Advertisement
Tax Breaks

Kiplinger’s Tax Map: About Our Methodology

The research behind our judgments.

Our maps and other tax content include data and state tax-policy details from a wide range of sources. To create our rankings, we created a metric to compare the tax burden in all 50 states and the District of Columbia.

Data sources:

Income tax

We looked at each state’s tax agency, plus this helpful document from the Tax Foundation. Effective tax rates represent the ratio of income tax due to state taxable income for our sample filers. See more about that calculation below under “Rankings.”

Property Tax

Values for median property tax paid and assessed home value in each state come from the U.S. Census American Community Survey and are 2017 data, the most recent available. We created a ratio of these: average taxes paid per $100,000 of home value.

Sales tax

Each state’s tax agency. We also cite the Tax Foundation’s figure for average sales tax, which is a population-weighted average of local sales taxes. In states that let local governments add sales taxes, this gives an estimate of what most people in a given state actually pay, as those rates can vary widely.

Fuel taxes

The American Petroleum Institute prepares a quarterly update of state rates. We used July 2019 data but made several updates to reflect new rates in Arkansas and Alabama. Values include excise taxes, sales taxes (when applicable) and a variety of fees that states impose.

Sin taxes

Inheritance & gift taxes:

Each state’s tax agency.

Wireless taxes:

The Tax Foundation.

Ranking method

The “tax-friendliness” of a state depends on the sum of income, sales and property tax paid by our sample filers.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

To determine income tax, we prepared returns for a married couple with two dependent children, an earned income of $150,000, and qualified dividends of $10,000. They paid $10,000 in mortgage interest. Since some states have local income taxes, we domiciled our filers in each state’s capital, from Juneau to Cheyenne. We calculated these 2018 returns using software from Credit Karma.

How much the sample filers paid (and deducted on their income tax return) in property taxes was calculated assuming a residence with $400,000 assessed value and each state’s average tax rate.

How much they paid in sales taxes was calculated using the IRS’ Sales Tax Calculator, which is localized to zip code. To determine those, we used Zillow to determine zip codes with housing inventory close to our sample assessed value.

We also calculated the effective tax rate for a single filer (earning $32,000 a year, with no dependents), but those returns were not used to calculate rankings.

Advertisement

Most Popular

HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020

Recommended

20 IRS Audit Red Flags
tax returns

20 IRS Audit Red Flags

There's no sure way to avoid an IRS audit, but these red flags could increase your chances of drawing unwanted attention from the IRS.
July 1, 2020
Is There an Unclaimed Tax Refund Waiting for You?
tax refunds

Is There an Unclaimed Tax Refund Waiting for You?

The IRS has $1.5 billion in refunds from 2016 waiting to be claimed. Is any of that money yours?
July 1, 2020
Sales Tax Holidays in 2020
state tax

Sales Tax Holidays in 2020

Sixteen states are having sales tax holidays this year. If you plan your shopping around these tax-free periods, you can save big on back-to-school cl…
July 1, 2020
10 Tax Breaks for the Middle Class
tax deductions

10 Tax Breaks for the Middle Class

Tax breaks aren't just for the rich. There are plenty of them that are only available to middle- and low-income Americans.
June 30, 2020