The 10 Least Tax-Friendly States for Middle-Class Families
Failing to consider state and local taxes before moving your family to another state could cost you thousands of dollars each year.
It's bad enough when Uncle Sam hits you with a big tax bill. But you really go through the roof when your state, county, or city follows that up by taking another huge chunk of your hard-earned cash. That's why people who are contemplating a move from one state to another need to do their homework before hiring a moving company. If you can help it, you don't want to end up in a state with higher taxes than the one you're in right now.
Moving from a low-tax state to a high-tax state can literally cost you thousands of dollars each year. If you want to prevent this, you need to know which states to avoid. And we can help with that.
To build our State-by-State Guide to Taxes on Middle-Class Families, Kiplinger editors estimated the overall income, sales, and property tax burden in each state for a hypothetical married couple with two children, combined wages of $77,000, $3,000 of other income, and a $300,000 home. That also allowed us to create the following list of the 10 least tax-friendly states for middle-class families (the least-friendly state is listed last). If you and your family are thinking of relocating to another state, make sure you check out the list first. It might make you think twice before packing your bags.
See the final slide for a complete description of our ranking methodology and sources of information.
10. Michigan
- State Income Tax Range: 4.25% (flat rate)
- Average Combined State and Local Sales Tax Rate: 6%
- Median Property Tax Rate: $1,448 per $100,000 of assessed home value
Good news first: sales taxes are below average in the Great Lakes State. There's a 6% state tax on purchases in Michigan, which is right around the mid-point as far as state-level sales tax rates go. But local governments don't add any additional tax on sales in the state. So, shoppers in Michigan can feel pretty good about the overall state and local sales tax burden on them.
But things go downhill from there. The 4.25% flat rate is higher than what you'll find on middle-class families in most other states. Plus, cities can levy additional local income taxes. As a result, Michigan's income tax bill for our hypothetical family is above the national average. Not by much, but the extra tax burden is enough to nudge the state in the wrong direction.
And there's more bad news when we look at property taxes in Michigan. For a home worth $300,000, the estimated annual property tax in Michigan is $4,344. That property tax amount is well over the national average and pushes Michigan onto this list of the least tax-friendly states for middle-class families.
For more information on these and other Michigan state taxes, see the Michigan State Tax Guide for Middle-Class Families.
9. Nebraska
- State Income Tax Range: 2.46% (on taxable income up to $3,290 for single filers; up to $6,570 for joint filers) to 6.84% (on taxable income over $31,750 for single filers; over $63,500 for joint filers)
- Average Combined State and Local Sales Tax Rate: 6.94%
- Median Property Tax Rate: $1,614 per $100,000 of assessed home value
While the cost of housing is comparatively low in the Cornhusker State, the average property tax rate in the state is quite high. For a $300,000 home, the state-wide average tax in Nebraska comes to $4,842 per year. That's the ninth-highest property tax amount in our U.S. rankings, and it's the primary reason why Nebraska is on the least tax-friendly list.
Sales taxes in Nebraska are middle-of-the-road. There's a 5.5% state tax, and localities can add as much as 2.5%. That works out to an average combined state and local rate of 6.94%, according to the Tax Foundation.
Finally, on the bright side, income taxes are below average in Nebraska for our hypothetical middle-class family. However, they're not low enough to balance out the state's high property taxes.
For more information on these and other Nebraska state taxes, see the Nebraska State Tax Guide for Middle-Class Families.
8. Maryland
- State Income Tax Range: 2% (on taxable income up to $1,000) to 5.75% (on taxable income over $250,000 for single filers; over $300,000 for joint filers)
- Average Combined State and Local Sales Tax Rate: 6%
- Median Property Tax Rate: $1,057 per $100,000 of assessed home value
Middle-class families in the Old Line State get killed when it comes to state and local income taxes. (Baltimore City and every county in Maryland imposes a local income tax.) For our hypothetical family, Maryland's income tax bill is the second-highest is the country.
The news is better when it comes to property taxes. If our made-up family moved into a $300,000 home in Maryland, they'd pay an estimated $3,171 in tax each year if the state's median property tax rate were applied. That property tax amount is right around the national average that we're seeing in our survey.
The Maryland tax system is actually quite friendly to shoppers, though. Like Michigan, there's a 6% state sales tax, but that's it – there are no additional local sales taxes to pay. That means the overall state and local sales tax burden on Marylanders is below average.
For more information on these and other Maryland state taxes, see the Maryland State Tax Guide for Middle-Class Families.
7. Kansas
- State Income Tax Range: 3.1% (on taxable income from $2,501 to $15,000 for single filers; from $5,001 to $30,000 for joint filers) to 5.7% (on taxable income over $30,000 for single filers; over $60,000 for joint filers).
- Average Combined State and Local Sales Tax Rate: 8.69%
- Median Property Tax Rate: $1,369 per $100,000 of assessed home value
Most people don't think of the farm belt as a high-tax area, but here's another state from that region on our least tax-friendly list (Nebraska was the first). With Kansas, its sales tax is the main culprit behind its poor (from a taxpayer standpoint) showing. According to the Tax Foundation, the combined average state and local sales tax rate is 8.69% (the state rate is 6.5%). That's the eighth-highest combined sales tax rate in the country.
