In the past, we’ve highlighted the most tax friendly states for retirees. We thought we should also identify the least tax advantageous states for all individuals. It should come as no surprise that California is at the top of the list for having the highest taxes in multiple areas. The other states may surprise you as well, especially as it relates to long-term capital gains tax rates.
Living in Hollywood comes at price
With all of the benefits that California has to offer (i.e. warm weather, beach access and show-biz), state taxes aren’t one of them. California bolsters some of the highest taxes in the country. The state’s income taxes range from 1% to 13.3% and sales taxes are as high as 7.5%. State sales taxes don’t include local taxes, which can be 3% or higher. Then, there is the staggering 13.3% tax on long-term capital gains. California’s capital gains tax rate is a whopping 3.4% higher than Oregon, which holds the 2nd place position in this category. The one bright spot in California is that the state’s property taxes are modest as compared to many other high tax states.
Some Mid-Atlantic States Aren’t Far Behind California
New York, New Jersey & Connecticut all levy high state income tax rates. New York & New Jersey tax residents as high as 8.82% & 8.97% respectively, while Connecticut levies a rate as high as 6.7%. New Jersey and Connecticut have the highest property tax rates in the country and sales tax rates are as high as 7%. New York & New Jersey charge long-term capital gains tax at 8.8% and 9.0% respectively, while Connecticut is at 6.7%. When considering all factors, Connecticut is likely the most tax friendly of these three states.
Vermont, Rhode Island & Maine Aren’t Much Better
Maine and Vermont have state income tax rates as high as 7.95% and 8.95% respectively. In Vermont, restaurant meals and alcoholic beverages are also subject to a 10% and 9% tax respectively. Maine and Vermont both have sales tax rates in the 5.5% to 6% range and long-term capital gains rates are 8.5% to 9.0%. Rhode Island has a lower state income tax rate than both of these state or as high as 5.99%. However, sales tax is 7% and it has the fifth highest property tax rate of all other states in the country when you consider the median home value.
What do you think of your state’s tax rates?
More Questions? Browse Answers or ask your state tax questions online.
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