Here Are the States Where Tax Filers Are Paying the Highest Percentage of Their Income

With tax season about to go into full swing, FinanceBuzz looked at what kind of a tax burden the average person can expect in every state this year. Using Census data and federal and state tax rates, we calculated tax burdens as a percentage of median annual income for individuals and married couples in every state.

We found the states where people will pay the most and least in taxes, the states individual filers and couples could move to for lower taxes, and more. Read on to find out how taxes in your state stack up to the rest of the country.

The average tax burden in every state for individual filers

Our analysis looked at the “effective” tax rate, which is the percentage of income an individual or couple pays in taxes for the year. To do this, we found the median income for full-time workers and couples in every state from the U.S. Census Bureau. We then applied state and federal deductions and exemptions to that amount and used federal and state tax rates for the 2021 tax year to find how much people in each state owe in federal and state taxes. By combining those amounts, we found the total amount owed. Finally, we divided that amount by median annual income to find the effective tax rate in every state.

Individuals in Oregon have the nation’s highest tax burden, owing 23.37% of their annual income in taxes for 2021. A prime reason for this is that Oregon has the highest effective state tax rate, at over 7%. The only other state with a state-level tax rate higher than 4.95% is Hawaii, with an effective rate of 6.22%.

Oregon’s federal tax rate is only the 16th-highest in the country, but the high state-level rate launches Oregonians to the very top of the tax burden list. Interestingly, that is the inverse case for Massachusetts, which has the second-highest effective tax rate. Massachusetts residents pay their state taxes at the ninth-highest effective rate, but owe the highest rate in the country in terms of federal tax, at 18.58%. Individuals in Massachusetts earn the highest median annual income in the country, which is why they pay such a high federal tax rate.

On the other end of the spectrum, Florida residents enjoy the lowest effective tax rate at 15.52%. Florida is one of nine states that do not charge state-level income taxes. These state-tax-free states make up nine of the 10 states with the lowest overall effective tax rates. North Dakota is the only member of the bottom 10 that charges state income tax, and they only do so at a low effective rate of 0.82%.

The average tax burden in every state for couples filing jointly

There are slightly different rules regarding deduction and exemption amounts for couples. Those differences combined with different income levels and tax brackets for couples produce slight differences compared to individual filers. For instance, across the entire country, the average couple owes taxes at an effective rate .05% higher than the individual average.

On the state level, there are notable shifts at the top and bottom of the list. While individuals pay the highest tax rate in Oregon, the biggest tax burden for couples falls to Massachusetts residents. In terms of the smallest tax burden for couples, Tennesseeans enjoy that luxury, with Florida having the second-lowest effective rate.

Tips for making tax season less stressful

No matter where you live, tax season can be overwhelming. Here are some tips on how to stay on top of your taxes and maybe even save a little in the process:

• Know how to file. Taxes can feel overwhelming for many reasons, so it's worth it to research how to file taxes before you dive in. If you're getting money back from Uncle Sam, you can track your refund to learn when it will get to you.
  
• Take steps to reduce what you owe. There are a variety of clever ways to pay less in taxes that are available to most people, including a number of strategies used by millionaires to avoid taxes.
  
• Pay your taxes with a credit card. Nobody likes to owe taxes, and we like to pay them even less. Using a credit card to pay your taxes could lessen the pain, thanks to the potential to earn rewards.

Methodology

We used the most up-to-date data from the U.S. Census Bureau to find the median income in every state for individual full-time, year-round workers as well as married couples. 

We then used federal guidelines for the 2021 tax year (filing in 2022) relating to deductions and taxable income to determine the amount of federal taxes (income and FICA) owed by individuals and couples in each state. We then used information from individual state tax and revenue department websites to determine the state-level tax owed by individuals and couples in each state for the 2021 tax year (filing in 2022). 

For this analysis, we did not include any potential deductions or exemptions relating to dependents but did include uniform deductions and exemptions available for individual filers and couples filing jointly.

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Author Details

Josh Koebert Josh Koebert is an experienced content marketer that loves exploring how personal finance overlaps with topics such as sports, food, pop culture, and more. His work has been featured on sites such as CNN, ESPN, Business Insider, and Lifehacker.

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