The States Where Tax Filers Are Paying the Highest Percentage of Their Income [2024]

Using Census data and updated tax rates, FinanceBuzz found the states where individuals and couples will pay the highest and lowest percentage of their annual income in taxes for the 2023 tax year (filing in 2024).

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Updated May 13, 2024
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With the 2024 tax season (covering taxes owed for 2023) in full swing, FinanceBuzz looked at what the average person can expect to pay in taxes this year. Using Census data and federal and state tax rates, we calculated tax burdens in every state (as a percentage of the median annual income for individuals and married couples).

We found the states where individual filers and married couples will pay the highest percentage of their income in federal taxes, state taxes, and overall. Read on to find out how taxes in your state stack up against the rest of the country.

In this article

Key findings

  • Residents of Massachusetts pay the highest percentage of their income in taxes (23.67% for individuals, 23.49% for couples filing jointly).
  • Individuals filing in Florida and Tennessee pay the lowest percentage of their income in taxes (15.75%).
  • For joint filers, couples in Tennessee pay the least (15.55%).

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.

Massachusetts residents have the nation’s highest tax burden, owing 23.67% of their annual income in taxes for 2023. This is primarily due to Massachusetts having the highest individual median income of any state at $73,399.

That income bracket puts many Bay Staters into tax brackets where a more significant portion of their income is taxed at higher rates compared to the rest of the country. As a result, Massachusetts residents owe more in federal taxes than any other state. The result is an effective federal tax rate of 18.97% — more than half a percent higher than any other state.

Looking beyond federal tax rates, there are only two places where the effective state-level tax rate is higher than 5%:

  • Oregon residents pay state taxes at the highest rate in the country, 7.08%.
  • Hawaii’s state-level bill comes out to an effective rate of 6.51%.

The impacts of these high state-level taxes are significant enough to give Oregon residents the second-highest total effective tax burden in the country despite a federal tax burden that ranks 17th in the country. And Hawaii ranks fourth in total effective tax burden despite only having the 16th-highest federal tax burden.

On the other end of the spectrum, Florida residents enjoy the lowest effective tax rate, at 15.75%, followed closely by Tennessee (15.77%), Nevada (15.78%), and South Dakota (15.78%). All these states are among the nine states that do not charge state-level income taxes, which is a major factor contributing to their low overall rates.

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 from individual filers.

For instance, across the entire country, the average couple owes taxes at an effective rate that’s 0.14% lower than individuals.

Though some states at the top of the list vary, couples filing jointly in Massachusetts still have the highest effective tax rate in the country, at 23.49%.

Hawaii and Connecticut round out the top three for couples filing jointly, with effective total tax rates of 23.34% and 23.17%, respectively.

At the bottom of the list, married residents in Tennessee pay taxes at the lowest single effective rate in the country (15.55%), with Floridians paying the second-lowest (15.64%).

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:

Expert advice

Matthew Hutchens

Lecturer of Accountancy

University of Illinois Urbana-Champaign, Gies College of Business

How can people in high tax-burden states prepare throughout the year to handle this?

Different states rely on different mixes of taxes to achieve their revenue goals. For example, in Illinois, the higher tax burden compared to other states is driven by high property taxes.

Managing this expense is straightforward if the taxpayer has a mortgage, as the tax payments will generally be handled via monthly escrow payments to the lender. If the taxpayer doesn’t have a mortgage with escrowed property taxes, [each month] they should … set aside the amount they will need to make large property tax payments later in the year.

In other states, the tax burden on individuals is driven by consumption taxes like the retail sales tax. A sales tax doesn’t require much planning during the year because the tax is generally paid to the retailer with each transaction — leaving the consumer nothing … to do compliance or planning-wise.

What are some ways you can manage your money to prepare for high taxes?

As for income taxes — and particularly in states with higher income taxes — taxpayers who are employees need to make sure to check that their withholdings have sufficient taxes withheld throughout the year to cover their income tax bill at year-end (both to the state and the IRS).

Independent contractors need to ensure they make sufficient quarterly estimated tax payments. Paying enough tax throughout the year through withholding and/or estimated taxes ensures that there is no “surprise” income tax bill at year-end, and that the taxpayer avoids potential penalties for underpayments.

If someone has a side hustle for extra income, what suggestions do you have for them to prepare for tax season?

When it comes to individuals with side hustles, maintaining adequate records is very important. And while a shoebox full of receipts is better than nothing, ideally you would want a record system that keeps a running total and doesn’t require a great deal of work at year-end to organize and reconcile

For example, an excel spreadsheet or a dedicated app could both work well (but make sure to keep the receipts, too, along with a backup like a digital photo).

Keeping track of your business income and expenses can be crucial at tax time to ensure you don’t end up paying more income tax than you are legally required to pay.

Andrew Belnap

Assistant Professor — Department of Accounting

University of Texas at Austin, McCombs School of Business

How can people in high tax-burden states prepare throughout the year to handle this?

Fortunately, there are built-in procedures to make sure that many individuals pay their taxes throughout the year and aren’t left with a large bill on tax day.

For example, employers withhold taxes from each paycheck (including state income taxes) and mortgage companies often require that a portion of the annual property tax bill is paid each month as part of the total mortgage payment. If tax rates change, the withholding is usually designed to adjust to the new rates automatically.

However, not all types of taxes or income are covered by these procedures. If you are self-employed or have other non-wage income (for example, gains from selling stock), then you may be responsible for making quarterly income tax payments yourself.

What are some ways you can manage your money to prepare for high taxes?

When higher taxes reduce take-home pay, people can make up the difference through smart budgeting or by finding additional work (such as driving for Uber or Lyft).

