States where Americans pay the least (and most) in taxes

Evan Comen and Thomas C. Frohlich | 24/7 Wall Street

Show Caption Hide Caption Hate taxes? You might not want to retire here When you retire, you don't want to pinch pennies. These are the 10 least tax-friendly states for retirees, according to GOBankingRates.

In the U.S. federalist system, each state government decides how to generate revenue — that is, which taxes to collect, and how. No state tax code is identical and, largely as a result, what the average American pays annually in taxes varies from state to state.

24/7 Wall Street reviewed the tax burden of residents in each state — the portion of income that goes to state and local governments’ taxes — from the report, “Facts & Figures 2017: How Does Your State Compare?” provided by tax policy research organization Tax Foundation. These tax burdens do not include the federal taxes paid by all Americans, regardless of state.

According to the report, tax burdens in the 2012 tax season were as low as 6.5% in Alaska and as high as 12.7% in New York.

In addition to federal, state, and local taxes, Americans pay taxes to other states. Out-of-state visitors pay sales taxes as tourists, investors pay capital gains taxes on investments in other states, and drivers filling up at gas stations in other states pay those states’ excise taxes. For this reason, the tax burden is not always a perfect reflection of taxes collected.

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Approximately 78% of taxes Americans pay go to their own state and local governments. The variation in tax burden between states is due largely to differences in each state’s tax code. High tax states tend to collect more taxes and at higher rates.

While most states tend to collect income, property, and sales taxes among several others, not all states collect all taxes and not at the same rate. High-tax-burden states collect more taxes and at higher rates, while lower-burden states collect less taxes and at lower rates.

For example, in the 10 highest-burden states, individual income tax collections per capita in fiscal 2015 exceeded the national average of $967. By contrast, five of the 10 states with the lowest tax burden collect no income tax. Similarly, property taxes tend to exceed the national average in high-burden states, while they tend to be lower in states at the other end of the tax-burden spectrum.

1. Alaska

Taxes paid as pct. of income: 6.5%

Income per capita: $55,646 (8th highest)

Income tax collections per capita: $0 (tied — the lowest)

Property tax collections per capita: $2,639 (4th highest)

General sales tax collections per capita: $0 (tied — the lowest)

2. Wyoming

Taxes paid as pct. of income: 7.1%

Income per capita: $55,116 (9th highest)

Income tax collections per capita: $0 (tied — the lowest)

Property tax collections per capita: $2,109 (9th highest)

General sales tax collections per capita: $1,384 (5th highest)

3. South Dakota

Taxes paid as pct. of income: 7.1%

Income per capita: $47,834 (22nd highest)

Income tax collections per capita: $0 (tied — the lowest)

Property tax collections per capita: $1,301 (24th lowest)

General sales tax collections per capita: $1,131 (9th highest)

4. Tennessee

Taxes paid as pct. of income: 7.3%

Income per capita: $43,326 (18th lowest)

Income tax collections per capita: $46 (8th lowest)

Property tax collections per capita: $830 (7th lowest)

General sales tax collections per capita: $992 (18th highest)

5. Louisiana

Taxes paid as pct. of income: 7.6%

Income per capita: $42,298 (13th lowest)

Income tax collections per capita: $639 (12th lowest)

Property tax collections per capita: $839 (8th lowest)

General sales tax collections per capita: $627 (12th lowest)

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6. Texas

Taxes paid as pct. of income: 7.6%

Income per capita: $46,274 (25th highest)

Income tax collections per capita: $0 (tied — the lowest)

Property tax collections per capita: $1,635 (14th highest)

General sales tax collections per capita: $1,226 (6th highest)

7. New Hampshire

Taxes paid as pct. of income: 7.9%

Income per capita: $55,954 (7th highest)

Income tax collections per capita: $72 (9th lowest)

Property tax collections per capita: $2,861 (2nd highest)

General sales tax collections per capita: $0 (tied — the lowest)

8. Nevada

Taxes paid as pct. of income: 8.1%

Income per capita: $43,567 (19th lowest)

Income tax collections per capita: $0 (tied — the lowest)

Property tax collections per capita: $953 (13th lowest)

General sales tax collections per capita: $1,412 (4th highest)

9. South Carolina

Taxes paid as pct. of income: 8.4%

Income per capita: $39,517 (7th lowest)

Income tax collections per capita: $764 (16th lowest)

