We often hear about making sure that the wealthy are paying their fair share of taxes. Deciding what is fair is where it can often become messy. Taxes are considered progressive when the tax rates increase as your income increases. So then how “progressive” is your state?
Well if you are here in California, the answer is very progressive. Not only do we boast the highest top tax rate in the country, we also are well below the average when it comes to the median tax bracket as well. As you take a look at the other states, the best way to understand how progressive they are is to look at the distance between the dots. The bigger the gap, the more progressive the tax policy.
You might also notice that there are not all 50 states in this chart. That is because Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming don’t have any income taxes. Beyond that, New Hampshire and Tennessee only tax on interest and dividends and leave your income alone. Some states make up for the lack of/lower income tax with higher property and sales taxes. However, if you are in California, we boast some of the highest property and sales tax as well.
While clearly state income taxes shouldn’t be the only factor in deciding where to live, for some it can be a major consideration especially for those in the higher tax brackets. If you are considering to retire, make sure you take a look at your state’s tax rates and factor those into your plans before pulling the trigger.