The Disparity in Tax Burdens Across American States

Exploring Tax Rates vs Tax Burdens

Understanding how income taxes are computed remains a complex puzzle for many Americans unversed in the nuances of tax laws and terminology. Terms like tax rate and tax burden can often be baffling.

A tax rate signifies the percentage at which an individual or business is levied, with considerable variations based on income levels. On the other hand, tax burden represents the total sum of taxes paid, encompassing state and local taxes. This distinction assumes a pronounced importance when contrasting the wealthiest and poorest 20% in every state.

Research Methodology Breakdown

To discern the disparities in tax burdens nationwide, GOBankingRates delved into state, federal, and local data to unravel the tax burdens of affluent and impoverished individuals for single filers and married joint filers in each state. Harnessing data from the U.S. Census Consumer Expenditure Survey and the Bureau of Labor Statistics Consumer Expenditure Survey, this comprehensive analysis employed an in-house income tax calculator to ascertain the effective and marginal tax rates on average incomes for both demographic segments in every state.

The study additionally scrutinized the annual expenditures in each state, multiplying them by the average combined sales tax to compute the total sales tax expenditure for each state. The cumulative sum expended on federal and state income taxes was added to the aggregate spent on sales tax and then divided by the average income. Notably, property tax was excluded from the analysis due to data inconsistencies.

Implications of Tax Disparity

The wealthiest 20% invariably bear a more substantial tax burden; however, despite this higher tax load, these individuals command significantly more wealth than the poorest quintile. Thus, each tax dollar exacts a heavier toll on the poorest 20%. For instance, in a scenario where a state’s tax burden for single filers stands at 27.50%, this does not signify that the wealthiest 20% pay 27.50% more than the poorest quintile. Instead, it signifies that they contribute 27.50% more of their personal income compared to the poorest 20%.

State-Specific Tax Burdens for Different Income Strata

Alabama

  • Single Filing for Richest 20%:
    • Average Annual Income of Richest 20%: $213,012
    • Total Taxes Paid: $69,320
    • Tax Burden: 32.54%
  • Single Filing for Poorest 20%:
    • Average Annual Income of Poorest 20%: $11,401
    • Total Taxes Paid: $1,252
    • Tax Burden: 10.98%

Difference in Tax Burden: 21.56%

  • Married Filing Jointly for Richest 20%:
    • Average Annual Income of Richest 20%: $213,012
    • Total Taxes Paid: $57,825
    • Tax Burden: 27.15%
  • Married Filing Jointly for Poorest 20%:
    • Average Annual Income of Poorest 20%: $11,401
    • Total Taxes Paid: $968
    • Tax Burden: 8.49%

Difference in Tax Burden: 18.65%

Alaska

  • Single Filing for Richest 20%:
    • Average Annual Income of Richest 20%: $254,899
    • Total Taxes Paid: $75,761
    • Tax Burden: 29.72%
  • Single Filing for Poorest 20%:
    • Average Annual Income of Poorest 20%: $20,172
    • Total Taxes Paid: $2,175
    • Tax Burden: 10.78%

Difference in Tax Burden: 18.94%

  • Married Filing Jointly for Richest 20%:
    • Average Annual Income of Richest 20%: $254,899
    • Total Taxes Paid: $60,828
    • Tax Burden: 23.86%
  • Married Filing Jointly for Poorest 20%:
    • Average Annual Income of Poorest 20%: $20,172
    • Total Taxes Paid: $1,543
    • Tax Burden: 7.65%

Difference in Tax Burden: 16.21%

Analysis of State Tax Burden Disparities The Great Divide: State Tax Burden Disparity Revealed
Written By Michael Gary Scott

Arizona

  • Single filing for the richest 20%
    • Average annual income of the top 20%: $254,650
    • Total taxes paid: $81,675
    • Tax burden: 32.07%
  • Single filing for the poorest 20%
    • Average annual income of the bottom 20%: $16,732
    • Total taxes paid: $1,640
    • Tax burden: 9.80%

Difference of tax burden between richest and poorest: 22.27%

Arkansas

  • Analysis for top and bottom 20% based on single filing status in Arkansas.
    • The wealthy 20% take home an average yearly salary of $196,563 and contribute $61,695 in taxes, resulting in a tax burden of 31.39%.
    • The least affluent 20% earn $11,225 annually, pay $1,135 in taxes, and face a tax burden of 10.11%.

