Most tax-friendly states for the middle class

Even if you earn a decent middle-class salary, all of the state and local income taxes you have to pay can eat away at your bottom line, leaving you with less money in your pocket than you’d like. But not all states are equal when it comes to the amount of taxes you’ll pay due to owning property, buying goods or having to submit to a personal income tax. The best states for taxes, as well as the worst, exist.

GOBankingRates conducted a study that determined the most tax-friendly states for the middle class by looking at the shares of certain income taxes paid by the middle 20 percent of income earners in 30 different states. If you’re in the middle class and hurting due to taxes, it’s worth it to know the best states for the middle class.

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30 most tax-friendly states for the middle class
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30 most tax-friendly states for the middle class

30. New Mexico

Total share of state and local taxes paid by middle 20%: 10.2%

Share of personal income tax paid by middle 20%: 0.9%

Share of property taxes paid by middle 20%: 2.3%

Share of sales and excise taxes paid by middle 20%: 6.9%

When compared to all of the other states on this list, the middle 20 percent of earners in New Mexico pay the lowest share of personal income tax, second only to North Dakota. Within the state, the middle 20 percent pay the third-highest share of personal income tax.

How Do You Compare? Here’s the Average American’s Tax Bill in Every State

29. Georgia

Total share of state and local taxes paid by middle 20%: 9.8%

Share of personal income tax paid by middle 20%: 2.6%

Share of property taxes paid by middle 20%: 2.4%

Share of sales and excise taxes paid by middle 20%: 4.7%

Georgia pays the second-highest share of family income toward property taxes within the state, with the lowest 20 percent of earners paying the highest share of 3.2 percent. Even so, Georgia’s middle 20 percent pay a lower property tax share than more than half the states on the list.

Related: 22% of Americans Mistakenly Think They’re ‘Middle Class’

28. Maine

Total share of state and local taxes paid by middle 20%: 9.6%

Share of personal income tax paid by middle 20%: 1.9%

Share of property taxes paid by middle 20%: 3.6%

Share of sales and excise taxes paid by middle 20%: 4.1%

The middle 20 percent in Maine pay 1.9 percent in personal income tax, whereas the lowest 20 percent pay a lower rate of -1.6 percent. The top 1 percent of earners pay a 5.4 percent rate. Compared to the rest of the states on the list, the middle 20 percent in the state pay relatively less for personal income tax.

27. Oregon

Total share of state and local taxes paid by middle 20%: 9.1%

Share of personal income tax paid by middle 20%: 4.6%

Share of property taxes paid by middle 20%: 3.3%

Share of sales and excise taxes paid by middle 20%: 1.1%

Although the middle 20 percent in Oregon pay the second-highest share of total state and local taxes in Oregon after the lowest 20 percent of earners, they pay one of the lowest shares of sales and excise taxes out of all of the states on the list.

26. Massachusetts

Total share of state and local taxes paid by middle 20%: 9.3%

Share of personal income tax paid by middle 20%: 3.4%

Share of property taxes paid by middle 20%: 3.1%

Share of sales and excise taxes paid by middle 20%: 2.7%

The middle 20 percent of earners pay the third-lowest share of sales and excise taxes in Massachusetts. The lowest 20 percent of earners pay a higher share of 4.8 percent, whereas the top 1 percent pays a much lower share of 0.5 percent. Across all states in this area, Massachusetts has the sixth-lowest share.

25. Louisiana

Total share of state and local taxes paid by middle 20%: 10.0%

Share of personal income tax paid by middle 20%: 1.8%

Share of property taxes paid by middle 20%: 1.2%

Share of sales and excise taxes paid by middle 20%: 7.0%

The middle 20 percent in Louisiana pay the lowest share of property taxes out of all of the states on the list. Among other earners in the state, the middle 20 percent pay the third-lowest share in this category, with lowest 20 percent of earners paying a share of 2.6 percent and the top 1 percent paying a share of 1.6 percent.

24. Rhode Island

Total share of state and local taxes paid by middle 20%: 9.5%

Share of personal income tax paid by middle 20%: 1.5%

Share of property taxes paid by middle 20%: 3.7%

Share of sales and excise taxes paid by middle 20%: 4.3%

Middle 20 percent earners in Rhode Island rank in the top five across all states for lowest personal income tax shares. And although the middle 20 percent ties with the fourth 20 percent within the state for property tax and total state and local tax shares, it doesn’t in the personal income tax category.

