April 8th 2024.
As Tax Day, April 15, approaches, many Americans are feeling the weight of their tax burden. However, the impact of taxes on middle-class incomes varies depending on where you live. A recent study conducted by WalletHub revealed which states take the most and the least from their residents during tax season.
The study, released in February, considered various types of taxes, including state income taxes, sales and excise taxes, and property taxes. For middle-class workers, the best states to live in only take a small percentage of their incomes, ranging from 4.98% to 8.5%. WalletHub determined the median income level to be $50,000.
Interestingly, the top ten best states for middle-class earners are scattered across the political spectrum and different regions of the country. Alaska claimed the first spot, with South Carolina rounding out the top ten. Blue states New Hampshire and Delaware also made it to the top three, despite being located in the Northeast and Mid-Atlantic regions, respectively.
On the other hand, the worst states for middle-class incomes are Hawaii, New York, and Illinois, all taking over 12.5% in taxes. The only southern state in the bottom five is Louisiana, collecting 12.05% in state taxes.
Surprisingly, some states that do not collect income taxes do not necessarily have the lowest tax burdens for middle-class earners. For example, Texas, Tennessee, and Florida have varying tax breaks for residents, and Washington state, which also has no state income tax, ranked among the highest at 11.96%.
The study also found that while taxes may vary for middle-class Americans, the wealthiest individuals in the country are the least affected by taxes. According to Business Insider, the top one percent only pays an average of 7.2% in taxes.
Furthermore, the top five best states for higher earners are almost identical to those for middle incomes, with Alaska, New Hampshire, and Wyoming remaining in the top spots. Florida and North Dakota are new additions for wealthier individuals. Alaska maintains the top spot for all income ranges, solidifying its position as the best state overall for lower tax burdens.
In conclusion, as Tax Day approaches, it's essential to consider the impact of taxes on middle-class incomes, as it varies greatly depending on where you live. Whether you live in a state with high or low tax burdens, it's crucial to understand the tax system and take advantage of any available tax breaks.
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