The Most Annoying Taxes You're Probably Tired of Paying

We all have to deal with taxes, but some of them pinch our wallets worse than others.
Last updated April 3, 2023 | By Kate Daugherty Edited By Chris Kissell
accountant working with US tax forms

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Taxes are a part of all our lives. Most people are comfortable with paying at least some taxes to fund schools, build roads, and offer services to those in need. We don’t usually mind these taxes, as long as we feel like we are spending our money wisely.

However, some taxes frustrate us, especially if we pay them year after year. It also often feels like there is a new tax popping up at the most inconvenient time. Watching taxes suddenly appear on even the simplest things, like candy or a soda, can be frustrating.

Following are some of the most annoying taxes you're probably tired of paying.

Property taxes

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If you own a home or land, you’re probably familiar with property taxes. Property taxes are the single largest source of state and local revenue in the U.S. and are calculated based on the property value of the land and any buildings on it.

Depending on where you live, property taxes can really sting, especially if you’ve made recent improvements to your home or live in an area where home and land values have increased dramatically.

In some cases, there isn’t much you can do about paying property taxes. However, if the value of your home has decreased recently, you may be able to get your property reassessed and have your taxes lowered.

Also, check your tax bill for inaccuracies and ensure the listed property size and square footage of your home are accurate.

State sales taxes

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Unless you live in one of the handfuls of states that don’t charge sales tax, you’re probably used to seeing a small tax added to everything you purchase. Tax rates and the goods and services they apply to vary by state and may be wildly different from one state to another.

For example, Oregon doesn’t have a state sales tax, but driving into neighboring Washington will require you to pay 6.5% in state taxes and any applicable local taxes.

Some states offer a sales tax holiday, where selected goods are exempt from sales (and possibly local) tax for a set time. Most tax holidays take place around back-to-school time and can help people save money on school supplies, clothes, and other items.

Taxes on Social Security

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Many people are surprised to learn their Social Security benefits can be subject to income tax. If your combined income in retirement exceeds $25,000 (or $32,000 for married people filing jointly), you’ll pay taxes on your benefits.

How much your benefits are taxed is based on your combined income, calculated by adding your adjusted gross income, tax-exempt interest income, and half of your Social Security benefits.

If you’re worried about paying taxes on benefits, work with a retirement professional or financial planner who can help you develop a strategy to minimize taxes in retirement.

Pro tip: Social Security will only go so far in providing income for retirement. So, make sure you find ways to supplement your Social Security benefit.

Soda taxes

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Currently, no states levy a sweetened beverage tax. However, there are six local governments that have imposed a tax on any drinks sweetened with sugar, which may include:

  • Iced tea
  • Soda
  • Sweetened fruit juices
  • Sports drinks

Taxes are usually charged to distributors and passed to consumers through higher prices. However, the District of Columbia directly charges consumers an 8% tax on sweetened beverages, including diet drinks.

Tax rates range from 1 cent per ounce in San Francisco to 2 cents in Boulder, Colorado. Revenue collected by cities with a soda tax ranges from about $2 million in Berkeley, California, to about $75 million in Philadelphia.

Candy taxes

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Although candy seems simple, it can get complicated when it comes to taxes.

Some states that charge sales tax offer exemptions on food items and groceries. Depending on where you live, candy (and soda) may be considered groceries and exempt from tax, or they may be classified as non-grocery items and subject to full sales tax.

In some places, specific rules determine what is taxed and what is not. For example, in Illinois, any candy that contains flour is considered food and exempt from state sales tax.

Gasoline taxes

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The price of gasoline has been all over the news lately, and a portion of the price we pay at the pump is due to taxes.

According to the U.S. Energy Information Administration, we pay 18.4 cents of federal taxes for every gallon of gas we put in our tanks or 24.4 cents per gallon for diesel.

In addition to the federal taxes we pay on gasoline, all states and the District of Columbia tax motor fuel too. If you fill up in Alaska, you’ll likely pay 8 cents per gallon in state taxes. In Pennsylvania, you may pay about 58 cents in taxes for each gallon of gas.

Income taxes

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Federal and state income taxes are often high on the list of levies that annoy people the most. According to a recent Gallup poll, 54% of Americans think the federal income tax they pay is too high, up about 4% from 2021.

Depending on where you live, state taxes can also take a chunk out of your budget. The highest income tax rate in the country goes to California at 13.3%, followed by Hawaii at 11%, and New Jersey at 10.75%.

Even though these percentages seem high compared to states with no income tax, there are often a variety of deductions, exemptions, credits, and varying definitions of taxable income that can change what you actually pay.

You can’t avoid paying income tax — at least not without getting into hot water with the IRS. So, work with a tax professional to help you find all the deductions and exemptions for which you qualify.

Estate taxes

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The federal estate tax is a tax on property transferred to your heirs upon your death. The tax usually only affects the wealthy, since it’s levied on only a portion of the estate’s value over a certain amount.

In 2022, the tax applies to estates worth more than $12.06 million. Although federal estate taxes won’t apply to most people when they die, it’s still one of the most disliked and argued about taxes.

A number of states also have their own estate taxes.

Net investment income tax

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Introduced as part of the American Taxpayer Relief Act of 2012, the net investment income tax (NIIT) is an additional 3.8% tax you might owe if you have investment income and your modified adjusted gross income goes over a certain amount.

In 2022, the threshold for single tax filers is $200,000, or $250,000 for couples filing jointly.

In addition to other types of income, net investment income may include:

  • Long- or short-term capital gains
  • Dividends
  • Taxable interest
  • Rental and royalty income
  • Passive investment income
  • Business income
  • Taxable portion of nonqualified annuity payments

Bottom line

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The tax code is dense and hard to understand, and even simple questions require a lot of digging to get all the information. According to the Pew Research Center, 47% of Americans are bothered “a lot” by the complexity of the federal tax system.

Taxes affect much of our daily lives, and there usually isn’t a way to avoid paying them. Instead, work with a tax professional to help you develop a plan to keep more of your hard-earned money in your pocket.

By avoiding handing over more than your fair share in taxes, you can build up savings and possibly even retire earlier than expected.

Easy Tax Relief Benefits

  • Eliminate your tax debt
  • Potentially reduce the amount you owe
  • Stop wage garnishments and bank levies
  • Communicates with the IRS on your behalf

Author Details

Kate Daugherty Kate Daugherty is a freelance writer based in Denver, Colorado. She specializes in personal finance, grant writing, and senior health.