Interestingly, higher taxes can also cause people to work less (this is called the “substitution effect”). This happens because higher taxes can make the after-tax value of an additional hour of labor less than the value of an additional hour of leisure (for example, watching TV). In other words, as the tax rate goes up, people might decide it’s not worth working so much because they now get less money in return.

Another way to deal with high taxes is to contribute to a tax-advantaged retirement account, such as a 401(k) or individual retirement account (IRA), which reduces taxable income and could result in a lower tax bill.

If someone has a side hustle for extra income, what suggestions do you have for them to prepare for tax season?

Two suggestions: (1) make sure you pay taxes on that income during the year, and (2) track your business expenses.

First, because taxes on wage income are automatically withheld from each paycheck by employers, many people don’t think about paying their income taxes until they file their tax returns each year. But in fact, income taxes must be paid throughout the year (at least quarterly), and you could incur penalties and interest by waiting to pay tax on your side hustle until you file your tax return. If you don’t want the hassle of making quarterly tax payments on your own, you can ask HR to help you increase the amount of tax withheld from your day job — this extra withholding can help cover the taxes you would owe on your side hustle.

Second, keep track of your business expenses. Every legitimate and reasonable business expense that you claim as a deduction on your tax return can reduce your tax liability. Ensure that you have good record-keeping procedures in place so that you don’t miss eligible deductions or mix up personal and business deductions.

Dr. Rachel Byers, PhD, CPA

Professor of Accounting

Purdue Global

How can people in high tax-burden states prepare throughout the year to handle this?

If you live in a high tax-burden state, you can prepare in a few different ways. One way is to invest in T-Bills or municipal bonds from your home state. The interest income is exempt from federal income tax and also (generally) state income tax if the issuer is in the investor's home state.

Utilize your state's 529 plan if you have students in college or private school. Many states' 529 plans allow contributors a state tax deduction for some (or all) of the money contributed. Further, the earnings on the amounts invested in these plans are exempt from federal and state taxes if used for qualified education expenses.

Another way to prepare throughout the year is to research state-specific tax credits. Credits, unlike deductions or exemptions, reduce the taxes owed dollar for dollar.

Tax-deferred plans are an avenue to explore, too. Qualified retirement accounts like 401k, 403b, SIMPLE, health savings accounts, and flexible spending accounts allow taxpayers to contribute money on a pre-tax basis.

Consider deferring payment of property taxes (or doubling up) to avoid the state and local tax (SALT) limitation. (Editor’s note: The state and local tax, or SALT, deduction is limited to $10,000).

What are some ways you can manage your money to prepare for high taxes?

Ensure your employer is withholding enough to cover your federal and state tax liabilities by verifying the information on your W-4 and state withholding election forms is up to date. Individuals with multiple jobs or a spouse who works, too, should take the time to complete the supplemental worksheet.

Consider opening a savings account specifically for taxes. Deposit a certain percentage of your income to the account each month. This is especially true for self-employed individuals whose net income from their business is also subject to self-employment tax on top of income tax.

In the event an individual sells an asset, make sure to calculate the estimated gain on the sale (generally, proceeds - selling fees - adjusted basis (debt paid off is not included in this calculation)) and save a portion of the proceeds for taxes.

If someone has a side hustle for extra income, what suggestions do you have for them to prepare for tax season?

Prepare for tax season by recapping all of your income earned and received as well as the expenses related to generating income. Not all income is deposited.

For example, cash is received and then used to pay an expense; some deposits from payment processors (like Square) are net of payment processing fees, and Uber/Lyft deducts their portion before paying drivers.

Don’t forget to consider all expenses directly related to generating income. Receipts should be kept for three years from when the return is filed or due — whichever is later. Use an app to track business mileage in lieu of a handwritten mileage log.

Some costs are only partially deductible, like home utilities and cell phones for business and personal use. Home office expenses are deductible if an area in the home is used exclusively for business, so make sure to provide your tax preparer with the necessary information.

Russell Rhoads Ph.D., CFA

Clinical Associate Professor of Financial Management

Indiana University Kelley School of Business

How can people in high tax-burden states prepare throughout the year to handle this?

The biggest mistake many investors make is not taking taxes into consideration when taking profits [from] an investment, regardless of their specific state’s tax rules. The end of the year sneaks up on them, and there is a sudden realization that they have a high tax obligation which may only be offset by taking losses.

Investors make two errors when managing their tax liability. First, they do not consider taxes when taking profits, but usually start to think about tax obligations in December. They should explore ways to offset a tax liability by taking losses in another investment.

People are reluctant to take losses on investments, so despite the tax benefit associated with taking a loss, they tend to hold onto losing investments longer than they should. Tax loss selling is a strategy that all investors should be aware of and consider at the time they take a profit as opposed to when tax season is approaching.

What are some ways you can manage your money to prepare for high taxes?

As noted above — managing gains by offsetting them with losses is the main strategy that should be used but is not. Of course, any tax-free investments such as health savings accounts, 401(k)s, IRAs, and education savings accounts should be taken advantage of.

If someone has a side hustle for extra income, what suggestions do you have for them to prepare for tax season?

If you are earning cash as a side hustle … you should consider pre-paying taxes on a quarterly basis. Another method of making sure that the side hustle doesn’t result in a big tax obligation (and penalty) is to have your full-time employer take more out of your paycheck to help cover the other tax obligation.

Responses were lightly edited for clarity.


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 and married couples.

We then used federal guidelines for the 2023 tax year (filing in 2024) relating to deductions and taxable income to determine the 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 2023 tax year (filing in 2024). By combining those amounts, we found the total amount owed. Finally, we divided that amount by the median annual income to find the effective tax rate in every state.

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.

2022 tax burden results

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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.