Podcast Center
Video Center
Webcasts
Resource Center
Events
October 25, 2017 at 08:10 AM
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.
(Related: GOP’s Chief Tax Writer Expects Deal on State, Local Tax Break)
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.
9. Connecticut
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.
8. California
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).
7. Hawaii
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.
