The states with the highest overall tax burden

No single state "pays the highest taxes" because tax burden depends on what you earn, what you own, and what you buy. But California, New York, New Jersey, Vermont, and Oregon consistently rank highest when you add up income tax, sales tax, and property tax together. California has the highest income tax rate at 13.3 percent on top earners. New Jersey and Connecticut have the highest property taxes as a percentage of home value. Oregon has no sales tax but makes up for it with high income tax.

The ranking changes depending on whether you measure by income tax alone, property tax alone, or total tax as a percentage of income. A high-income earner in California pays more in state income tax than someone in Texas, but a middle-class homeowner in New Jersey may pay more in property tax than a California resident with the same house value. Your actual tax bill depends on your specific situation, not just the state you live in.

Key Takeaways

  • California, New York, New Jersey, Vermont, and Oregon have the highest combined state and local tax rates when measured across income, property, and sales taxes.
  • California's top income tax rate of 13.3 percent is the highest in the nation, but this applies only to income above a certain threshold.
  • New Jersey and Connecticut have the highest effective property tax rates, meaning homeowners pay a larger percentage of their home's value each year.
  • States with no income tax (like Texas, Florida, and Nevada) often have higher sales taxes or property taxes to fund government services.
  • Your total tax burden depends on your income level, home value, and spending habits, not just which state you live in.

How income tax rates vary by state

State income tax rates range from zero to 13.3 percent, and most states use a progressive system where higher earners pay a higher percentage. California's 13.3 percent rate applies only to income over $680,000 (as of 2024, though this threshold changes yearly). New York's top rate is 10.9 percent, Vermont's is 8.75 percent, and Oregon's is 9.9 percent. Nine states have no income tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only investment income).

The difference between a 5 percent rate and a 10 percent rate matters most to high earners. A person making $100,000 in a 5 percent state pays $5,000 in state income tax; in a 10 percent state, they pay $10,000. But progressive tax brackets mean the rate you see advertised is not the rate you pay on all your income—it is the rate on income above a certain level. Your actual effective rate (total tax divided by total income) is usually lower than the top rate.

Property tax: the hidden cost in high-tax states

Property tax is often the largest tax bill for homeowners, and it varies wildly by state. New Jersey's effective property tax rate is around 2.1 percent of home value per year—meaning a $400,000 home costs roughly $8,400 per year in property tax. Connecticut is similar at around 2.1 percent. Illinois, Texas, and Ohio also have high property tax rates. Hawaii and Alabama have the lowest, below 0.3 percent.

Property tax funds local schools, roads, and services, so rates reflect local spending choices, not just state policy. A wealthy suburb may have higher property taxes than a rural area in the same state. When comparing states, look at the effective rate (total property tax divided by median home value) rather than just the tax rate percentage, because assessment methods differ by state.

Sales tax and what it covers

Sales tax rates range from zero (in Oregon, Montana, New Hampshire, and Delaware) to 7.25 percent at the state level, though local taxes can push the total to 10 percent or higher. California's state sales tax is 7.25 percent, but many counties add local tax, bringing the total to 8 or 9 percent. Tennessee has no state income tax but a 9.55 percent combined state and local sales tax—one of the highest in the nation.

What is taxed matters as much as the rate. Most states exempt groceries and prescription drugs. Some exempt clothing. A few tax services like haircuts and repairs; most do not. If you spend heavily on taxed items, sales tax adds up. A family spending $50,000 per year on taxable goods in a 9 percent sales tax state pays $4,500 in sales tax alone.

Total tax burden: how to compare states fairly

The fairest way to compare is to add up income tax, property tax, and sales tax for your specific situation. A $100,000-per-year earner who owns a $300,000 home and spends $40,000 per year on taxable goods will have a different total tax bill in each state. Some tax research organizations publish comparisons for different income levels, but these change yearly as rates and thresholds shift.

Moving to a lower-tax state saves money only if you actually move. Remote workers sometimes relocate to save on income tax, but they must establish residency—usually by living there for at least part of the year and registering to vote. Some states pursue former residents who claim to have moved but still own property or maintain other ties. If you are considering a move for tax reasons, consult a tax professional in both states to understand the real impact on your situation.

States with no income tax and how they fund services

The nine states with no income tax fund government through sales tax, property tax, and other sources. Texas has no income tax but a 6.25 percent state sales tax plus local taxes, and property taxes are high. Florida has no income tax and a 6 percent sales tax, but property taxes vary by county. Nevada has no income tax and no sales tax on groceries, but a 6.85 percent sales tax on other goods and relatively high property taxes.

The myth that no-income-tax states are always cheaper is false. A high earner may save money in a no-income-tax state, but a middle-class family may pay more overall because sales and property taxes hit everyone equally. The actual savings depend on your income, home value, and spending patterns.

Other taxes that add to your burden

Income, property, and sales tax are the big three, but states also collect excise taxes on gasoline, alcohol, and cigarettes. Some states tax vehicle registrations heavily. A few tax inheritance or have estate taxes. These smaller taxes do not usually change the overall ranking, but they add to the total burden. California's gas tax is among the highest in the nation, for example, which affects anyone who drives.

Local taxes also matter. A city or county can add to income tax, property tax, and sales tax. New York City residents pay both state and city income tax. Some counties in California add local sales tax on top of the state rate. When you move, check both state and local rates for your specific address.

Frequently Asked Questions

Does moving to a no-income-tax state always save money?

Not always. Texas and Florida have no income tax but high property taxes and sales taxes. A high earner saves the most by moving to a no-income-tax state, but a middle-class family may pay the same or more overall. Calculate your actual tax bill in both states before deciding.

Can I claim residency in a low-tax state if I work remotely?

You can establish residency in another state, but you must actually live there—usually at least part of the year. Some states pursue people who claim to have moved but keep property or other ties in the old state. Consult a tax professional before relocating for tax reasons.

Why do some states have no sales tax?

Oregon, Montana, New Hampshire, and Delaware chose not to impose sales tax. They fund government through income tax, property tax, and other sources instead. This does not mean they are cheaper overall—Oregon has high income tax to make up for no sales tax.

Is the advertised tax rate the same as what I actually pay?

No. State income tax uses progressive brackets, so the top rate applies only to income above a certain level. Your effective rate (total tax divided by total income) is lower than the top rate. Property tax is calculated as a percentage of assessed home value, which may differ from market value.

How often do state tax rates change?

Income tax brackets and rates change yearly in most states to account for inflation. Property tax assessments change when you buy a home or when the assessor revalues your property. Sales tax rates change less often but can shift when local taxes are added or removed. Check your state's tax website for current rates.