- 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

What is Inflation?

Why do prices go up?

View Course »

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

TurboTax Articles

Video: Tax Guidelines About Gifting

Note: Some of the content of this video applies only to taxes prepared prior to 2012. It is included here for reference only. Find out the tax guidelines about gifting with help from TurboTax in this video on tax tips.

Video: What are Income Tax Rates?

Note: The content of this video applies only to taxes prepared for 2010. It is included here for reference only. Income tax rates change depending on both the amount of money you make and how you made it. Find out about income tax rates with help from TurboTax in this video on tax tips.

Video: How To Reduce Errors on Your Tax Return

Did you know that errors on your tax return can affect the amount of your tax bill and the amount of time it takes to get a refund? Fortunately, TurboTax helps you avoid errors AND be sure you're getting all the tax deductions and credits you deserve.

Does Your Company Need to File Form 1095-B?

A company is responsible for filing IRS Form 1095-B only if two conditions apply: It offers health coverage to its employees, and it is "self-insured." This means that the company itself pays its employees' medical bills, rather than an insurance company. A company that doesn't meet both conditions won't have to deal with Form 1095-B. Its employees might still receive a 1095-B, but from their insurer, not the employer.

Video: Who Qualifies for an Affordable Care Act Exemption (Obamacare)?

The Affordable Care Act requires all Americans to have health insurance or pay a tax penalty. But, who qualifies for an Affordable Care Act exemption? Find out more about who qualifies for an exemption from the Affordable Care Act tax penalty, how to claim an exemption on your tax return and how the Affordable Care Act may affect your taxes with this video from TurboTax.

Add a Comment

*0 / 3000 Character Maximum


Filter by:

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

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

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

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

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

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

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

Fed statement assured the markets nothing has changed.

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

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

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