Property tax collections per capita: $1,080 (19th lowest)

General sales tax collections per capita: $729 (19th lowest)

10. Oklahoma

Taxes paid as pct. of income: 8.6%

Income per capita: $42,692 (14th lowest)

Income tax collections per capita: $832 (20th lowest)

Property tax collections per capita: $623 (2nd lowest)

General sales tax collections per capita: $686 (16th lowest)

11. Mississippi

Taxes paid as pct. of income: 8.6%

Income per capita: $35,484 (the lowest)

Income tax collections per capita: $596 (11th lowest)

Property tax collections per capita: $916 (10th lowest)

General sales tax collections per capita: $1,144 (7th highest)

12. New Mexico

Taxes paid as pct. of income: 8.7%

Income per capita: $38,474 (3rd lowest)

Income tax collections per capita: $662 (13th lowest)

Property tax collections per capita: $731 (4th lowest)

General sales tax collections per capita: $1,082 (11th highest)

13. Montana

Taxes paid as pct. of income: 8.7%

Income per capita: $42,947 (16th lowest)

Income tax collections per capita: $1,143 (18th highest)

Property tax collections per capita: $1,465 (17th highest)

General sales tax collections per capita: $0 (tied — the lowest)

14. Alabama

Taxes paid as pct. of income: 8.7%

Income per capita: $38,896 (4th lowest)

Income tax collections per capita: $687 (14th lowest)

Property tax collections per capita: $522 (the lowest)

General sales tax collections per capita: $507 (7th lowest)

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15. Arizona

Taxes paid as pct. of income: 8.8%

Income per capita: $40,415 (9th lowest)

Income tax collections per capita: $551 (10th lowest)

Property tax collections per capita: $986 (18th lowest)

General sales tax collections per capita: $947 (22nd highest)

16. Florida

Taxes paid as pct. of income: 8.9%

Income per capita: $45,953 (24th lowest)

Income tax collections per capita: $0 (tied — the lowest)

Property tax collections per capita: $1,184 (22nd lowest)

General sales tax collections per capita: $1,075 (12th highest)

17. Colorado

Taxes paid as pct. of income: 8.9%

Income per capita: $51,999 (14th highest)

Income tax collections per capita: $1,168 (15th highest)

Property tax collections per capita: $1,365 (23rd highest)

General sales tax collections per capita: $516 (9th lowest)

18. North Dakota

Taxes paid as pct. of income: 9.0%

Income per capita: $54,627 (10th highest)

Income tax collections per capita: $709 (15th lowest)

Property tax collections per capita: $1,121 (21st lowest)

General sales tax collections per capita: $1,835 (2nd highest)

19. Georgia

Taxes paid as pct. of income: 9.1%

Income per capita: $42,159 (11th lowest)

Income tax collections per capita: $947 (25th highest)

Property tax collections per capita: $1,087 (20th lowest)

General sales tax collections per capita: $515 (8th lowest)

20. Nebraska

Taxes paid as pct. of income: 9.2%

Income per capita: $50,029 (19th highest)

Income tax collections per capita: $1,181 (14th highest)

Property tax collections per capita: $1,757 (12th highest)

General sales tax collections per capita: $943 (23rd highest)

21. Iowa

Taxes paid as pct. of income: 9.2%

Income per capita: $46,000 (25th lowest)

Income tax collections per capita: $1,111 (21st highest)

Property tax collections per capita: $1,525 (15th highest)

General sales tax collections per capita: $973 (20th highest)

22. Idaho

Taxes paid as pct. of income: 9.3%

Income per capita: $39,470 (6th lowest)

Income tax collections per capita: $893 (22nd lowest)

Property tax collections per capita: $928 (11th lowest)

General sales tax collections per capita: $885 (25th lowest)

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23. Virginia

Taxes paid as pct. of income: 9.3%

Income per capita: $52,957 (12th highest)

Income tax collections per capita: $1,420 (8th highest)

Property tax collections per capita: $1,457 (18th highest)

General sales tax collections per capita: $452 (6th lowest)

24. Washington

Taxes paid as pct. of income: 9.3%

Income per capita: $54,579 (11th highest)

Income tax collections per capita: $0 (tied — the lowest)

Property tax collections per capita: $1,364 (24th highest)

General sales tax collections per capita: $1,746 (3rd highest)

25. Missouri

Taxes paid as pct. of income: 9.3%

Income per capita: $42,926 (15th lowest)

