5 States that Will Take the Most of Your Paycheck in Income Taxes

By Caroline Zaayer Kaufman


If you’re planning a move to another state for work it might be wise to consider what you’ll pay in property tax, sales tax and, of course, how big of a chunk the state government is going to take out of your paycheck. The federal government will get its share wherever you go, but states can vary widely in how much they collect from your income, so state taxes should be a factor you take into consideration as you work to decide if and where to relocate.

While state income tax rates vary by your income bracket and circumstances, there are some states that will certainly take a bigger bite out of your paycheck than others, and seven that levy no income tax at all: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

For income tax collections per capita in 2011, the Tax Foundation reports that New York leads the pack at $1,864 per person. The next four in line are: Connecticut ($1,808), Massachusetts ($1,765), Oregon ($1,425) and Minnesota ($1,404).

Here are the states with the highest top income tax rates and the highest rates for the middle class, according to studies by the Tax Foundation and the Heritage Foundation.

1. California and Oregon

Top tax rate: 13.3 percent. 
With the highest top income tax rate in the nation, California takes more from its top earners than any other state.

Middle class tax rate: 9 percent. 
When combined with federal income tax, middle class residents of Oregon can expect to hand over 52.3 percent of their income to the government.

2. Hawaii and Maine

Top tax rate: 11 percent. 
Hawaii also holds the second place spot for sales/excise tax collection per capita, taking $2,394 on average.

Middle class tax rate: 8.5 percent. 
Including federal taxes, Maine’s total marginal income tax rate is 51.8 percent.

3. Oregon and Idaho.

Top tax rate: 9.9 percent. 
Oregon is the only state that lands on the top five lists in all three categories we looked at here: top income tax rates, middle class income tax rates and income tax collection per capita.

Middle class tax rate: 7.8 percent.
Idaho ranks twelfth highest among states levying an individual income tax.

4. Iowa and Hawaii

Top tax rate: 8.98 percent.
Iowa is the only landlocked state in the top five for highest top income tax rates, and also holds the number one spot for the highest corporate income tax rate at 12 percent.

Middle class tax rate: 7.6 percent. 
Hawaii frequently appears on lists of highest-taxing states.

5. New Jersey and Minnesota

New Jersey
Top tax rate: 8.97 percent. 
New Jersey is also the state with the highest property taxes in the U.S.

Middle class tax rate: 7.1 percent
Additionally, Minnesota’s corporate income tax rate is third highest in the nation at 9.8 percent.

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