The news gets a little better when it comes to other taxes in the Sunflower State. For instance, income taxes are only slightly above average for middle-class families. However, hundreds of local governments in Kansas also impose a tax on interest, dividends, and other earnings from intangible property. The local rates range from 0.125% to 2.25%. Even though the local taxes aren't on all income, they certainly push up the overall tax burden for many families in the state.
Property taxes in Kansas are above average, too. If our hypothetical family moved to Kansas and bought a $300,000 home in the state, they would pay about $4,107 in property taxes each year based on the state's median tax rate. That's the 15th-highest amount in the country for a home at that value.
For more information on these and other Kansas state taxes, see the Kansas State Tax Guide for Middle-Class Families.
6. Wisconsin
- State Income Tax Range: 3.54% (on taxable income up to $11,450 for single filers; up to $15,960 for joint filers) to 7.65% (on taxable income over $263,480 for singles; over $351,310 for joint filers)
- Average Combined State and Local Sales Tax Rate: 5.43%
- Median Property Tax Rate: $1,684 per $100,000 of assessed home value
The Badger State owes its spot on our list of the least tax-friendly states for middle-class families to high property taxes. And we estimate that property taxes for a $300,000 home in Wisconsin would run about $5,052 per year. That's the eighth-highest property tax amount in our nation-wide rankings.
Income taxes are above average for middle-class families in Wisconsin, too. The state did reduce the 2020 income tax rates for people with lower incomes. However, the rate cut didn't help our imaginary middle-class family, because their income put them in a higher Wisconsin tax bracket that wasn't adjusted.
The good news is that sales taxes are actually low in Wisconsin. There's a 5% state sales tax, but local governments can add their own tax to it. But, overall, Wisconsin has the ninth-lowest combined average state and local tax rate in the nation, says the Tax Foundation.
For more information on these and other Wisconsin state taxes, see the Wisconsin State Tax Guide for Middle-Class Families.
5. New York
- State Income Tax Range: 4% (on taxable income up to $8,500 for single filers; up to $17,150 for joint filers) to 10.9% (on taxable income over $25 million)
- Average Combined State and Local Sales Tax Rate: 8.52%
- Median Property Tax Rate: $1,692 per $100,000 of assessed home value
For our hypothetical middle-class family, New York's income tax bill is only in the "average" range when compared to the taxes imposed by other states. However, New York City and Yonkers tack on their own income taxes, and there's a commuter tax for people working in and around New York City. So, the overall state and local income tax bill is higher for people living in those parts of the state.
While income taxes in the Empire State aren't too high for middle-class families, things start to get bad when you look at sales taxes. The state sales tax rate is only 4%. But local taxes can add as much as 4.875% more. At 8.52%, New York's average combined state and local sales tax rate is the 10th-highest in the country, according to the Tax Foundation.
And then things go from bad to worse when property taxes are added to the mix. The average property tax on a $300,000 home in New York is about $5,076, which is tied for the seventh-highest property tax amount in the country for a home worth that much. But in some high-cost parts of the state, such as Westchester County, homeowners pay more than twice that amount, which means they're pinched even more by the $10,000 cap on the federal deduction for state and local taxes.
For more information on these and other New York state taxes, see the New York State Tax Guide for Middle-Class Families.
4. New Jersey
- State Income Tax Range: 1.4% (on taxable income up to $20,000) to 10.75% (on taxable income over $1 million)
- Average Combined State and Local Sales Tax Rate: 6.6%
- Median Property Tax Rate: $2,417 per $100,000 of assessed home value
For middle-class families in the Garden State, income taxes are relatively low when compared with other states. New Jersey checked with the fourth-lowest income tax total out of all the states with a broad-based income tax when we calculated income tax bills for our hypothetical family. (There's also a payroll tax in Newark.)
Sales taxes are below average in New Jersey, too. The state sales tax rate is 6.625%. But because some areas charge only half the state rate on certain sales, the Tax Foundation says that New Jersey's average state and local combined sales tax rate is only 6.6%.
But while New Jersey gives residents a break on income and sales taxes, it brings the hammer down when they buy a home. New Jersey's property taxes are the highest in the U.S. The state-wide average property tax on a $300,000 home in New Jersey comes to a whopping $7,251.
For more information on these and other New Jersey state taxes, see the New Jersey State Tax Guide for Middle-Class Families.
3. Iowa
- State Income Tax Range: 0.33% (on taxable income up to $1,676) to 8.53% (on taxable income over $75,420)
- Average Combined State and Local Sales Tax Rate: 6.94%
- Median Property Tax Rate: $1,529 per $100,000 of assessed home value
Which do you think is higher in Iowa: the corn or taxes? It might be taxes, thanks to staggering income and property taxes in the state. Iowa's income tax on our hypothetical middle-class family is the third-highest in the country. One reason why income taxes are on the high end in the state is because over 200 school districts and Appanoose County add their own income taxes on top of the state-level tax. (Beginning in 2023, the lowest Iowa personal income tax rate will be 4.4%, while the highest rate will be 6.5%.)
