Hate paying taxes? You have our sympathies — particularly if you live in the Northeast.
States in that part of the nation dominate the rankings of places where residents pay the most state and local income taxes per capita — or per person — according to a recent analysis by the nonprofit Tax Foundation.
Nationwide, state and local governments collected an average of $1,164 per capita in individual income taxes in fiscal year 2016, the most recent year for which data was available.
New York has the dubious honor of collecting more income taxes per capita than any other state. In fact, residents of the Empire State pay more than double the national average.
The six places where the taxman digs especially deep into your wallet — taking an average of more than $2,000 in state and local income taxes per capita — are:
- New York: $2,929
- District of Columbia: $2,788
- Maryland: $2,276
- Massachusetts: $2,115
- Connecticut: $2,106
- California: $2,055
Income taxes are a crucial source of income for many states, comprising 23.5 percent of state and local tax collections, the Tax Foundation says. That is just behind the amount collected in general sales taxes, 23.6 percent.
Still, there are seven states that do not levy an individual income tax, according to the foundation. They are:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- Wyoming
Two states — New Hampshire and Tennessee — don’t tax wage income but do tax investment income. Tennessee’s tax on investment income is being phased out, though.
How to lower your own tax rate
Wherever you live, you probably have more power to pay lower tax rates than you think. The key is to take all the deductions and credits to which you are entitled.
A great — and often free — way to make sure you use every tax break possible is to choose the right tax software. You’ll find a roundup of great options in “The 5 Best Tax Software Programs for 2019.”
If you prefer to turn over the reins to someone else, you’ll find tips for finding the best help in “How to Get the Right Tax Pro at the Right Price.”
Finally, you’ll find more advice for keeping your cash out of the government’s clutches in “Beware These 9 Common and Costly Tax Mistakes.”
What are your best tips for reducing your tax burden? Share them in comments below or on our Facebook page.
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