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Special Report: Taxes & the Most Friendly & Least Friendly States

Posted By Administration, Tuesday, November 5, 2019

A few days from now we’ll push into November. Year-ending December isn’t far behind. So at this point many of us are looking at income, deductions, and other financial items to determine our 2019 tax footprint.

Every year Kiplinger does its State-by-State Guide to Taxes. Four PIA Western Alliance states are among the best states in which to live in terms of taxes. Kiplinger also has a list of the 10-worst states in that guide. No PIA Western Alliance states are on that list.

Tax-friendliness depends — says Kiplinger — on total income, sales and property taxes and the company uses Tax Foundation statistics to determine the lists.

These are the 10 most tax-friendly states in the United States in 2019. The PIA Western Alliance states on the list are Nevada at 2, Alaska is 5, Washington comes in at 6 and Arizona is set at number-nine.

Here is the list:

1. Wyoming

  State Income Tax: None

  Effective Income Tax Rate: 0%

  Average State and Local Sales Tax: 5.32%

  Average Property Tax: $635 per $100,000 in home value

  Gas Taxes and Fees: 24 cents per gallon

 

2. Nevada

  State Income Tax: None

  Effective Income Tax Rate: 0%

  Average State and Local Sales Tax: 8.14%

  Average Property Tax: $693 per $100,000 in home value

  Gas Taxes and Fees: 33.78 cents per gallon

 

Nevada is a no-income-tax state that’s a haven for many. Property taxes sit below the national average and are only $2,771 for a $400,000 home. Part of the reason taxes are low is the $1.5 billion in taxes received annually from the state’s gaming industry and the hotels and motels surrounding the area.

The downside of Nevada’s tax structure is its sales tax. The combination of state and local sales taxes — on average — hits 8.14%. That makes it the 14th highest in the nation.

Another negative is the governmental service tax on motor vehicles. How much is assessed is determined by the vehicle’s age and value. A vehicle that’s a couple of years old and worth about $20,000 — for example — will see an annual tax of $238.

Gas taxes in Nevada are slightly above the national average of 31.7 cents per gallon. However, according to the Tax Foundation, the state has the third-lowest average tax on cellphone wireless services—only 3.27%.

 

3. Tennessee

  State Income Tax: 2% on interest and dividends

  Effective Income Tax Rate: 0%

  Average State and Local Sales Tax: 9.47%

  Average Property Tax: $768 per $100,000 in home value

  Gas Taxes and Fees: 27.4 cents per gallon

 

4. Florida

  State Income Tax: None

  Effective Income Tax Rate: 0%

  Average State and Local Sales Tax: 7.05%

  Average Property Tax: $1,041 per $100,000 in home value

  Gas Taxes and Fees: 41.99 cents per gallon

 

5. Alaska

  State Income Tax: None

  Effective Income Tax Rate: 0%

  Average State and Local Sales Tax: 1.76%

  Average Property Tax: $1,234 per $100,000 in home value

  Gas Taxes and Fees: 14.66 cents per gallon

 

Alaska’s residents pay no state income taxes nor do they pay a state sales tax, plus the gasoline taxes are the lowest in the country. The Tax Foundation — however — says municipalities can enact sales taxes locally but can only go as high as 7.5%. It rarely goes that high since average sales tax is just 1.76%.

If you pick up a — for example — a $400,000 home, your property tax would hit $4,936 per year. That is way above the national average.

One last item. Alaska gives each legal resident — someone that has lived in the state for a full year — a once a year Permanent Fund Dividend. In 2019 that dividend is $1,606. In 2015 — the highest ever payment — was $2,072.

 

6. Washington

  State Income Tax: None

  Effective Income Tax Rate: 0%

  Average State and Local Sales Tax: 9.21%

  Average Property Tax: $1,125 per $100,000 in home value

  Gas Taxes and Fees: 49.4 cents per gallon

 

Washington does not have an income tax. That’s why it made Kiplinger’s list of most tax-friendly states. However, the Tax Foundation points out that the state and local government sales tax rates are the third highest in the nation. The gas tax is the fourth highest in the country. And if you’re a wireless user — which most of us are — the tax on that is $19.41%.

Washington also has an estate tax on any estates worth $2.193 million or more. That is a 10% to 20% tax.

The good news is that property tax rates are considered moderate. A $400,000 home will cost you about $4,499 a year and that’s close to the national average.

 

7. South Dakota

  State Income Tax: None

  Effective Income Tax Rate: 0%

  Average State and Local Sales Tax: 6.4%

  Average Property Tax: $1,388 per $100,000 in home value

  Gas Taxes and Fees: 30 cents per gallon

 

8. North Dakota

  State Income Tax: 1.1% (on taxable income of $39,450 or less for single filers and $65,900 or less for joint filers) — 2.9% (on taxable income over $433,200)

  Effective Income Tax Rate: 1.1% for single filers and 1.58% for joint filers

  Average State and Local Sales Tax: 6.85%

  Average Property Tax: $1,056 per $100,000 in home value

  Gas Taxes and Fees: 23 cents per gallon

 

9. Arizona

  State Income Tax: 2.59% (on taxable income of $26,500 or less for single filers and $53,000 or less for joint filers) — 4.5% (on taxable income of over $159,000 for single filers and over $318,000 for joint filers)

  Effective Income Tax Rate: 2.77% for single filers; 3.24% for joint filers

  Average State and Local Sales Tax: 8.39%

  Average Property Tax: $754 per $100,000 in home value

  Gas Taxes and Fees: 19 cents per gallon

 

Arizona’s top income tax rate in 2019 is 4.5%. And that doesn’t go into effect until income goes over $159,000 for individuals and $318,000 for married couples filing joint returns. What that effectively means is that very few people are going to be taxed at the highest rate in the state.

