Same Income, Different Taxes: See Where You’d Keep the Most Money
When it comes to paying taxes, where you live matters.
While federal income taxes are consistent across the country, which state you live in can actually have a major impact on how much total tax you end up paying. In fact, two people with the exact same income might be stuck with two very different state tax bills, depending on which two states they call home.
Imagine, for example, Jane Smith lives in California and Jessica Smith lives in Pennsylvania, and both make $40,000 a year. Jane in California would pay about $1,015 in state income taxes, while Jessica in Pennsylvania would pay $1,228.
Now, let’s say both Jane and Jessica get a big raise and now both earn $80,000 per year. Jane in California now would pay $4,445, close to doubling Jessica’s state income tax bill of $2,456.
Compare State Taxes By Income Level
The map below displays the approximate total tax contribution that a single individual can expect to pay in state income taxes, given their income bracket. It is worth noting that your taxes may vary considerably due to your own unique financial circumstances.
States have implemented a wide variety of approaches to taxing their residents, with the majority adopting a marginal tax structure. This means that all of your income is divided into distinct income brackets, each of which is taxed at an increasing rate. The more tax brackets and higher rates are said to be more “progressive,” meaning that individuals with higher incomes pay a larger share of taxes than those living in states with a “flatter” tax structure.
The following states collect no income taxes:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- Wyoming
Of course, income taxes are not the only tool states have in collecting tax revenue. Property taxes, states taxes, and other forms of tax need to be considered when evaluating your overall tax obligation.
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