Income tax collections per capita: $963 (24th highest)

Property tax collections per capita: $960 (14th lowest)

General sales tax collections per capita: $556 (10th lowest)

26. Michigan

Taxes paid as pct. of income: 9.4%

Income per capita: $44,253 (21st lowest)

Income tax collections per capita: $889 (21st lowest)

Property tax collections per capita: $1,335 (25th lowest)

General sales tax collections per capita: $928 (24th highest)

27. Indiana

Taxes paid as pct. of income: 9.5%

Income per capita: $43,097 (17th lowest)

Income tax collections per capita: $791 (19th lowest)

Property tax collections per capita: $970 (16th lowest)

General sales tax collections per capita: $1,100 (10th highest)

28. Kansas

Taxes paid as pct. of income: 9.5%

Income per capita: $47,228 (23rd highest)

Income tax collections per capita: $777 (18th lowest)

Property tax collections per capita: $1,435 (19th highest)

General sales tax collections per capita: $1,049 (14th highest)

29. Kentucky

Taxes paid as pct. of income: 9.5%

Income per capita: $38,926 (5th lowest)

Income tax collections per capita: $920 (25th lowest)

Property tax collections per capita: $737 (5th lowest)

General sales tax collections per capita: $738 (21st lowest)

30. Utah

Taxes paid as pct. of income: 9.6%

Income per capita: $40,925 (10th lowest)

Income tax collections per capita: $1,054 (22nd highest)

Property tax collections per capita: $969 (15th lowest)

General sales tax collections per capita: $628 (13th lowest)

31. West Virginia

Taxes paid as pct. of income: 9.8%

Income per capita: $36,624 (2nd lowest)

Income tax collections per capita: $1,048 (23rd highest)

Property tax collections per capita: $852 (9th lowest)

General sales tax collections per capita: $701 (18th lowest)

32. Ohio

Taxes paid as pct. of income: 9.8%

Income per capita: $44,593 (22nd lowest)

Income tax collections per capita: $765 (17th lowest)

Property tax collections per capita: $1,203 (23rd lowest)

General sales tax collections per capita: $1,025 (15th highest)

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33. North Carolina

Taxes paid as pct. of income: 9.8%

Income per capita: $42,244 (12th lowest)

Income tax collections per capita: $1,115 (20th highest)

Property tax collections per capita: $951 (12th lowest)

General sales tax collections per capita: $683 (15th lowest)

34. Arkansas

Taxes paid as pct. of income: 10.1%

Income per capita: $39,722 (8th lowest)

Income tax collections per capita: $895 (23rd lowest)

Property tax collections per capita: $675 (3rd lowest)

General sales tax collections per capita: $1,069 (13th highest)

35. Maine

Taxes paid as pct. of income: 10.2%

Income per capita: $44,053 (20th lowest)

Income tax collections per capita: $1,153 (16th highest)

Property tax collections per capita: $1,918 (11th highest)

General sales tax collections per capita: $963 (21st highest)

36. Pennsylvania

Taxes paid as pct. of income: 10.2%

Income per capita: $50,742 (16th highest)

Income tax collections per capita: $897 (24th lowest)

Property tax collections per capita: $1,405 (21st highest)

General sales tax collections per capita: $771 (22nd lowest)

37. Hawaii

Taxes paid as pct. of income: 10.2%

Income per capita: $50,363 (18th highest)

Income tax collections per capita: $1,389 (10th highest)

Property tax collections per capita: $980 (17th lowest)

General sales tax collections per capita: $2,090 (the highest)

38. Delaware

Taxes paid as pct. of income: 10.2%

Income per capita: $47,869 (21st highest)

Income tax collections per capita: $1,205 (13th highest)

Property tax collections per capita: $828 (6th lowest)

General sales tax collections per capita: $0 (tied — the lowest)

39. Oregon

Taxes paid as pct. of income: 10.3%

Income per capita: $45,399 (23rd lowest)

Income tax collections per capita: $1,814 (6th highest)

Property tax collections per capita: $1,350 (25th highest)

General sales tax collections per capita: $0 (tied — the lowest)

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40. Vermont

Taxes paid as pct. of income: 10.3%

Income per capita: $49,984 (20th highest)

Income tax collections per capita: $1,133 (19th highest)

Property tax collections per capita: $2,339 (6th highest)

