’s also a vehicle tax that functions like a property tax. Cigarettes are taxed at $2.87 per pack (San Francisco adds another $0.20); other tobacco products, 28% of the wholesale price. Incidentally, marijuana and vapor/E-juice are also taxed, if you were wondering.
Then there’s alcohol, with beer taxed at $0.20 per gallon; wine, at $0.20 per gallon ($0.30 for sparkling wine); liquor, at $3.30 per gallon; and alcohol over 100 proof, $6.60 per gallon (yes, that’s double). And wireless service is taxed at 11.6%.
But yay, no inheritance or estate tax (maybe there’s nothing left to tax).
While Hawaii’s property taxes are low, that’s pretty much where the good news stops. Income tax rates are high, with the top rate at 8.25% and kicking in at $48,000 for individual filers. The 4.35% average sales tax may look low, but when you pay it on nearly everything it adds up all too fast. Only prescription drugs and prostheses are exempt.
There’s a state excise tax on vehicle sales, and a by-weight tax at registration; gasoline tax is $0.44 per gallon, while diesel is $0.41 per gallon. And those Mai Tais on the beach will cost you, too, with liquor taxed at $5.98 per gallon, wine at $1.38 ($2.12 if sparkling) per gallon and beer at $0.93 per gallon ($0.54 per gallon for draft beer, though). Cigarettes and little cigars are taxed at $3.20 per pack, while large cigars come in at 50% of the wholesale price and other tobacco products at 70% of the wholesale price. And wireless is taxed at 7.6%.
There’s no inheritance tax, but there is an estate tax, with rates ranging from 10% to 15.7%. Exemptions are tied to federal thresholds. But, surprisingly enough, the state also has a deduction to care for exceptional trees — claimable only once every three years, up to $3,000, and the work must be done by a certified arborist on a certified tree.
One of the 10 highest property tax rates in the country and curtailed tax deductions for the wealthy make Vermont not quite so friendly to those with higher incomes. The state sales tax is 6%, to which municipalities can add up to 1% more, for an average combined rate of 6.17%. Lots of clothing is exempt, but soda isn’t. Vehicles are taxed at purchase.
Gasoline is taxed at $0.30 per gallon, diesel at $0.32. Cigarettes are taxed at $3.08 per pack, with cigars going as high as $4 per cigar depending on price. Snuff and smokeless tobacco are taxed at $1.87 per ounce. Beer is taxed at $0.27 per gallon, $0.55 per gallon if it’s 6% alcohol or above; wine, $0.55 per gallon; and liquor, $7.71 per gallon. Wireless is taxed at 8.5%.
The state has no inheritance tax, but estate tax is levied on property exceeding $2.75 million. The maximum estate tax rate is 16%.
They’re lower than they were, but Maine’s income tax rates are still high — in fact, its lowest rate of 5.8% is still higher than some states’ highest rates. Sales tax is relatively low, and property taxes aren’t horrible, but vehicle owners will pay not just sales tax but also excise tax, the latter calculated on the vehicle’s age and value.
Gasoline is taxed at $0.30 per gallon, diesel at $0.31 per gallon. For beer, you’ll pay an extra $0.35 per gallon; for wine, $0.60; and for liquor, $5.82. Cigarette tax is $2.00 per pack, snuff $2.02 per ounce and other tobacco products, 20% of the wholesale price. Wireless is taxed at 7.4%.
There’s no inheritance tax, but the estate tax is kicking in, in accord with federal thresholds. Rates range from 8–12%. And blueberry lovers, beware; the state’s “weird” tax is on anyone who grows, purchases, sells, handles or processes blueberries; they’re taxed at a rate of $0.015 per pound of berries.
It’s raised its flat income tax to 4.95%, has the second highest property taxes in the country and also taxes purchasers with combined state and local sales tax rates that can go as high as 10%. Food, prescription drugs and nonprescription drugs are all taxed by the state at 1%.
New vehicle purchases are taxed at 6.25% and up; private purchases of used cars come with a use tax that varies with the age of the vehicle. Gasoline is taxed at $0.33 per gallon; diesel, $0.35. Beer and cider with an alcohol content of 0.5% to 7% are taxed at $0.23 per gallon, while wine comes in at $1.39 per gallon and liquor at $8.55 per gallon. Cigarettes and little cigars, $1.98 per pack plus municipality charges; other tobacco products, 36% of the wholesale price; e-cigarettes/juice are taxed extra in Chicago and Cook County. Wireless is taxed at 17.5%.
There’s no inheritance tax, but the estate tax has a $4 million estate tax exemption and a maximum rate of 16%.
3. New York
You’re going to pay for the privilege of living in New York, with high income, property and sales taxes. The average combined sales tax rate is 8.49%.
Vehicles are subject to sales tax, with some counties adding a charge based on vehicle weight. Gasoline is taxed at a weighted average of $0.43 per gallon, diesel at $0.42 (also a weighted average). Beer is taxed at $0.14 per gallon; wine, $0.30 per gallon; spirits, $6.44 per gallon. Cigarettes and little cigars, $4.35 per pack — the highest in the country (and in New York City, it’s $1.50 more); cigars and other tobacco products, 75% of the wholesale price; and snuff is taxed at $2.00 per container for an ounce or less, $2 per ounce for larger containers. Wireless is taxed at 17.9%.
There’s no inheritance tax, but there is an estate tax — a “cliff tax.” If the estate’s value is more than 105% of the current exemption, the exemption isn’t available and the entire estate is subject to state estate tax. Oh, and if you have that bagel sliced — even if you want it plain, without even butter — that makes it a “prepared” food, subject to sales tax.
High income tax, with a rate of 5.35% at the low end and 9.85% at the high end, coupled with high property taxes, make Minnesota pretty tax-unfriendly. The average combined sales tax rate is 7.30%, although most clothing and shoes are exempt. There’s a 6.5% sales tax on vehicles at time of purchase, and gasoline and diesel are both taxed at $0.29 per gallon.
Cigarettes and little cigars are taxed at $3.00 per pack, with premium cigars taxed at 90% of the wholesale price with a $3.50 per cigar cap. Moist snuff is taxed at 90% of the wholesale price or at least $2.83 per container, while other tobacco products are taxed at 90% of the wholesale price.
Want a drink to go with that cigar? Beer is taxed at $0.47 per gallon; wine, $1.13; liquor, $8.67. If beer is higher than 3.2% alcohol, there’s also a 2.5% gross-receipts tax due. Champagne, no matter its alcohol content, is taxed six times as much as regular wine. Wireless is taxed at 9.5%.
There’s no inheritance tax, but the estate tax has a maximum rate of 16%.
Maryland nails you on income tax, with 23 counties and the city of Baltimore ready to hit you up for taxes on top of the state’s take. Real estate taxes are middling, and sales tax is a flat 6%, but the effective income tax rate with all those add-ons comes out to 6.1% for an individual and 6.6% for joint filers.
There’s sales tax on vehicles, but no excise tax; both gasoline and diesel are taxed at $0.34 per gallon. Beer is taxed at $0.49 per gallon, wine at $1.35 per gallon and liquor at $4.64 per gallon, while cigarettes are taxed at $2.00 per pack. Other tobacco products are taxed at 15% of the wholesale price, and in Montgomery County expect to pay 30% of the wholesale price for e-cigarettes and juice. Wireless service is taxed at 12.7%.
Maryland’s inheritance tax hits individuals other than a spouse, child or other lineal descendant, spouse of a child or other lineal descendant, parent, grandparent or sibling with a 10% tax. Its estate tax has a maximum rate of 16%.
— Related on ThinkAdvisor: