Federal & State Income Tax & Millionaires

Legislators, government officials and people all over the country are debating the taxes paid by the rich compared to what those that aren’t rich pay. On the ballot this year in Washington and California are ballot measures to tax millionaires (Washington) and billionaires (California).

That brings up the question of exactly how much millionaires and billionaires actually pay in federal taxes. State taxes vary but federal income taxes are the same for residents in all states in the union.

A recent study by SmartAsset looked at the total federal income taxes paid by the top 1% in each state. What SmartAsset found is millionaires and billionaires and the rest of the top 1% are the biggest source of revenue of the federal government.

The top 1% of earners paid an average of 19.5% on all income. They ended up paying 37% of the income received by the federal government.

Here are the top 5 states. The PIA Western Alliance state of Nevada is number 3.

1. Wyoming

Share of income taxes paid by top 1%: 54.67%

Total income tax paid by the top 1%: $2.46 billion

Number of top 1% households: 2,611

Average adjusted gross income per top1% households: $4.08 million

2. Florida

Share of income taxes paid by top 1%: 53.62%

Total income tax paid by the top 1%: $96.26 billion

Number of top 1% households: 105,101

Average adjusted gross income per top1% households: $3.53 million

3. Nevada

Share of income taxes paid by top 1%: 51.12%

Total income tax paid by the top 1%: $11.01 billion

Number of top 1% households: 14,754

Average adjusted gross income per top1% households: $2.99 million

4. New York

Share of income taxes paid by top 1%: 46.26%

Total income tax paid by the top 1%: $79.49 billion

Number of top 1% households: 91,840

Average adjusted gross income per top1% households: $3.13 million

5. Texas

Share of income taxes paid by top 1%: 44.52%

Total income tax paid by the top 1%: $81.99 billion

Number of top 1% households: 128,130

Average adjusted gross income per top1% households: 2.4 million

The PIA Western Alliance states:

7. Montana

Share of income taxes paid by top 1%: 42.92%

Total income tax paid by the top 1%: $2.69 billion

Number of top 1% households: 5,101

Average adjusted gross income per top1% households: $2.13 million

13. California

Share of income taxes paid by top 1%: 38.6%

Total income tax paid by the top 1%: $122.45 billion

Number of top 1% households: 175,045

Average adjusted gross income per top1% households: $2.6 million

17. Idaho

Share of income taxes paid by top 1%: 38.2%

Total income tax paid by the top 1%: $3.39 billion

Number of top 1% households: 8,145

Average adjusted gross income per top1% households: $1.74 million

19. Arizona

Share of income taxes paid by top 1%: 38%

Total income tax paid by the top 1%: $14.44 billion

Number of top 1% households: 31,872

Average adjusted gross income per top1% households: $1.79 million

38. Hawaii

Share of income taxes paid by top 1%: 33.57%

Total income tax paid by the top 1%: $2.46 billion

Number of top 1% households: 6,472

Average adjusted gross income per top1% households: $1.53 million

42. New Mexico

Share of income taxes paid by top 1%: 32.3%

Total income tax paid by the top 1%: $2.38 billion

Number of top 1% households: 9,310

Average adjusted gross income per top1% households: $1.05 million

43. Washington

Share of income taxes paid by top 1%: 32.06%

Total income tax paid by the top 1%: $20.01 billion

Number of top 1% households: 35,597

Average adjusted gross income per top1% households: $2.19 million

48. Oregon

Share of income taxes paid by top 1%: 30.37%

Total income tax paid by the top 1%: $6.77 billion

Number of top 1% households: 19,053

Average adjusted gross income per top1% households: $1.43 million

50. Alaska

Share of income taxes paid by top 1%: 26.37%

Total income tax paid by the top 1%: $1.02 billion

Number of top 1% households: 3,223

Average adjusted gross income per top1% households: $1.25 million

Data gathered by Finance Buzz from the census looked at federal and state taxes and looked at which states tax its citizens the most. The PIA Western Alliance states of Oregon and Hawaii rank 1st and 9th of the highest tax burdens in the U.S.