General sales tax collections per capita: $586 (11th lowest)

41. Massachusetts

Taxes paid as pct. of income: 10.3%

Income per capita: $64,235 (2nd highest)

Income tax collections per capita: $2,133 (3rd highest)

Property tax collections per capita: $2,181 (8th highest)

General sales tax collections per capita: $854 (24th lowest)

42. Minnesota

Taxes paid as pct. of income: 10.8%

Income per capita: $52,038 (13th highest)

Income tax collections per capita: $1,889 (5th highest)

Property tax collections per capita: $1,411 (20th highest)

General sales tax collections per capita: $999 (17th highest)

43. Rhode Island

Taxes paid as pct. of income: 10.8%

Income per capita: $50,427 (17th highest)

Income tax collections per capita: $1,151 (17th highest)

Property tax collections per capita: $2,307 (7th highest)

General sales tax collections per capita: $908 (25th highest)

44. Maryland

Taxes paid as pct. of income: 10.9%

Income per capita: $58,052 (5th highest)

Income tax collections per capita: $1,390 (9th highest)

Property tax collections per capita: $1,491 (16th highest)

General sales tax collections per capita: $734 (20th lowest)

45. Wisconsin

Taxes paid as pct. of income: 11.0%

Income per capita: $46,762 (24th highest)

Income tax collections per capita: $1,225 (12th highest)

Property tax collections per capita: $1,657 (13th highest)

General sales tax collections per capita: $848 (23rd lowest)

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46. Illinois

Taxes paid as pct. of income: 11.0%

Income per capita: $51,817 (15th highest)

Income tax collections per capita: $1,237 (11th highest)

Property tax collections per capita: $2,007 (10th highest)

General sales tax collections per capita: $696 (17th lowest)

47. California

Taxes paid as pct. of income: 11.0%

Income per capita: $56,374 (6th highest)

Income tax collections per capita: $1,991 (4th highest)

Property tax collections per capita: $1,385 (22nd highest)

General sales tax collections per capita: $983 (19th highest)

48. New Jersey

Taxes paid as pct. of income: 12.2%

Income per capita: $61,472 (3rd highest)

Income tax collections per capita: $1,479 (7th highest)

Property tax collections per capita: $3,065 (the highest)

General sales tax collections per capita: $1,021 (16th highest)

49. Connecticut

Taxes paid as pct. of income: 12.6%

Income per capita: $69,311 (the highest)

Income tax collections per capita: $2,279 (the highest)

Property tax collections per capita: $2,774 (3rd highest)

General sales tax collections per capita: $1,137 (8th highest)

50. New York

Taxes paid as pct. of income: 12.7%

Income per capita: $59,563 (4th highest)

Income tax collections per capita: $2,208 (2nd highest)

Property tax collections per capita: $2,581 (5th highest)

General sales tax collections per capita: $662 (14th lowest)

Findings and Methodology

A myriad of cultural, historical, and economic factors help explain the differences in state tax structures. At the root of a state’s tax system is what Tax Foundation experts characterize as a deal between residents and their governments.

“The level of services that citizens of a certain state want is a very personal decision to that state,” said Tax Foundation policy analyst Morgan Scarboro in an interview.

Scott Drenkard, director of state projects at the Tax Foundation, added, “There are some states that offer really high taxes and really great public services.”

More: The fastest growing (and shrinking) states: A closer look

Generally, states with lower-income residents tend to have lower tax burdens. Per capita income in all but three of the 15 states with the lowest tax burdens is lower than the average income nationwide. In contrast, the per-capita income in 12 of the 15 states with the highest tax burdens is greater than the national average of $49,246 a year. The three states with the highest tax burdens — Connecticut, New Jersey, and New York — have the highest, third highest, and fourth highest incomes per capita in the country.

To identify the states with the highest and lowest tax burdens, 24/7 Wall St. reviewed state and local tax burdens as a share of state residents’ income in fiscal 2012 provided by the Tax Foundation. Personal income per capita for each state is for 2016 and came from the U.S. Bureau of Economic Analysis. State individual income tax collections per capita are for fiscal 2015; state and local property tax collections per capita are for fiscal 2014; state general sales tax collections per capita are for fiscal 2015; and all came from the “Tax Foundation’s Facts & Figures 2017: How Does Your State Compare?” report. All data are for the most recent period available.

24/7 Wall Street is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.