23. North Carolina

Total share of state and local taxes paid by middle 20%: 9.4%

Share of personal income tax paid by middle 20%: 2.6%

Share of property taxes paid by middle 20%: 2.2%

Share of sales and excise taxes paid by middle 20%: 4.6%

Although the share of sales and excise taxes the middle 20 percent pay aren’t the highest within the state, the share is still comparatively high — tying with California and West Virginia — when considering the rest of the states on the list.

Check Out: 20 Bizarre US State Taxes

22. Virginia

Total share of state and local taxes paid by middle 20%: 9.2%

Share of personal income tax paid by middle 20%: 3.3%

Share of property taxes paid by middle 20%: 2.4%

Share of sales and excise taxes paid by middle 20%: 3.5%

In Virginia, the middle 20 percent of earners pay one of the lowest shares of property taxes across the board, with the lowest 20 percent of earners paying 3.1 percent and the top 1 percent paying 1.8 percent.

21. Michigan

Total share of state and local taxes paid by middle 20%: 9.2%

Share of personal income tax paid by middle 20%: 2.7%

Share of property taxes paid by middle 20%: 2.6%

Share of sales and excise taxes paid by middle 20%: 3.9%

Within the state, the middle 20 percent of earners don’t pay the highest total share of state and local taxes, but they do pay one of the highest rates on the list. Both the middle 20 percent of earners, who make $33,000 to $57,100, and the 20 percent of earners right above that group, who make $57,100 to $95,900, pay the share of 9.2 percent.

20. Texas

Total share of state and local taxes paid by middle 20%: 9.7%

Share of personal income tax paid by middle 20%: 0.0%

Share of property taxes paid by middle 20%: 2.9%

Share of sales and excise taxes paid by middle 20%: 6.8%

Texas is one of the few states that doesn’t impose a state income tax on residents, but the state’s share of sales and excise taxes and property taxes for the middle 20 percent are some of the highest on the list.

19. Arizona

Total share of state and local taxes paid by middle 20%: 9.4%

Share of personal income tax paid by middle 20%: 1.3%

Share of property taxes paid by middle 20%: 2.7%

Share of sales and excise taxes paid by middle 20%: 5.4%

Out of the states that charge personal income tax, Arizona’s middle 20 percent of earners pay one of the lower shares on the list. The lowest 20 percent of earners in the state pay a share of 0.3 percent, whereas the top 1 percent of earners pay a share of 3 percent.

18. Missouri

Total share of state and local taxes paid by middle 20%: 9.0%

Share of personal income tax paid by middle 20%: 2.5%

Share of property taxes paid by middle 20%: 2.2%

Share of sales and excise taxes paid by middle 20%: 4.3%

Although the middle 20 percent of earners don’t pay the largest share of state and local taxes in Missouri, they do pay one of the largest shares out of all of the middle 20 percent of earners from the states on the list.

For Your Filing: Top 10 Most Expensive States to File Taxes

17. Colorado

Total share of state and local taxes paid by middle 20%: 8.9%

Share of personal income tax paid by middle 20%: 2.5%

Share of property taxes paid by middle 20%: 2.3%

Share of sales and excise taxes paid by middle 20%: 4.0%

Colorado’s middle 20 percent of earners pay less total state and local tax shares than a little more than a third of the states on the list. Within the state, the middle 20 percent pay an 8.9 percent share of total state and local taxes, whereas the second 20 percent, earning less, pay a higher share of 9 percent.

16. Alabama

Total share of state and local taxes paid by middle 20%: 9.0%

Share of personal income tax paid by middle 20%: 2.4%

Share of property taxes paid by middle 20%: 1.3%

Share of sales and excise taxes paid by middle 20%: 5.4%

Personal income tax shares within the state don’t vary that much for most of the income classes. For example, the second 20 percent pay a share of 2.1 percent, the middle 20 percent of earners pay 2.4 percent and the top 20 percent of earners pay the top share of 2.7 percent. Even so, Alabama still has one of the lowest personal income tax shares for the middle 20 percent when compared to the other states on the list, as well as ranking one of the states with the lowest property taxes.