Oregon — Total Effective Tax Rate: 24.41%: A big contributor to Oregon’s number-one ranking is a highest in the nation 7.86% state income tax rate. Add that to the average 16.55% federal income tax rate and Oregonians are taxed pretty hard.

Oregon — along with Massachusetts and Maryland — has higher tax rates and lower incomes that drives the total tax burden to 19.37% above the national average.

Massachusetts — Total Effective Tax Rate: 23.52%: Residents pay an effective rate of 23.52%. Even though it has the highest median income average in the country at $78,811 residents face an effective federal tax rate of 18.8% and a 4.72% state income tax burden.

Maryland — Total Effective Tax Rate: 22.40%: The average income in Maryland is $74,296. Residents hitting the average income pay $13,478 in federal taxes and $3,165 in state taxes. The high tax burden is mostly due to high local taxes and property taxes that fund education and services for the public.

New York — Total Effective Tax Rate: 22.09%: The average tax rate means 20% of a New Yorker’s income goes to taxes. The median income is $70,122 and, of that, those with that income pay 17.46% in federal taxes and state income

New Yorkers face an effective tax rate of 22.09%, meaning more than one-fifth of income goes to taxes. Residents earn a median income of $70,122 and pay roughly 17.46% in federal taxes, while the state adds 4.64%. Residents in areas like New York City face exceptionally high property taxes, high local taxes and huge amounts of money given to government to finance public services, education and infrastructure.

New Jersey — Total Effective Tax Rate: 21.46%: The effective tax rate in New Jersey is 21.46% for people with the median income of $73,606. For them, federal taxes hit 18.03% with state taxes putting another 3.42% to the burden. In total it comes to $13,274 for federal taxes and $2,519 in state income taxes for the median income earners.

High property taxes and a high progressive income tax hits everyone in New Jersey.

Virginia — Total Effective Tax Rate: 21.43%: Virginia’s median annual income is $67,034. Federal taxes for those earners hits $11,325 and state income tax adds up to $3,040. The people of Virginia have a state income tax that rises quite quickly compared to those with lower incomes. So many mid-income earners pay the same rate as higher earners.

Minnesota — Total Effective Tax Rate: 21.43%: Residents pay 16.85% in federal income taxes on average and 4.57% in state taxes. The state has a progressive state tax that hits a top rate of 9% quite quickly.

Illinois — Total Effective Tax Rate: 21.29%: The effective tax rate of 21.29% is based on a median income of $65,318. Federal taxes gobble up 16.56% of that and state income taxes another 4.73%. That is a flat tax that applies to everyone no matter the income. The high tax burden comes from very high property taxes and public pension fund obligations that are higher than in most states.

Hawaii — Total Effective Tax Rate: 21.21%: Hawaii’s heavy tax burden is from the state high income tax. The median income is $60,531. Individuals in the median income bracket pay $9,766 in federal taxes and $3,070 in state income taxes from an effective state rate of 5.07%. Hawaii also has a general excise tax on most goods and services adding to the burden.

Hawaii residents face a heavy tax burden, largely due to the state's income tax structure and broader tax system. At a median income of $60,531, individuals pay about $9,766 in federal taxes and $3,070 in state income taxes, with an effective state rate of 5.07%.

Colorado — Total Effective Tax Rate: 21.16%: The median income in Colorado is $71,700. Of that, 21.16% goes to taxes. The federal income tax hit is $12,709, or 17.72% and $2,462 for median income earners. State local sales taxes are high and sometimes hang somewhere around 10%. Property tax assessments are sky high and contribute to the tax woes in Colorado.

Source link: Business Insider — https://bit.ly/4xeChz4

Source link: Finance Buzz — https://bit.ly/4wFoTnR