Where You'll Pay the Most in State and Local Taxes

Couple doing taxes at home on laptop

Fizkes / Getty Images 

Some states have high sales taxes and property taxes but no income taxes. Other states have no sales taxes but high income taxes. Overall, taxes at the state and local levels can dramatically impact the cost of living for consumers. Understanding various state taxes can give you an idea of how the highest- and lowest-taxed states differ which can be helpful if you're considering moving a particular state, like when it's time to retire.

Key Takeaways

  • Sales tax is levied by states on the purchase of goods and services. In addition to states, some local governments can also impose sales tax.
  • Tennessee and Louisiana have the highest combined sales tax while Alaska and Hawaii are states with some of the lowest sales tax rates
  • California and Hawaii rank the highest in state income taxes while North Dakota and Pennsylvania have the lowest state income tax rates
  • Seven states—Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, and Wyoming— levy no income tax
  • New Jersey and New Hampshire have some of the highest property rates in the country while Hawaii and Alabama have some of the lowest.

State Sales Taxes 

Sales taxes are the percentage you pay over and above sales prices when you purchase certain items. Most states rely heavily on these taxes to meet their fiscal needs.

Municipalities and counties sometimes have their own sales taxes in addition to those charged at the state level. The Tax Foundation, a leading source for tax information, provides comprehensive annual rankings based on various taxes overall.

According to the Tax Foundation, the five states with the highest combined sales taxes at the state and local levels as of 2022 are as follows:

  • Tennessee: 9.55%
  • Louisiana: 9.55%
  • Arkansas: 9.47%
  • Washington: 9.29%
  • Alabama: 9.24%

The states with the lowest combined sales taxes are as follows:

  • Alaska: 1.76%
  • Hawaii: 4.44%
  • Wyoming: 5.22%
  • Wisconsin: 5.43%
  • Maine: 5.50%

Four states have no sales tax at all: Delaware, Montana, New Hampshire, and Oregon.

State Income Taxes

Seven states impose no tax on residents' incomes as of 2022: Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, and Wyoming. New Hampshire taxes only interest and dividend income, while Washington taxes only high earners, and then only capital gains income.

At the other end of the scale are states with walloping tax rates at the highest income levels. The top five states by income tax rate in 2022 are as follows:

  • California: up to 13.3%
  • Hawaii: up to 11%
  • New York: 10.9%
  • New Jersey: 10.75%
  • Washington D.C.: 10.75%

You'll note that none of these states also make the list for the highest state and local sales taxes, so residents do receive a little bit of a break there. The bottom states by income tax rate in 2022 are as follows:

  • North Dakota: 2.9% and lower
  • Pennsylvania: 3.07% (flat)
  • Indiana: 3.23% (flat)
  • Ohio: 3.99% and lower
  • Michigan: 4.25% and lower
  • Louisiana: 4.25% and lower

Property Tax Rates

Property taxes are generally imposed at the local level. New Jersey municipalities are known for having the highest property taxes at a median rate of 1.89%, and Louisiana has the lowest at 0.18%. Half of all property taxes are higher than the median, and half are lower.

Trailing New Jersey but still making the top five states for the most burdensome property taxes are as follows:

  • New Hampshire: 1.86%
  • Texas: 1.81%
  • Nebraska: 1.76%
  • Wisconsin: 1.76%

At the other end of the spectrum, the four states joining Louisiana for the five lowest median property tax rates are as follows:

  • Hawaii: 0.26%
  • Alabama: 0.33%
  • Delaware: 0.43%
  • West Virginia: 0.49%

Notably, Alabama offsets its ranking here with its high sales taxes. Also note that Washington, D.C., though not a state, falls near the bottom of the list with a 0.46% property tax rate.

Putting It All Together

These lists only report the highest and lowest states in each category. Consumers will find that the majority of states charge income taxes along with hefty additional state and local taxes. Looking at each of these categories comprehensively for your individual situation can keep you informed regarding your own goals, and it might greatly help to potentially influence your choice of the state in which you want to live, particularly in retirement.


Property taxes wouldn't be a consideration if you plan to rent rather than own your home, while income tax—or the lack of one—would be more of a consideration for high-income earners.

Other Things to Think About

Combined taxes are tracked by the U.S. Census Bureau, which generally looks at taxes as a percentage of revenue. As of the first quarter of 2022, combined tax revenues for property, sales and gross receipts, and income taxes amounted to $513.3 billion across the U.S.

Each state has a unique mix of taxes that affects both residents and non-residents. This makes creating a comprehensive ranking of overall tax burdens an even more difficult undertaking and one that can be looked at in several ways. The U.S. Census Bureau’s quarterly data report helps provide insight on total tax revenue, which takes into account taxes paid by residents and nonresidents.

It can be important to consider taxes as they contribute to state revenue and budgets as well as those that affect local consumers.

Frequently Asked Questions (FAQs)

Which sates have the highest and lowest property taxes?

Property tax is paid by the owner of a property to the local government. States such as New Jersey and New Hampshire have some of the highest property tax rates in the country whereas Hawaii and Alabama are states with the lowest property tax rates.

Which states have the highest and lowest income taxes?

State income tax is levied on income that is earned in the state. While most states in the U.S. impose an income tax, they have differing rates. California with a top marginal rate of 13.3% and Hawaii with a top rate of 11% are the states with the highest income tax rates. Seven states impose no income tax while nine states impose a flat rate.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Tax Foundation. "State and Local Sales Tax Rates, 2022."

  2. The Tax Foundation. "State Individual Income Tax Rates and Brackets for 2022."

  3. Tax-Rates.org. "Property Taxes by State."

  4. U.S. Census Bureau. "Quarterly Summary of State and Local Government Tax Revenue: 2022 Q1."

Related Articles