Not all states are made equal, so to speak. Throughout the United States, each and every state usually comes with its own peculiarities, special laws, and obviously, specific tax regulations.
So, it goes without saying why some of them are preferred by families, whilst others – such as the ten below – are usually the final option of any individual that considers optimizing their taxes.
Being aware of which US state could end up costing you more in taxes is important for families that plan to relocate. If you’re one of those, especially a middle-class family, here’s every bit of information you should know before making a decision!
The first entry on our list comes with a 4.25% tax on your family’s income, a 6% tax on sales, and up to $100k in tax when it comes to property. The main downside here is, obviously, the flat tax on family income which is kind of high when compared to some other locations.
Moreover, since such sums can be levied, Michigan is often found to be above the average in terms of tax responsibilities.
In our next state, the tax on income is between 2.46% and 6.84%, depending on one variable – namely the type of tax filing. Moving on, sales taxes are just shy of 7%, while the tax on property is within the average limits.
Just as in the case of our previous entry, the tax on property is what takes it off the list for many families with average income. For example, people end up paying roughly $5k for a $300k property.
However, sales taxes here are standing at pretty much what’s considered the national median value.
Next up, this state comes with up to 5.75% tax on income (minimum 2%) – depending on variables such as single/joint filers and certain taxable sums as well. Sales taxes are, once again, standing within the median limit – they are 6%.
Last but not least, property taxes can be as low as $1k, which is acceptable for middle-class families.
Reportedly, Maryland features an income tax bill that’s the second-highest in the entire country. Naturally, this is a no-no for the type of families in question. Tax on property, on the other hand, is a bit gentler – only $3k/year for properties valued at $300k.
The minimum income tax in this state is a bit higher, standing at 3.1% – while the maximum is, just as before, 5.7%. The rather big downside is the sales tax – almost 9% – 8.69% to be more precise.
Since there has to be at least one advantage, the average tax on property is $1.3k.
The sales tax of the state is ranked eighth in the US, while the tax on income is roughly standing at the national median value.
Our next state, Wisconsin, comes with a tax on income that is above the median value – a minimum of 3.54% and a maximum of 7.65%. On the other hand, sales tax is under 6%, standing at 5.43%.
One of the big downsides would be, as usual, the tax on property. For houses valued at $300k, one would have to pay just a little above $5k every year. Usually, this is not feasible for the type of families that we are considering in this article today.
New York, one of the most sought-after places to relocate to in the US, features significant income taxes – taxes that cannot be easily ignored. As such, one would have to pay at least 4% and at most 8.82% tax on their income if they want to move there.
Naturally, sales taxes are not giving you a break either, standing at 8.52%.
Last but not least, tax on property is above the median value as well – in fact, it’s quite similar to Wisconsin.
While the minimum tax on income is more than bearable here – 1.4%, the maximum ruins this option in its entirety for some people. Over $1 million in income translates to 10.75% tax.
Sales taxes stand at roughly the national median value, namely at 6.6%. When it comes to taxes on their house, however, families must be ready to pay as much as $7.2k a year for a home valued at $300k. Obviously, this is not suitable for most families.
Iowa is similar to most states that stand slightly above the medial tax values. Its tax on income is a minimum of 0.33% and a maximum of 8.53% – but the latter applies to over $74k in income.
Moving on, sales tax stands at 6.94%, whereas the tax on housing is the eleventh-highest in the country, of $1.5k for properties valued at $100k.
Overall, Iowa could be suitable for middle-class families, given its median tax rates. However, it goes without saying that there are much better options if you want to increase your savings account.
While Connecticut is definitely a nice state to relocate to, it features rather expensive taxes, especially on housing. The state ranks third in this particular field, as one must pay roughly $6.5k a year for a house valued at $300k.
The tax on income, however, is on the more bearable side – with a minimum of 3% and a maximum of 6.99%. Last but not least, sales tax stands at 6.35%, which is a nice, median sum.
The last entry on our list is Illinois. It is equipped with a flat tax on income of 4.95% and with roughly 9% tax on sales. Just as in the case of some of our other locations, its biggest downside is the rather excruciating tax on houses – once again, families must pay $6-7k a year for $300k homes.
Taxes in Illinois are overall regarded as above average and not fit for middle-class families.
The Bottom Line
As you can see, not everything is pink in the US, in terms of taxes related to income, property, and sales. It might be easier to choose European countries, for example, when planning to move – choosing a state in the US means that you must take many more things into account.Naturally, the good part of it all is that you don’t have to go through these tax conundrums all alone. There are many tax lawyers in Phoenix, Chicago, Davenport, or firms such as Scottsdale tax attorneys who can help you determine whether a state is friendly enough for you and your family, in terms of taxes!