Understanding Taxes in America in 7 Visualizations
State taxes can be a pretty complex topic. Each state has its own income, sales, property, fuel, and other tax rates — making it difficult to determine which state is the best to live in with regards to taxes.
By analyzing the data and taking a look at the following seven visualizations, not only can we effectively compare state tax rates, but we can get a complete picture of the tax situation in each U.S. state.
- Wyoming is the most tax-friendly state in the United States.
- Illinois is the least tax-friendly state in America.
- States collected over $1 trillion in taxes in 2018.
- 40 out of 50 states receive more in federal spending than they pay in taxes.
A Breakdown of All States’ Taxes Revenue
Our first visualization illustrates exactly where states get their tax revenue based on data from the United States Census Bureau’s Annual Survey of State Government Tax Collections.
As shown in the image, the largest source of tax revenue is individual income tax, which accounts for $392.1 billion in tax revenue. This is followed fairly closely by general sales with selective sales tax in a distant third place.
Are Taxpayers in Your State Giving More Money to the Feds Than They Get Back?
Of course, knowing where your tax revenue goes is just as important as knowing where it comes from.
As demonstrated in the visualization, a surprising 40 out of 50 states actually receive more in federal spending than they pay in federal taxes.
On the other end of the spectrum, though, are states like New Jersey and Massachusetts, which spend thousands more per capita than they receive.
This Map Shows the Average Tax Refund in Every State
For a lot of people, the best part of paying taxes is getting their tax refund, but not everyone gets a refund. Many people either receive very small refunds or end up owing the IRS after filing.
Per the above visualization, we can see that, while the average refund is around $2,700, refunds vary widely by state. Texans receive the largest average refund at $3,206, while Maine residents receive only $2,336 on average.
The Best and Worst States for Taxes in America
States take in tax revenue from a variety of different sources. While many people only look at income and sales tax, other taxes can have a serious impact on your take-home income by the end of the year.
Only nine states have no income tax rate — six of which made it in the top 10 of the most tax-friendly states in the country.
Rich vs. Poor: Who Pays More Taxes in Each State?
Income taxes are progressive, meaning those with higher incomes pay more in taxes. However, not all taxes work this way. This next visualization illustrates how much the top earners in each state pay in taxes compared to those with lower incomes.
On average, the bottom 20% of taxpayers pay a state and local tax rate that eats up a larger percentage of their income than top 1% of households. Washington state has the most regressive tax system with a 14.8% gap between the lowest and highest-income taxpayers.
This is What you Take Home from a $100K Salary in America's Biggest Cities
A $100,000 salary isn’t the same in every state. How far your money will go significantly depends on where you live. For reference, a $100,000 annual salary comes out to $8,333 per month before taxes.
New York, NY, Portland, OR, and Louisville, KY top the list of the states in which workers earning $100,000 a year end up with the lowest monthly take-home pay. If you’re basing your next move on where you can take home the most money, there are several great options, including Seattle, WA, Las Vegas, NV, and more.
See How Your Take Home Pay Compares to Workers Around the World
Even if you live in one of the least tax-friendly states in the country, you’re still probably taking home more than you would in many other countries.
As the graphic above illustrates, the United States is 10th in the world when it comes to the highest average net wage after taxes at $39,211. Based on the available data, Switzerland sits at first place with an average net wage of $58,864, while Mexico sits at the bottom at $11,304.
America’s tax system can be very complex. From state income taxes to taxes on tobacco, there are a lot of factors to consider when determining the best state to live in for tax purposes.
By examining the seven visualizations in this article, we can get a clear picture of each state’s tax system and understand how these systems compare to other states and other countries around the world.
What did you take from these visualizations? Do we need a more progressive tax system? Let us know in the comments below.