The inequality in tax burden is stark at 21.28%.

California

  • California singles in the wealthiest bracket rake in $346,847 per year, with tax payments of $143,534 equating to a tax burden of 41.38%.
  • The poorest singles in California with an average annual income of $18,110 only contribute $1,969 in taxes, shouldering a tax burden of 10.87%.

The disparity stands at a staggering 30.51%.

Colorado

  • The top 20% of single filers in Colorado earn an average of $293,864 annually, paying $104,701 in taxes, resulting in a tax burden of 35.63%.
  • On the flip side, the bottom 20% average $20,359 in earnings, paying $2,495 in taxes, carrying a tax burden of 12.25%.

The divergence in tax burden registers at 23.38%.

Connecticut

  • For singles in the top 20% income bracket in Connecticut, the average annual income is $340,731, and they pay $132,929 in taxes, leading to a tax burden of 39.01%.
  • Conversely, the poorest singles in Connecticut with an average income of $17,449 pay $2,367 in taxes, resulting in a tax burden of 13.57%.

The gap in tax burden amounts to 25.45%.

Delaware

  • The juxtaposition is clear in Delaware with the top earners paying exponentially more taxes than the bottom earners, showcasing the disparity in the system.








Analysis of Tax Burden Disparities Across Different US States

Analysis of Tax Burden Disparities Across Different US States

Florida Tax Landscape

  • Single filing for the richest 20%

    • Average annual income of the top 20%: $261,209
    • Total taxes paid: $78,453
    • Tax burden: 30.03%
  • Single filing for the poorest 20%

    • Average annual income of the bottom 20%: $15,293
    • Total taxes paid: $1,314
    • Tax burden: 8.59%

Difference in tax burden: 21.44%

Georgia Tax Scene

  • Single filing for the wealthiest 20%

    • Average annual income of the wealthiest 20%: $253,577
    • Total taxes paid: $89,295
    • Tax burden: 35.21%
  • Single filing for the least affluent 20%

    • Average annual income of the poorest 20%: $15,412
    • Total taxes paid: $1,738
    • Tax burden: 11.28%

Difference in tax burden: 23.93%

Hawaiian Tax Outlook

  • Single filing for the top 20% earners

    • Average annual income of the top 20%: $297,132
    • Total taxes paid: $120,595
    • Tax burden: 40.59%
  • Single filing for the bottom 20%

    • Average annual income of the bottom 20%: $18,975
    • Total taxes paid: $2,807
    • Tax burden: 14.79%

Difference in tax burden: 25.79%

Insights from Idaho

  • Single filing for the top 20% wage earners

    • Average annual income of the top 20%: $229,521
    • Total taxes paid: $77,914
    • Tax burden: 33.95%
  • Single filing for the least wealthy 20%

    • Average annual income of the least wealthy 20%: $18,560
    • Total taxes paid: $2,164
    • Tax burden: 11.66%

Difference in tax burden: 22.29%

The Tax Story of Illinois

  • Single filing for the most affluent 20%

    • Average annual income of the most affluent 20%: $275,167
    • Total taxes paid: $98,026
    • Tax burden: 35.62%
  • Single filing for the most disadvantaged 20%

    • Average annual income of the most disadvantaged 20%: $15,343
    • Total taxes paid: $2,083
    • Tax burden: 13.57%

Difference in tax burden: 22.05%





Analysis of Tax Burdens Across Different Income Groups in Various U.S. States

Dissecting Tax Disparities Across the Heartland

Indiana: A Tale of Two Taxes

Indiana, the land of basketball and cornfields, presents a stark dichotomy in tax burdens between its richest and poorest. For those filing single, the richest 20% bear a hefty tax burden of 31.08%, while the poorest grapple with a significantly lighter burden of 11.69%. Married couples from both ends of the income spectrum face similar discrepancies, with disparities as wide as the state’s Hoosier heart, ranging from 19.39% to 7.97%.