Our survey also shows that the average property tax rate in the Hawkeye State is the 11th-highest in the nation. If our hypothetical family bought a $300,000 home in the state, they can expect to pay about $4,587 per year in property taxes. That certainly doesn't help middle-class families in Iowa.
While sales taxes in Iowa aren't low, at least they're not as high as the state's income and property taxes. The state sales tax rate is 6%, and localities can add as much as 1%. That puts Iowa's combined average state and local sales tax rate (6.94%, according to the Tax Foundation) in the middle-of-the-pack when compared to the rates in other states.
For more information on these and other Iowa state taxes, see the Iowa State Tax Guide for Middle-Class Families.
2. Connecticut
- State Income Tax Range: 3% (on taxable income up to $10,000 for single filers; up to $20,000 for joint filers) to 6.99% (on taxable income over $500,000 for single filers; over $1 million for joint filers)
- Average Combined State and Local Sales Tax Rate: 6.35%
- Median Property Tax Rate: $2,139 per $100,000 of assessed home value
The Constitution State is an expensive place to live. Connecticut's property taxes are the third-highest in the U.S., so the $10,000 cap on the federal tax deduction for state and local taxes stings a bit more here. The state-wide average property tax for a $300,000 home is $6,417 per year. However, residents in high-income areas such as Fairfield County typically pay more than $10,000 in property taxes each year, so their federal tax deductions for state and local taxes have been curtailed.
State income taxes on are the high end, too. Connecticut income taxes for our make-believe middle-class are above average, but not sky high.
Sales taxes are also reasonable in Connecticut. There are no local sales taxes in Connecticut, so you'll pay only the statewide rate of 6.35% (slightly below average) on most of your purchases. But luxury items, such as cars valued at $50,000 or more or jewelry worth more than $5,000, are taxed at 7.75%.
For more information on these and other Connecticut state taxes, see the Connecticut State Tax Guide for Middle-Class Families.
1. Illinois
- State Income Tax Range: 4.95% (flat rate)
- Average Combined State and Local Sales Tax Rate: 8.82%
- Median Property Tax Rate: $2,165 per $100,000 of assessed home value
Sorry, Illinois, but you're the least tax-friendly state in the country for middle-class families. For all three taxes we're tracking – income, sales, and property taxes – you tax middle-income residents at an above average rate (at least). And for one of those taxes, the rates are extremely high. That's enough to put the Land of Lincoln in the most undesirable spot on our list.
At first blush, the state's 4.95% flat income tax rate doesn't seem that steep when compared to other states' top tax rates. And that's true if you're talking about wealthy residents. But for middle-class taxpayers, the income tax rate is one the high end. Also note that Illinois voters rejected a proposal on the November 2020 ballot that would have dumped the flat tax in favor of a graduated income tax. If it had passed, the marginal tax rate for most middle-income residents would have dropped slightly to 4.9%.
Sales taxes in Illinois are high, too. There's a 6.25% state tax on purchases in Illinois (1% on groceries and prescription drugs). Plus, up to 4.75% in local taxes are tacked on in certain places within the state. All told, the average combined state and local sales tax in Illinois is 8.82%, which is the seventh-highest combined sales tax rate in the U.S.
The tax situation really goes downhill fast for Illinois residents when you look at the property taxes they have to pay. Property taxes in Illinois are the second-highest in the nation. If our hypothetical family purchased a $300,000 home in the state, their average annual property tax bill would be an eye-popping $6,495.
For more information on these and other Illinois state taxes, see the Illinois State Tax Guide for Middle-Class Families.
About Our Methodology
Our tax maps and related tax content include data from a wide range of sources. To generate our rankings, we created a metric to compare the tax burden in all 50 states and the District of Columbia.
Data sources:
Income tax – Our income tax information comes from each state's tax agency. Income tax forms and instructions were also used. See more about how we calculated the income tax for our hypothetical family below under "Ranking method."
Property tax – The median property tax rate is based on the median property taxes paid and the median home value in each state for 2019 (the most recent year available). The data comes from the U.S. Census Bureau.
Sales tax – State sales tax rates are from each state's tax agency. We also cite the Tax Foundation's figure for average combined sales tax, which is a population-weighted average of state and 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.
Ranking method
The "tax-friendliness" of a state depends on the sum of income, sales and property tax paid by our hypothetical family.
To determine income tax, we prepared returns for a married couple with two dependent children, an earned income of $77,000, long-term capital gains of $1,500, qualified dividends of $1,000, and taxable interest of $500. They had $4,500 in state income taxes withheld from their wages. They also paid $3,000 in real estate taxes, paid $2,800 in mortgage interest, and donated $2,300 (cash and property) to charity. Since some states have local income taxes, we domiciled our filers in each state's capital, from Juneau to Cheyenne. We calculated these 2019 returns using software from Credit Karma.
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.
How much the hypothetical family paid (and deducted on their income tax return) in property taxes was calculated by assuming a residence with $300,000 assessed value and then applying each state's median property tax rate to that amount.