15. South Dakota

Total share of state and local taxes paid by middle 20%: 8.9%

Share of personal income tax paid by middle 20%: 0.0%

Share of property taxes paid by middle 20%: 2.5%

Share of sales and excise taxes paid by middle 20%: 6.3%

South Dakota is another state on the list that doesn’t have a personal income tax, which helps it rank as one of the most tax-friendly states for the middle class. Overall, the state ranks higher than almost half the states on the list for lowest shares of total state and local taxes for the middle 20 percent.

14. West Virginia

Total share of state and local taxes paid by middle 20%: 8.5%

Share of personal income tax paid by middle 20%: 2.5%

Share of property taxes paid by middle 20%: 1.4%

Share of sales and excise taxes paid by middle 20%: 4.6%

Within the state, the middle 20 percent of earners have the third-lowest total state and local tax share: 8.5 percent. Comparatively, the lowest 20 percent of earners pay the highest share of 9.4 percent and the top 1 percent of earners pay the lowest share of 7.4 percent. By comparison with other states on the list, West Virginia is one of the states with the lowest property taxes.

13. Utah

Total share of state and local taxes paid by middle 20%: 8.2%

Share of personal income tax paid by middle 20%: 2.8%

Share of property taxes paid by middle 20%: 1.7%

Share of sales and excise taxes paid by middle 20%: 3.6%

The middle 20 percent of earners in the state tie with Tennessee for the top-five lowest shares of property taxes across all states on the list. Within the state, the middle 20 percent, earning $39,600 to $63,900, tie with the next 4 percent, earning $202,400 to $486,500, with both having a 1.7 percent property tax share.


 

12. New Hampshire

Total share of state and local taxes paid by middle 20%: 8.1%

Share of personal income tax paid by middle 20%: 0.0%

Share of property taxes paid by middle 20%: 6.3%

Share of sales and excise taxes paid by middle 20%: 1.3%

Although New Hampshire’s 6.3 percent property tax rate is the highest on the list of states for the middle 20 percent of earners — the next highest on the list is Rhode Island’s 3.7 percent — it is a state that doesn’t charge any personal income tax. Plus its share of sales and excise taxes for the middle 20 percent is one of the lowest among states on the list.

11. California

Total share of state and local taxes paid by middle 20%: 8.3%

Share of personal income tax paid by middle 20%: 1.2%

Share of property taxes paid by middle 20%: 2.5%

Share of sales and excise taxes paid by middle 20%: 4.6%

Compared to other states, California’s share of income tax paid by the middle 20 percent is relatively low at 1.2 percent. The lowest 20 percent of earners in the state pay a share of -0.7 percent and the top 1 percent pay a share of 9.8 percent.

10. North Dakota

Total share of state and local taxes paid by middle 20%: 8.5%

Share of personal income tax paid by middle 20%: 0.7%

Share of property taxes paid by middle 20%: 1.8%

Share of sales and excise taxes paid by middle 20%: 5.9%

North Dakotans pay some of the lowest shares of personal income tax in the country: 0.2 percent for the lowest 20 percent of earners, 0.7 percent for the middle 20 percent and just 1.7 percent for the top 1 percent of earners. The highest share of personal income tax paid by the middle 20 percent in a state on this list is Oregon’s 4.6 percent.

9. South Carolina

Total share of state and local taxes paid by middle 20%: 8.1%

Share of personal income tax paid by middle 20%: 1.7%

Share of property taxes paid by middle 20%: 2.3%

Share of sales and excise taxes paid by middle 20%: 4.1%

South Carolina qualifies as one of the top 10 most tax-friendly states for the middle class. The share of family income devoted to total state and local tax rates in South Carolina doesn’t change very much at all between the lowest and middle 20 percent of earners: 8.3 percent versus 8.1 percent, respectively. The share drops a bit, however, for the top 1 percent of earners to 6.8 percent.

See: Many Americans Have No Idea What Income Class They’re In

8. Idaho

Total share of state and local taxes paid by middle 20%: 8.1%

Share of personal income tax paid by middle 20%: 1.5%

Share of property taxes paid by middle 20%: 2.1%

Share of sales and excise taxes paid by middle 20%: 4.4%

Property taxes in Idaho are lower than average among U.S. states for all classes of earners, and there’s not that much difference in shares among the lowest 20 percent, middle 20 percent and top 1 percent of earners within the state: 3.3 percent, 2.1 percent and 1.6 percent, respectively.