Iowa: Taxing Times for The Hawkeye State

In Iowa, where fields of soybeans stretch as far as the eye can see, tax disparities are as vast as the crop fields. Single filers in the top 20% shoulder a whopping 34.14% tax burden, while the bottom 20% manage a more modest 14.16%. Married couples face similar discrepancies, with differences in tax burdens ranging from 19.98% to 16.27%, mirroring the ups and downs of the Cedar Rapids.

Kansas: A Sunflower State of Tax Affairs

Into the plains of Kansas, where amber waves of grain frame the landscape, tax burdens fluctuate like the prairie winds. Single filers in the top 20% face a hefty 34.06% burden, contrasting starkly with the 11.25% burden shouldered by the poorest 20%. As for married couples, the chasm in tax burdens ranges from 22.81% to 19.06%, akin to the ebb and flow of the Kansas River.

Kentucky: Bluegrass State’s Taxing Disparities

In Kentucky, where bluegrass music reverberates through the hills, tax disparities strike a discordant note. Single filers in the 20% richest bear a 32.05% burden, while their counterparts in the lowest income bracket face a much lighter 11.11% burden. The tax gap is equally glaring for married couples, ranging from 20.94% to 9.62%, resembling the rise and fall of Louisville’s skyline.

Louisiana: Jazzing Up Tax Disclosures

Down in the bayous of Louisiana, where jazz and gumbo flavor the air, tax discrepancies are as pronounced as the bends of the Mississippi River. The top 20% of single filers grapple with a 31.15% burden, while the bottom 20% shoulder a mere 9.50%. Married couples in Louisiana also face significant gaps in tax burdens, with variations running from 21.65% to 16.29%, akin to the sway of the Spanish moss.








Tax Burden Discrepancy Across States in the US

Bar Harbor: Group of young people walking on green grass hill in park downtown village in summer by boats.

Maine

  • Single filing for the wealthiest 20%
    • Average annual income of the top 20%: $231,939
    • Total taxes paid: $81,492
    • Tax burden: 35.14%
  • Single filing for the poorest 20%
    • Average annual income of the bottom 20%: $15,968
    • Total taxes paid: $1,556
    • Tax burden: 9.75%

Difference in tax burden: 25.39%

Annapolis Maryland capitol

Maryland

  • Single filing for the wealthiest 20%
    • Average annual income of the top 20%: $308,921
    • Total taxes paid: $114,812
    • Tax burden: 37.17%
  • Single filing for the poorest 20%
    • Average annual income of the bottom 20%: $19,444
    • Total taxes paid: $2,804
    • Tax burden: 14.42%

Difference in tax burden: 22.74%

Boston, Massachusetts, USA - October 14, 2016: Pedestrians cross at the Old State House in Boston.

Massachusetts

  • Single filing for the wealthiest 20%
    • Average annual income of the top 20%: $351,952
    • Total taxes paid: $134,752
    • Tax burden: 38.29%
  • Single filing for the poorest 20%
    • Average annual income of the bottom 20%: $16,996
    • Total taxes paid: $2,465
    • Tax burden: 14.50%

Difference in tax burden: 23.79%

Ann Arbor, MI - September 21, 2019: Historic Michigan Theater, built in 1928, located on East Liberty St in Downtown, Ann Arbor.

