We all pay Uncle Sam the
same no matter where we live, but property, gasoline, tobacco and sales
taxes are all over the map.
By Rick VanderKnyff
If you live in New York, Connecticut or Washington, D.C., you are a big
spender at tax time, like it or not. Alaska or Alabama? You get to keep
a bigger slice of what you make.
While the IRS tends to monopolize our attention when it comes to taxes,
it's not the only government agency with its hand out. Many of the
taxes that command a piece of our income are collected at the state and
local level, and they vary widely.
Where you live can have a big impact on how much you pay in taxes each
year. The spread, according to numbers crunched by the nonprofit Tax
Foundation, might not be enough to make you pull up stakes and move to
a new state, but it can give you a case of tax envy. The state and
local burden ranges from 6.3% (Alaska) to 12.9% (New York).
Add in the federal tax burden, and the disparity widens to almost 10
percentage points, from 32.3% at the top (Connecticut) to 23.6% at the
bottom (Alaska again). The national average for state and local tax
burden is 10%; add in federal taxes and the average is 27.8%.
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Want to see how your state ranks? See our interactive tax map (below).
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What are states collecting?
State income taxes are not the only determinant of state tax burdens.
Washington, for example, is one of seven states with no personal income
tax, but it still ranks 21st when it comes to state and local tax
burden. When figuring state and local taxes, the Tax Foundation
considers everything from sales and property taxes to gasoline excise
taxes and vehicle license fees.
Federal tax rates, of course, are uniform across the country, but
states with a higher per-capita income will have more taxpayers pushed
into higher brackets, so the federal tax burden varies from state to
state.
Your actual tax burden, of course, depends on many factors that go well
beyond where you live -- how much you make, the source of your income,
whether you own a home, the number of deductions you claim. The tax
burden figures just provide some broad comparison.
Here's a breakdown of some of the numbers that go into your state and
local taxes, and how some states fare on each.
Income tax
Seven states -- Alaska, Florida, Nevada, South Dakota, Texas,
Washington and Wyoming -- have no state income tax. Tennessee and New
Hampshire limit their tax to dividends and interest income only.
Comparisons for the other 41 states can be a tricky thing because
income brackets and personal exemptions are all over the map. If you're
interested in seeing how your state fares -- and you're willing to wade
through some numbers -- check out this chart from the National
Association of Tax Administrators.
States also vary in the way they tax retirement income; 15 states tax
Social Security income, for instance, at least to some extent.
Fuel taxes
The federal government levies 18.4 cents on each gallon of gasoline
sold. The amount that states tax on top of that varies from 7.5 cents
per gallon in Georgia and 8 cents in Alaska all the way up to 31 cents
per gallon in Rhode Island and 28.5 cents in Wisconsin.
That's just the state excise tax; other localities within a state may
levy additional taxes, and gasoline in many states is also subject to
sales tax.
Sales taxes
Speaking of sales tax, this is another area where the range is wide.
The basic state rate goes all the way from 0% (in Alaska and New
Hampshire) to 7% (in Mississippi, Rhode Island and Tennessee).
Counties and other localities can -- and do -- levy their own sales
taxes on top of the state rate, however. The chart below shows the top
sales tax in each state; if you want to see the sales tax for a
particular ZIP code, try this calculator.
Property taxes
Taxes on land and buildings are the biggest generators of revenue for
local governments, and they are levied not at the state level but by
other local assessing districts that include cities, counties,
townships and school districts.
Because both the median home value of homes and the residential
property tax rate varies so much across the country -- and even within
states -- it can be difficult to come up with meaningful comparisons.
When Kiplinger's surveyed state and local tax burdens in 2004, it found
that among major cities, residents of New Orleans paid the lowest tax
on a median-priced home: $495 on a house valued at $103,900 (largely
because the first $75,000 of value is tax-free). In Chicago, the
magazine found, a family would pay $4,654 in taxes on a home valued at
$170,500.
Tobacco taxes
States and localities place additional taxes on a number of
commodities, from fuel to alcohol, but perhaps no single product has
been subject to as much rising taxation as tobacco. Smokers, it seems,
are the one population who can be targeted for regular tax hikes
without political consequences.
