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States Taxes: Where They're Highest, and Where They're Lowest

States with the highest taxesWhen people think about their taxes, they often focus on how much money they send to Washington, but your state and local tax burden is a big piece of the puzzle -- as of 2010, those taxes soaked up, on average, 9.9% of Americans' income. But the figure varies widely depending on where you live.

You might expect the biggest thing pushing those taxes lower would be small-government advocates in power in state capitals trimming services and revenue to match. And to a degree, says Tax Foundation economist Scott Drenkard, that's true. Many states do less for their citizens, and thus have less need to tax. "They don't collect that much in taxes" Drenkard said, "so they don't have that much of a burden."

But the most important factor is less obvious: How much tax revenue a state can collect from businesses and people who don't live there. Think oil- and resource-rich states like Alaska and North Dakota, or Nevada, which draws a large percentage of its revenue from tourism.

There's also the matter of what gets taxed: While sales and excise taxes and corporate taxes have the potential to export some of a state's tax burden to non-residents, property tax and income taxes largely fall on residents.

Click through our gallery to see the 10 states where residents paid the most in state and local taxes relative to per capita income -- and the 10 where they paid the least.

24/7 Wall St. based its findings on the Tax Foundation's annual State and Local Tax Burden report, and also reviewed per capita income and property, income, excise and sales taxes, which were all for the 2010 fiscal year, with the exception of excise tax rates, which are as of July 1, 2012. In addition, it reviewed cost-of-living data from the Missouri Economic Research and Information Institute for the second quarter of 2012.

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Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

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Texas state tax is 8.25% and has been for LONG time...seems like a lot of these stats are wrong.

November 01 2012 at 10:42 AM Report abuse rate up rate down Reply

I just took a great class on small business accounting and taxation. You can find it at


I highly recommend it.


October 29 2012 at 5:42 PM Report abuse rate up rate down Reply

I just took a great online tutorial on Accounting and small business taxation. You can find it at


it's accompanying study guidet is at


It helped me a lot.


October 29 2012 at 5:38 PM Report abuse rate up rate down Reply

Blue States have high taxes and high unenjoyment,,,, there is a message to learn about Kool-Aide drinkers iand taking your $$$$ to redistribute!!!

October 29 2012 at 9:08 AM Report abuse -1 rate up rate down Reply

I live in Pennsylvania where we have a Republican governor and a Republican majority in the state house. What we don't have is tax on food and clothing except for leathers and furs and prepared food. But the article didn't mention that. At our state lines we have a ton of outlet malls that others travel to just to buy those items!

October 28 2012 at 11:05 PM Report abuse +1 rate up rate down Reply

Is it any coincidence that most of the highest taxed states are controlled by the left

October 28 2012 at 12:58 PM Report abuse -2 rate up rate down Reply
1 reply to fgr111's comment

No. It is pretty much even. CA - Democratic Governor (D); ME - Republican Governor (R); CT-R; MA - D; MN-D; NJ-R; NY-D; PA-R; WI-R; and RI - Independent Govenor (I). 5 Republican Governors; 4 Democratic Governors; and one Independent Governor.

October 28 2012 at 9:47 PM Report abuse rate up rate down Reply
shawn jamieson

This is the second time I am writing this. It was not posted the first time. Guess the Daily Finance doesn't want the truth to be known but here goes again. These tax rates are all bull crap. Florida has no state or city income taxes making it one of the lowest, right? Wrong they tax or fee everything to death. utility bills (comccast,FPL, water and waste services and Suburban propane) have a list as long as six items of taxes and fees one bill just simply itemizes the tax three times as "other tax". Property taxes are sky high and home owner permits to work on their house went from $75 a few years ago to $270 now. Yes I have to pay some idiot $270 for the right to work on my own house. Sounds a bit like extortion to me. This occurs in every state, hidden taxes they want to call fees surcharges and permits. So don't be fooled by this bogus claim of low taxes in some states. They will get the money out of your pocket one way or another. Get this, Massachusettes taxes their motorists on the value of their vehicles every year so I guess the state, not the buyer really owns the car the tax payer paid for.

October 28 2012 at 10:17 AM Report abuse +1 rate up rate down Reply
1 reply to shawn jamieson's comment

270 for a Building Permit is cheap, up here the cost ranges form 300 to 475 depending on what you are doing to the structure.

October 28 2012 at 10:46 AM Report abuse rate up rate down Reply

But when you add in local communities, that's where it adds up,. especially near a military base, such as in KY. they are sticking it to us in this town, especially in gas prices. Every time they have a "free" event, prices goes up. Just free for the locals.The head Repub bitch about economy/money spent, budget..., but his state is sure cashing in!

October 28 2012 at 8:44 AM Report abuse rate up rate down Reply

They also spelled Connecticut wrong...it's called Corrupticut thanks to all the corrupt politicians we have here.

October 28 2012 at 8:44 AM Report abuse +1 rate up rate down Reply
2 replies to Joe's comment

Say whattt???? You think you have it bad?!?!?!? Come try out Louisiana where we have the best politicians money can buy!!!

October 28 2012 at 9:30 AM Report abuse +4 rate up rate down Reply
1 reply to Eric's comment

yes and NEW JERSEY runs a close second

October 29 2012 at 2:33 AM Report abuse rate up rate down

in yuma az we have the highest unemployment, if you dont have an income, dont mater what the taxes are

October 28 2012 at 10:05 AM Report abuse +1 rate up rate down Reply

New Yok ???? Who edits this stuff !!!!

October 27 2012 at 11:28 PM Report abuse +1 rate up rate down Reply