Michigan

  • Single filing for the wealthiest 20%
    • Average annual income of the top 20%: $230,959
    • Total taxes paid: $75,791
    • Tax burden: 32.82%
  • Single filing for the poorest 20%
    • Average annual income of the bottom 20%: $14,784
    • Total taxes paid: $1,853
    • Tax burden: 12.53%

Difference in tax burden: 20.28%

  • Married filing jointly for the wealthiest 20%
    • Average annual income of the top 20%: $230,959
    • Total taxes paid: $63,066
    • Tax burden: 27.31%
  • Married filing jointly for the poorest 20%
    • Average annual income of the bottom 20%: $14,784
    • Total taxes paid: $1,759
    • Tax burden: 11.90%

Difference in tax burden: 15.41%

minneapolis,minesota,usa.

Minnesota

  • Single filing for the wealthiest 20%
    • Average annual income of the top 20%: $270,174
    • Total taxes paid: $102,387
    • Tax burden: 37.90%
  • Single filing for the poorest 20%
    • Average annual income of the bottom 20%: $18,980
    • Total taxes paid: $2,241
    • Tax burden: 11.81%

Difference in tax burden: 26.09%

  • Married filing jointly for the wealthiest 20%
    • Average annual income of the top 20%: $270,174
    • Total taxes paid: $82,230
    • Tax burden: 30.44%
  • Married filing jointly for the poorest 20%
    • Average annual income of the bottom 20%: $18,980
    • Total taxes paid: $1,452
    • Tax burden: 7.65%

Difference in tax burden: 22.79%

Streets of small American town.

Mississippi

  • Single filing for the wealthiest 20%
    • Average annual income of the top 20%: $184,924
    • Total taxes paid: $57,236
    • Tax burden: 30.95%
  • Single filing for the poorest 20%
    • Average annual income of the bottom 20%: $0,624
    • Total taxes paid: $1,321
    • Tax burden: 15.41%








Analysis of Tax Burden Disparities Across Income Groups

Examining Tax Burden Disparities Among Different Income Brackets

Missouri

  • Single filing for richest 20%

    • Average annual income of richest 20%: $222,783
    • Total taxes paid: $72,906
    • Tax burden: 32.73%
  • Single filing for poorest 20%

    • Average annual income of poorest 20%: $14,324
    • Total taxes paid: $1,143
    • Tax burden: 7.98%

Difference of tax burden: 24.74%

Montana

  • Single filing for richest 20%

    • Average annual income of richest 20%: $228,532
    • Total taxes paid: $79,409
    • Tax burden: 34.75%
  • Single filing for poorest 20%

    • Average annual income of poorest 20%: $15,384
    • Total taxes paid: $1,528
    • Tax burden: 9.93%

Difference of tax burden: 19.05%

Nebraska

  • Single filing for richest 20%

    • Average annual income of richest 20%: $234,995
    • Total taxes paid: $81,701
    • Tax burden: 34.77%
  • Single filing for poorest 20%

    • Average annual income of poorest 20%: $16,346
    • Total taxes paid: $1,758
    • Tax burden: 10.75%
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Difference of tax burden: 24.01%

Nevada

  • Single filing for richest 20%

    • Average annual income of richest 20%: $247,917
    • Total taxes paid: $72,784
    • Tax burden: 29.36%
  • Single filing for poorest 20%

    • Average annual income of poorest 20%: $16,162
    • Total taxes paid: $1,468
    • Tax burden: 9.08%

Difference of tax burden: 20.28%

New Hampshire

  • Single filing for richest 20%

    • Average annual income of richest 20%: $288,945
    • Total taxes paid: $90,282
    • Tax burden: 31.25%
  • Single filing for poorest 20%

    • Average annual income of poorest 20%: $21,841
    • Total taxes paid: $2,470
    • Tax burden: 11.31%

