Even though we have to go through the painstaking process of filing taxes every year, it’s not the easiest or most enjoyable thing to do. Millions of American citizens are now having to deal with the changes to tax code that resulted from the Affordable Care Act going into law. Tax code changes are just another one of the bumps in the road this tax season and it’s just another stress that gets in the way of an already complicated process. There are certainly best and worst states for income tax and this information is pertinent to know up front. If you want to know how your status is affected in terms of income taxes this year, you should get educated about it as early as possible. There are six components that affect for filing for state income tax. The standard deduction amount, personal exemption per filer, exemption per dependent, the rate associated with your income bracket, whether the state income tax is deducted on the basis of net or gross income after federal filing and whether or not local income taxes are applicable. The best and worst states for income tax have been ranked and now it’s all about where you fall in the grand scheme of things.
Income Tax: Worst to Best
The ranking of this list is based off of the effective tax rate a person making an average income could be expected to pay. This individual would also be filing as a single person with no dependents that’s filed a federal return and taken the standard deduction available to them. These figures were derived from 2014 tax information thanks to the TaxFoundation web portal. You should not count on these figures as the most accurate information out there as this is meant to be a guide to familiarize you with approximate possibilities.
- In Minnesota, federal tax payments are not deducted on the state return and a single filer that’s meeting the average income requirement of $60,907 can be expected to pay about $3,100 or a little more than 5% of their income.
- New York also doesn’t deduct federal taxes from state returns either. There might also be some local income taxes that have to be accounted for in addition. Someone filing as a single person making the average income of $53,843 can be expected to pay about $2,650 in income tax or almost 5% of their income.
- Single and joint filers in Illinois will pay 5% of their federal adjusted gross income. There will be some modifications made to state income taxes. Federal tax payments are deducted only after local tax burdens have been assessed and no other local taxes will apply. A single person filing in Illinois making an average income of $57,196 can expect to pay about $2,700 in state income taxes or almost 5% of their income.
- California does not deduct federal taxes on the state returns and no other local income taxes are added on the state returns. A single person filing in California making an average income of $57,528 will pay about $2,400 in state income taxes which comes out to 4% of their income.
- Federal tax payments don’t come out of the state taxes in Mississippi and there are no other local taxes that are due. People filing as singles making the average income of $40,850 can expect to pay about $1,400 in state income tax. That’s almost 4% of their income.
- Both single and joint filers in Pennsylvania pay 3.7% in state taxes if they make any kind of income at all. State tax burdens are considered before federal taxes are deducted and other local income taxes might be added. If you’re a single person filing in Pennsylvania with a median income of $53,592, you can expect to pay about $1,600 in state income taxes or 3% of your income.
- In Texas, no one has to pay taxes off of their income to the state. If you’re a single filer making the average income of $53,027, you won’t pay anything at all in state income taxes.
It Gets Better
Now that you have an idea about the best and worst states for income tax, it should make it easier for you to get through the tax season with less question marks in your mind. It’s clear that Texans have the best deal when it comes to income taxes since the state doesn’t get anything from anyone in that department. The best and worst states for income tax aren’t hard to see from the numbers and they’re kind of relative to the ideas that some people might already have about the different states. To make sure you’re getting the most out of your tax process, you want to be sure that you’re going to a specialist that you trust if you don’t feel confident in your ability to do them yourself.