The Tax Foundation said property taxes are relatively low and are below the national average. If you own a $400,000 home the property tax will be $3,014 a year.

Gas taxes are low as well. They’re just 19 cents a gallon which is way, way below the national average. There is — however — an annual vehicle license fee based on 60% of the manufacture’s base retail price. That rate is $2.80 per $100 of value for new vehicles and $2.89 for used.

The rate drops 16.25% each year.

Arizona does have a sales tax but prescription drugs and groceries are exempt. Counties and cities have sales taxes as well and some actually extend that sales tax to groceries. So the combined rate for state and local sales taxes is 8.39% and that’s the 11th highest in the country according to the Tax Foundation.

10. New Hampshire

  State Income Tax: 5% on interest and dividends

  Effective Income Tax Rate: 0%

  Average State and Local Sales Tax: 0%

  Average Property Tax: $2,296 per $100,000 in home value

  Gas Taxes and Fees: 23.83 cents per gallon

 

These are the 10 least tax-friendly states with the least friendly being identified as number 1. By the way, none of the PIA Western Alliance states are on the least friendly list:

1. Illinois

  State Income Tax: 4.95% (flat)

  Effective Income Tax Rate: 4.95% for single filers and 4.63% for joint filers

  Average State and Local Sales Tax: 8.78%

  Average Property Tax: $2,408 per $100,000 in home value

  Gas Taxes and Fees: 54.98 cents per gallon

 

2. Connecticut

  State Income Tax: 3% (on taxable income of $10,000 or less for single filers and $20,000 or less for joint filers) — 6.99% (on taxable income over $500,000 for single filers and over $1 million for joint filers)

  Effective Income Tax Rate: 2.03% for single filers and 5.19% for joint filers

  Average State and Local Sales Tax: 6.35%

  Average Property Tax: $2,114 per $100,000 in home value

  Gas Taxes and Fees: 42.11 cents per gallon

 

3. New York

  State Income Tax: 4% (on taxable income of $8,500 or less for single filers and $17,150 or less for joint filers) — 8.82% (on taxable income over $1,077,550 for single filers and over $2,155,350 for joint filers)

  Effective Income Tax Rate: 5.03% for single filers and 6.33% for joint filers

  Average State and Local Sales Tax: 8.49%

  Average Property Tax: $1,812 per $100,000 in home value

  Gas Taxes and Fees: 45.96 cents per gallon

 

4. Wisconsin

  State Income Tax: 4% (on taxable income of $11,450 or less for single filers and $15,270 or less for joint filers) — 7.65% (on taxable income over $252,150 for single filers and over $336,200 for joint filers)

  Effective Income Tax Rate: 2.59% for single filers and 4.95% for joint filers

  Average State and Local Sales Tax: 5.44%

  Average Property Tax: $1,924 per $100,000 in home value

  Gas Taxes and Fees: 32.9 cents per gallon

 

5. New Jersey

  State Income Tax: 1.4% (on taxable income of $20,000 or less) — 10.75% (on taxable income over $5 million)

  Effective Income Tax Rate: 1.53% for single filers and 3.37% for joint filers

  Average State and Local Sales Tax: 6.6%

  Average Property Tax: $2,530 per $100,000 in home value

  Gas Taxes and Fees: 41.4 cents per gallon

 

6. Nebraska

  State Income Tax: 2.46% (on taxable income of $3,230 or less for single filers and $6,440 or less for joint filers) — 6.84% (on taxable income over $31,160 for single filers and over $62,320 for joint filers)

  Effective Income Tax Rate: 3.23% for single filers and 5.22% for joint filers

  Average State and Local Sales Tax: 6.88%

  Average Property Tax: $1,855 per $100,000 in home value

  Gas Taxes and Fees: 30.6 cents per gallon

 

7. Pennsylvania

  State Income Tax: 3.07% (flat)

  Effective Income Tax Rate: 5.07% for both single and joint filers

  Average State and Local Sales Tax: 6.34%

  Average Property Tax: $1,674 per $100,000 in home value

  Gas Taxes and Fees: 58.7 cents per gallon

 

8. Ohio

  Effective Income Tax Rate: 1.81% for single filers and 4.83% for joint filers

  Average State and Local Sales Tax: 7.17%

  Average Property Tax: $1,641 per $100,000 in home value

  Gas Taxes and Fees: 38.51 cents per gallon

 

9. Iowa

  State Income Tax: 0.33% (on taxable income of $1,638 or less) — 8.53% (on taxable income over $73,710)

  Effective Income Tax Rate: 4.43% for single filers and 7.03% for joint filers

  Average State and Local Sales Tax: 6.82%

  Average Property Tax: $1,678 per $100,000 in home value

  Gas Taxes and Fees: 30.5 cents per gallon

 

10. Kansas

  State Income Tax: 3.1% (on taxable income of $15,000 or less for single filers and $30,000 or less for joint filers) — 5.7% (on taxable income over $30,000 for single filers and over $60,000 for joint filers)

  Effective Income Tax Rate: 4.04% for single filers and 5.04% for joint filers

  Average State and Local Sales Tax: 8.67%

  Average Property Tax: $1,491 per $100,000 in home value

  Gas Taxes and Fees: 24.03 cents per gallon

 

Source links: Kiplinger — link 1, link 2

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