Difference of tax burden: 19.94%




Analyzing Tax Burdens Across Different States

Insights into State Taxation Disparities

New Jersey: Garden State Tax Realities

  • Single filing for the richest 20%

    • Average annual income of the wealthiest 20%: $344,854
    • Total taxes paid: $133,968
    • Tax burden: 38.85%
  • Single filing for the poorest 20%

    • Average annual income of the least affluent 20%: $19,682
    • Total taxes paid: $2,364
    • Tax burden: 12.01%

Difference in tax burden: 26.83%

New Mexico: Enchanting Tax Dynamics

  • Single filing for the top 20%

    • Average annual income of the wealthiest quintile: $209,081
    • Total taxes paid: $66,587
    • Tax burden: 31.85%
  • Single filing for the bottom 20%

    • Average annual income of the poorest quintile: $11,775
    • Total taxes paid: $901
    • Tax burden: 7.65%

Difference in tax burden: 24.20%

New York: Empire State Tax Disparities

  • Single filing for the wealthiest 20%

    • Average annual income of the richest quintile: $326,428
    • Total taxes paid: $125,682
    • Tax burden: 38.50%
  • Single filing for the poorest 20%

    • Average annual income of the poorest quintile: $13,591
    • Total taxes paid: $1,263
    • Tax burden: 9.30%

Difference in tax burden: 29.21%

North Carolina: Tar Heel Tax Insights

  • Single filing for the top 20%

    • Average annual income of the richest quintile: $241,821
    • Total taxes paid: $81,163
    • Tax burden: 33.56%
  • Single filing for the bottom 20%

    • Average annual income of the poorest quintile: $15,096
    • Total taxes paid: $1,391
    • Tax burden: 9.21%

Difference in tax burden: 24.35%

North Dakota: Roughrider Tax Realms

  • Single filing for the richest 20%

    • Average annual income of the wealthiest quintile: $245,836
    • Total taxes paid: $76,615
    • Tax burden: 31.17%
  • Single filing for the poorest 20%

    • Average annual income of the least affluent quintile: $16,049
    • Total taxes paid: $1,472
    • Tax burden: 9.17%

Difference in tax burden: 21.99%

Ohio: Buckeye State Tax Portraits

  • Single filing for the wealthiest 20%



    • Analysis of Tax Burdens Across Different States

      Exploring Disparities in Tax Burdens Across States

      Comparing Income Groups

      • Average annual income of richest 20%: $226,591
      • Total taxes paid: $71,578
      • Tax burden: 31.59%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $14,195
      • Total taxes paid: $1,120
      • Tax burden: 7.89%

    Difference of tax burden: 23.70%

    Oklahoma Tax Insights

    • Single filing for richest 20%
      • Average annual income of richest 20%: $210,114
      • Total taxes paid: $67,200
      • Tax burden: 31.98%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $13,082
      • Total taxes paid: $1,137
      • Tax burden: 8.69%

    Difference of tax burden: 23.29%

    Rhode Island’s Tax Landscape

    • Single filing for richest 20%
      • Average annual income of richest 20%: $266,185
      • Total taxes paid: $93,316
      • Tax burden: 35.06%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $15,526
      • Total taxes paid: $1,563
      • Tax burden: 10.06%

    Difference of tax burden: 24.99%

    Insight on South Carolina Taxes

    • Single filing for richest 20%
      • Average annual income of richest 20%: $226,183
      • Total taxes paid: $78,126
      • Tax burden: 34.54%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $13,906
      • Total taxes paid: $1,391
      • Tax burden: 10.00%

    Difference of tax burden: 24.54%


    Analyzing State Tax Burden Disparities Across the United States

    The Great Divide

    Examining the tax landscape in different states reveals a stark contrast in the burden shouldered by taxpayers across income brackets. The disparity in tax payments and associated burdens is a reflection of the socio-economic fabric woven into the financial structures of states.