The chart below shows the full range of cigarette taxes by state, but
here are the high and low states, just for quick comparison: The tax on
a pack of cigarettes in Virginia is 2.5 cents; in New Jersey it's
$2.05. Meanwhile, from the It Was Bound to Happen Department.
Researchers in Canada say that tobacco taxes are contributing to the
general rise in obesity. They say folks are giving up smoking and
eating more instead.
When are you free?
The Tax Foundation, the source of our overall statistics, makes a big
annual splash when it celebrates "Tax Freedom Day" -- that's what it
calls the day when average Americans have earned enough to pay their
taxes for the year.
In 2004, it declared April 11 as national Tax Freedom Day (because of
President Bush's tax cuts and a sluggish economy, the date has been
sliding back from its record of May 2 in 2001).
Your own Tax Freedom Day will vary depending on where you live, though,
according to the organization. In 2004, Alaska marked the occasion on
March 26; residents of Connecticut had to wait until April 28. The Tax
Foundation will release its 2005 dates in April.
SALES TAXES BY STATE
| State |
Gasoline(cents)* |
Cigarettes(%) |
Retail** |
| Alabama |
18 |
16.5 |
11 |
| Alaska |
8 |
100 |
7 |
| Arizona |
18 |
118 |
8.6 |
| Arkansas |
21.5 |
59 |
9.9 |
| California |
18 |
87 |
8.5 |
| Colorado |
22 |
20 |
7.9 |
| Connecticut |
25 |
151 |
6 |
| Delaware |
23 |
55 |
|
| Florida |
14.3 |
33.9 |
7.5 |
| Georgia |
7.5 |
37 |
7 |
| Hawaii |
16 |
130 |
4 |
| Idaho |
25 |
57 |
8 |
| Illinois |
19.8 |
98 |
9.3 |
| Indiana |
18 |
55.5 |
6 |
| Iowa |
20.3 |
36 |
7 |
| Kansas |
24 |
79 |
8.3 |
| Kentucky |
16.4 |
3 |
6 |
| Louisiana |
20 |
36 |
9.5 |
| Maine |
24.6 |
100 |
5 |
| Maryland |
23.5 |
100 |
5 |
| Massachusetts |
21 |
151 |
5 |
| Michigan |
19 |
125 |
6 |
| Minnesota |
20 |
48 |
7.5 |
| Mississippi |
18.4 |
18 |
7.3 |
| Missouri |
17 |
17 |
8.4 |
| Montana |
27 |
70 |
|
| Nebraska |
25.7 |
64 |
7 |
| Nevada |
24 |
80 |
7.3 |
New Hampshire
|
19.5
|
52
|
|
| New Jersey |
14.5 |
205 |
6 |
| New Mexico |
18.9 |
91 |
7.3 |
| New York |
22.6 |
150 |
8.5 |
| North Carolina |
24.6 |
5 |
7.5 |
| North Dakota |
21 |
44 |
7.5 |
| Ohio |
24 |
55 |
7 |
| Oklahoma |
17 |
23 |
9.9 |
| Oregon |
24 |
128 |
|
| Pennsylvania |
26.2 |
100 |
7 |
| Rhode Island |
31 |
171 |
7 |
| South Carolina |
16 |
7 |
7 |
| South Dakota |
22 |
53 |
6 |
| Tennessee |
21.4 |
20 |
9.8 |
| Texas |
20 |
41 |
8.3 |
| Utah |
24.5 |
69.5 |
7 |
| Vermont |
20 |
119 |
6 |
| Virginia |
17.5 |
2.5 |
4.5 |
| Washington |
28 |
142.5 |
8.9 |
| West Virginia |
25.4 |
55 |
6 |
| Wisconsin |
28.5 |
77 |
5.6 |
| Wyoming |
14 |
60 |
6 |
District of
Columbia
|
100 |
5.8 |
20
|
*Additional federal levy is 18.4 cents nationwide
**Maximum state and local sales tax, 2003
Source: Tax Policy Center, MSN Money research
http://moneycentral.msn.com/content/Taxes/P111921.asp[4]
