- Days left

3 Months Into 2014, You're Likely Still Working for the Tax Man

×
person hold an empty wallet
Nikola Bilic/Shutterstock
Between income taxes, property taxes, sales taxes and all those other taxes, the amount of your income that flows into government coffers adds up quickly.

One way to think about its is to figure out how much of your working year goes to covering your taxes. The conservative-leaning Tax Foundation calculates annually how many working days it takes for the average American worker to earn enough to pay all his federal, state and local taxes, plots it on the calendar, and dubs it "Tax Freedom Day."

Last year, that day was April 18, reflecting that Americans on average paid 29.4 percent of their income in federal and state taxes. But that date varies widely from state to state.

Early Freedom From Taxes

Residents in different states see varying percentages of their income go toward taxes for a variety of reasons. State tax rates vary. So does relative income, with less prosperous states tending to pay lower federal tax rates than those with more high-income taxpayers.

The lowest-tax states in 2013 were Louisiana and Mississippi, whose Tax Freedom Days were both March 29. All five lowest-tax states were in the South, with Tennessee, South Carolina and New Mexico rounding out the top five.

All five take a relatively low percentage of their residents' income in state and local taxes. Most rely on sales taxes; South Carolina's the exception, with a high level of revenue from property taxes. Louisiana and Mississippi boast the highest percentage of federal aid of any state, getting back from Washington far more than they send to it.

Paying More Tax, into May

At the other end of the spectrum, Connecticut residents took the longest to account for their taxes in 2013, with a Tax Freedom Day of May 13, outlasting No. 2 New York by a full week. The Northeast dominated the top of the list, with New Jersey and Massachusetts coming in third and fourth, and Illinois taking No. 5.

Most of these states are among the highest in terms of state and local taxes paid per person, reflecting their relative wealth. All five also take more than 10 percent of their residents' income in the form of state and local taxes, with New York exceeding the national average by almost 3 percentage points.

Property and state income taxes make up a huge portion of the revenue sources for these states, taking advantage of the extensive property holdings and high income that their residents enjoy.

What's Your Tax Freedom Day?

A Tax Foundation map shows the 2013 Tax Freedom Day for your state. The announcement of Tax Freedom Day 2014 is expected to come soon.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google+.

Increase your money and finance knowledge from home

Building Credit from Scratch

Start building credit...now.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

TurboTax Articles

Depreciation of Business Assets

In an effort to stimulate the economy by encouraging businesses to buy new assets, Congress approved special depreciation and expensing rules for property acquired in 2014. However, beginning in 2015, we are back to the old depreciation rules.

Tax Deduction Wisdom - Should You Itemize?

Learn whether itemizing your deductions makes sense, or if you should simply take the no-questions-asked standard deduction. The standard deduction is always easier, but for one out of every four taxpayers, itemizing pays off with a lower tax bill. Browse this quick tax deduction overview to avoid paying more taxes than you actually owe.

Tax Breaks and Home Ownership

Home ownership brings with it not only many trips to home improvement stores, but also a slew of tax breaks. It's up to you to take full advantage of the write-offs available to you. Here's what you can and can't deduct.

When to Use Tax Form 1099-C for Cancellation of Debt

In most situations, if you receive a Form 1099-C from a lender after negotiating a debt cancellation with them, you'll have to report the amount on that form to the Internal Revenue Service as taxable income. Certain exceptions do apply.

What is IRS Form 8917?

If you, your spouse or dependents attended post-secondary school, you may be able to deduct a portion of the tuition and fees by reporting it on IRS Form 8717.

Add a Comment

*0 / 3000 Character Maximum

7 Comments

Filter by:
jrb359

The government is supposed to work for us but now they feel that we work for them.

March 31 2014 at 3:08 PM Report abuse rate up rate down Reply
Hi RON

Just keep voting in these spending liberal democrats who think they can save the world by taxing us and spending on those (many too lazy to work) who choose to sit at home.. the few that need it... are ignored and NO enforcement is taken to week out the wheat from the chaff !!! And watch your tax dolars be wasted.

March 31 2014 at 2:07 PM Report abuse +3 rate up rate down Reply
1 reply to Hi RON's comment
jj2301

We now have 2 classes of people in America:

1) Those who vote for a living (apparently, they now outnumber the second class)
2) Those who work for a living

Any bets on how long it'll be before the second class stops, puts down the yoke and walks away?

March 31 2014 at 3:39 PM Report abuse rate up rate down Reply
tomjohnkraus

Makes you wonder whether you work for your employer, or the government? I'm sure there are also taxes paid that aren't included.

March 31 2014 at 1:50 PM Report abuse +2 rate up rate down Reply
Iselin007

Odd way the Fed has confirming the poor job market. What is odder is the where the shovel ready jobs are located.

March 31 2014 at 12:03 PM Report abuse +2 rate up rate down Reply
Iselin007

The young know most of them do not make enough to pay tax but they also know they do not need health care insurance because they will likely be drafted for WWIII and get VA benefits.

March 31 2014 at 11:55 AM Report abuse +1 rate up rate down Reply
Iselin007

Yellen basically said not much has changed so the markets rallied!

March 31 2014 at 11:46 AM Report abuse +2 rate up rate down Reply
Iselin007

Fed statement assured the markets nothing has changed.

March 31 2014 at 11:44 AM Report abuse rate up rate down Reply
Iselin007

Part time, low wages, longterm unemployed, and millions forced out of the labor force while the 1% invest off shore means big tax losses.

March 31 2014 at 11:27 AM Report abuse +1 rate up rate down Reply
joehall13025

You're not working for the tax man - you're paying for roads, schools, police, emergency services, a court system and THE MILITARY!!!!! And you're paying off the Iraq War and the Bush tax cuts that went to rich people that didn't need them. Stop acting like taxes are being stolen from people.

March 31 2014 at 10:40 AM Report abuse -2 rate up rate down Reply