2016’s States with the Highest & Lowest Tax Rates

Methodology

In order to identify the states with the highest and lowest tax rates, WalletHub’s analysts compared the 50 states and the District of Columbia across four types of taxation:

• Real-Estate Tax: To calculate this tax, we first divided the “Median Real-Estate Tax Amount Paid” by the “Median Home Price” in each state. We then applied the resulting rates to a house worth $175,700, the median value for a home in the U.S., in order to obtain the dollar amount paid as real-estate tax.

• Vehicle Property Tax: To calculate this tax, we examined data for cities and counties collectively accounting for at least 50 percent of the state’s population and extrapolated this to the state level using weighted averages based on population size. For each state, we assumed all residents own the same car: the 2016 Toyota Camry LE four-door sedan, 2015’s highest-selling car, valued at $23,070.

• Income Tax: To calculate this tax, we used the percentage of income (middle income rate) spent on income tax from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. More specifically, we used the mean third quintile income amount of $53,889.

• Sales & Excise Tax: To calculate this tax, we used the percentage of income (middle income rate) spent on sales and excise taxes from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. More specifically, we used the mean third quintile income amount of $53,889.

Source: WalletHub

Overall Rank	State	Effective Total State & Local Tax Rates on Median U.S. Household*	Annual State & Local Taxes on Median U.S. Household*	% Difference Between State & Nat’l. Avg.**	Annual State & Local Taxes on Median State Household***	Adjusted Overall Rank (based on Cost of Living Index)
3	Montana	6.92%	$3,728	-35.37%	$3,561	3
4	Wyoming	7.45%	$4,015	-30.40%	$4,312	2
5	Nevada	7.72%	$4,161	-27.86%	$4,028	7
7	Idaho	8.48%	$4,569	-20.80%	$4,074	5
8	California	8.80%	$4,741	-17.81%	$6,803	33
11	Oregon	9.17%	$4,943	-14.32%	$5,392	34
12	Colorado	9.41%	$5,070	-12.11%	$5,854	15
14	Utah	9.53%	$5,133	-11.02%	$5,802	10
15	Arizona	9.69%	$5,224	-9.44%	$4,878	14
26	New Mexico	10.65%	$5,741	-0.48%	$4,912	20
34	Washington	11.69%	$6,302	9.25%	$7,722	37

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