
Considering a move to another state? Not so fast. Be sure to weigh state taxes when calculating the difference in the cost of living.
States with high income taxes or property taxes could cost you thousands of dollars every year you live there. Other states with high sales taxes or gas taxes could slowly drain your wallet every time you buy something.
Here is our updated list of the 10 least-tax-friendly states in the U.S. Almost all of the states levy property taxes well above the national median of
Take a look.
1. California
State income tax: 1% (on income up to
State sales tax: 7.5%
Gas taxes and fees:
If you're moving to the Golden State, plan to take short showers (to conserve water) and to pay the highest state income tax rates in the U.S. Worse, capital gains are taxed as regular income.
California's gas taxes and fees are down from
Good news: Californians pay lower property taxes than residents of other high-tax states, but in a state with some of the highest real estate prices in the U.S., they're no bargain. The median property tax on the state's median home value of
2. Connecticut
State income tax: 3% (on income up to
State sales tax: 6.4% for most items; 7.8% for certain luxury items.
Gas taxes and fees:
The Constitution State ranks so high because of its one-two punch of property taxes (fourth-highest in the nation) and gas taxes (fifth-highest).
The sales tax on vehicles valued at
The median property tax on the state's median home value of
There are no local sales taxes in
3. New Jersey
State income tax: 1.4% (on income up to
State sales tax: 7%
Gas taxes and fees:
If you plan to buy a home in the Garden State, make sure to leave a lot of room in your budget for property taxes. New Jersey's property taxes are the highest in the U.S., according to the
Food, prescription and nonprescription drugs, clothing and footwear are exempt from the 7% state sales tax. Because some designated Urban Enterprise Zones, such as
There is relief for commuters: Gas taxes are the second-lowest in the U.S. (Alaska's are the lowest) and a bargain compared with neighboring states
4. Hawaii
State income tax: 1.4% (on income up to
State sales tax: 4%
Gas taxes and fees:
The sunshine is free, but just about everything else in the Aloha State is taxable.
Hawaii's average combined local sales tax rate is 4.4%, among the lowest in the U.S. However, virtually all transactions (precription drugs are an exception) are taxed. Vehicles are subject to the 4% sales tax (technically an excise tax levied on businesses), even if they're purchased on the mainland. Residents also pay annual state and county taxes based on their vehicle's weight.
While property values are high, property taxes as a percentage of home value are the lowest in the U.S. The median property tax on the state's median home value of
5. New York
State income tax: 4% (on income up to
State sales tax: 4%
Gas taxes and fees:
Local jurisdictions impose additional sales taxes ranging from 3% to 4.8%. That boosts the average combined state-local sales tax rate to 8.5%, the seventh-highest in the country. Food and prescription and nonprescription drugs are exempt from taxes, as are greens fees, health club memberships, and most arts and entertainment tickets in the Empire State.
The median property tax on the state's median home value of
The tax on cigarettes is
6. Rhode Island
State income tax: 3.8% (on income up to
State sales tax: 7%
Gas taxes and fees:
The Ocean State's 7% state sales tax rate is the second-highest in the U.S., but the state has no local sales taxes to add to it. Groceries, most clothing and footwear, and prescription drugs are exempt. Over-the-counter drugs, such as aspirin, are taxed unless you have a prescription. The tax also applies to the portion of any individual sale of clothing and footwear that exceeds
Property tax rates are the 10th-highest in the U.S. The median property tax on the state's median home value of
7. Vermont
State income tax: 3.55% (on income up to
State sales tax: 6%
Gas taxes and fees:
The Green Mountain State vaults from ninth to seventh place in our annual ranking, based on updated property tax numbers and a a new measure that raises taxes on the state's wealthiest residents.
In an effort to close the state's
The average state and local combined sales tax rate is 6.1%. Food, clothing, and prescription and nonprescription drugs are exempt from sales tax. Starting
The median property tax on the state's median home value of
8. Maine
State income tax: 6.5% (on income up to
State sales tax: 5.5%
Gas taxes and fees:
The Pine Tree State dropped its top state income tax rate from 8.5% to 8.0% in 2013, but that's still steep compared with other states.
The median property tax on Maine's median home value of
9. Minnesota
State income tax: 5.35% (on income up to
State sales tax: 6.9%
Gas taxes and fees:
Food, clothing, and prescription and nonprescription drugs are exempt from the state sales tax. A few cities and counties add their own local sales tax. The average combined local and state sales tax rate is 7.2%. The sales tax for vehicles is 6.5%, slightly lower than the overall state sales tax, and vehicles are not subject to local sales taxes.
The median property tax on Minnesota's median home value of
10. Illinois
State income tax: 3.8%
State sales tax: 6.3%
Gas taxes and fees:
The Prairie State's income tax dropped to a flat rate of 3.8% from 5% on
Property taxes here are the second-highest in the U.S. The median property tax on the state's median home value of
The combined average state and local sales tax is 8.2%, the 10th-highest rate in the U.S. In some municipalities, combined state and local sales taxes are as high as 10%. Qualifying food and prescription and nonprescription drugs are taxed at 1%.
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Sandra Block is a senior associate editor for Kiplinger's Personal Finance. .