7. Tennessee

Total share of state and local taxes paid by middle 20%: 8.5%

Share of personal income tax paid by middle 20%: 0.0%

Share of property taxes paid by middle 20%: 1.7%

Share of sales and excise taxes paid by middle 20%: 6.7%

Family sales and excise taxes for the middle 20 percent of earners are relatively high compared to the other states on the list. Even so, the state still manages to rank in the top 10 of the most tax-friendly states for the middle class due to its relatively low share of property taxes for the middle 20 percent, as well as the fact that the state doesn’t charge a personal income tax.

6. Florida

Total share of state and local taxes paid by middle 20%: 8.1%

Share of personal income tax paid by middle 20%: 0.0%

Share of property taxes paid by middle 20%: 2.3%

Share of sales and excise taxes paid by middle 20%: 5.8%

A big gap exists between the share of state and local taxes the lowest 20 percent of Floridian earners pay and the share the top 1 percent of earners in the state pay: 12.7 percent vs. 2.3 percent, respectively. The middle 20 percent fall on the higher side, at 8.1 percent. Even so, Florida is one of the top 10 most tax-friendly states for the middle class — and a favorite of retirees — due to no personal income tax and a relatively low total share of state and local taxes paid by the middle 20 percent.

5. Montana

Total share of state and local taxes paid by middle 20%: 7.1%

Share of personal income tax paid by middle 20%: 2.8%

Share of property taxes paid by middle 20%: 3.0%

Share of sales and excise taxes paid by middle 20%: 1.2%

Montana ranks in the top 10 for the most tax-friendly states for the middle class due, in part, to having the second-lowest share of sales and excise taxes across the states on the list. The lowest 20 percent of earners in the state pay a higher 2.1 percent share, whereas the top 1 percent pay a 0.1 percent share.

4. Wyoming

Total share of state and local taxes paid by middle 20%: 7.5%

Share of personal income tax paid by middle 20%: 0.0%

Share of property taxes paid by middle 20%: 2.6%

Share of sales and excise taxes paid by middle 20%: 4.9%

Even though Wyoming has one of the higher shares of sales and excise taxes for the middle 20 percent when compared to other states on the list, the state doesn’t have a personal income tax and ranks in the top five for lowest total share of state and local taxes across the board, which makes it one of the states with the lowest tax burden overall.

3. Nevada

Total share of state and local taxes paid by middle 20%: 7.6%

Share of personal income tax paid by middle 20%: 0.0%

Share of property taxes paid by middle 20%: 2.1%

Share of sales and excise taxes paid by middle 20%: 4.5%

Nevada ranks in the top ten for most tax-friendly states for the middle class due to having a comparatively lower property tax rate across the states on the list, as well as no personal income tax.

Find Out: Are You in the Middle Class?

2. Delaware

Total share of state and local taxes paid by middle 20%: 5.6%

Share of personal income tax paid by middle 20%: 3.4%

Share of property taxes paid by middle 20%: 1.4%

Share of sales and excise taxes paid by middle 20%: 1.4%

There’s not that much of a difference between the percentages of total local and state taxes paid by the lowest 20 percent, middle 20 percent and top 1 percent of Delaware taxpayers: 5.5 percent, 5.6 percent and 6.5 percent, respectively, and those shares are low when compared to the other states on the list. Delaware also features comparatively low sales and excise tax shares and property tax shares for the middle 20 percent when compared to the rest of the states on the list.

1. Alaska

Total share of state and local taxes paid by middle 20%: 4.3%

Share of personal income tax paid by middle 20%: 0.0%

Share of property taxes paid by middle 20%: 2.7%

Share of sales and excise taxes paid by middle 20%: 1.6%

The middle 20 percent in Alaska pay the lowest total share of state and local taxes out of all the states on the list. The state ranks as the most tax-friendly state for the middle class due, in part, to no personal income tax and the fifth-lowest share of sales and excise taxes paid across all states by the middle 20 percent.

Click through to read more about why America’s middle class faces a bleak financial future.

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More from GO Banking Rates:  
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Methodology: GOBankingRates determined the most (and least) tax-friendly states for the middle class by analyzing tax data along the following factors: (1) total share of sales and excise tax paid by middle 20% of households; (2) total share of property taxes paid by middle 20% of households; (3) total share of personal income taxes paid by middle 20% of households; (4) total share of state and local taxes paid by middle 20%, all sourced from the Institution of Taxation and Economic Policy’s “Who Pays” report from 2018. Median household incomes were sourced from the U.S. Census Bureau’s 2017 American Community Survey.

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