    South Dakota

    • Single filing for richest 20%
      • Average annual income of richest 20%: $220,281
      • Total taxes paid: $61,741
      • Tax burden: 28.03%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $15,826
      • Total taxes paid: $1,408
      • Tax burden: 8.90%

    Difference of tax burden: 19.13%

    Tennessee

    • Single filing for richest 20%
      • Average annual income of richest 20%: $226,707
      • Total taxes paid: $64,289
      • Tax burden: 28.36%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $14,667
      • Total taxes paid: $1,204
      • Tax burden: 8.21%

    Difference of tax burden: 20.15%

    Texas

    • Single filing for richest 20%
      • Average annual income of richest 20%: $261,583
      • Total taxes paid: $78,612
      • Tax burden: 30.05%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $15,762
      • Total taxes paid: $1,397
      • Tax burden: 8.86%

    Difference of tax burden: 21.19%

    Utah

    • Single filing for richest 20%
      • Average annual income of richest 20%: $267,902
      • Total taxes paid: $94,260
      • Tax burden: 35.18%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $23,988
      • Total taxes paid: $3,972
      • Tax burden: 16.56%

    Difference of tax burden: 18.63%

    Vermont

    • Single filing for richest 20%
      • Average annual income of richest 20%: $233,602
      • Total taxes paid: $82,052
      • Tax burden: 35.12%
    • Single filing for poorest 20%
      • Average annual income of poorest 20%: $17,704
      • Total taxes paid: $2,115
      • Tax burden: 11.95%

    Difference of tax burden: 23.18%



    Tax Burden Disparity Across US States

    Analyzing Tax Burden Disparity Across US States

    Virginia Tax Analysis

    Virginia showcases a stark contrast in tax burden between the richest and the poorest. Single filers in the top 20% face a tax burden of 37.27%, compared to a mere 11.95% for those in the bottom 20%. The gap widens further for married joint filers, with the top 20% bearing a 30.45% tax burden, while the lowest 20% shoulder only 7.86%, marking a significant 22.59% difference.

    Washington Tax Overview

    In Washington, the tax disparity is evident, with a tax burden of 32.40% for the wealthiest single filers compared to 10.66% for the poorest. For married couples, the contrast remains pronounced, at 25.48% for the richest 20% and a mere 7.65% for the poorest, posing a significant 21.74% gap.

    Insights from West Virginia

    West Virginia portrays a tax burden divisiveness as well. Single filers in the top income bracket face a tax burden of 32.39%, contrasting with the 10.76% burden on the lowest earners. Married joint filers experience a 27.49% burden for the wealthiest 20% versus a 10.76% burden for the least affluent, indicating a 16.73% gap.

    Wisconsin Tax Examination

    Wisconsin demonstrates a substantial divergence in tax burdens, with the top 20% of single filers bearing a 33.36% tax burden compared to 10.41% for the bottom 20%. For married joint filers, the contrast stands at 27.57% and 7.65% for the wealthiest and poorest, respectively, revealing a 19.92% disparity.

    Wyoming Tax Differential

    Wyoming showcases discrepancies in tax burdens as well, with a 27.74% burden on the richest single filers versus 8.94% on the poorest. Married couples in the top 20% face a 22.45% burden, while the bottom 20% encounter a 7.65% burden, highlighting a 14.80% gap.

    The Tax Disparity: A State-by-State Analysis of Rich and Poor Tax Burdens

    Diving Deep into Expenditure Costs

    The Missouri Economic and Research Information Center delved into the financial landscape by examining the national average overall expenditure costs for the poorest 20% (bottom quintile) and the richest 20% (top quintile). This data, sourced from the Bureau of Labor Statistics Consumer Expenditure Survey, provided a nuanced understanding of how individuals in different income brackets interact with the economy.

    Exploring Tax Brackets and Rates

    An analysis of the 2023 federal income tax brackets and rates alongside the 2023 state income tax brackets and rates shed light on the tax obligations faced by Americans. These figures, sourced from the TaxFoundation, allowed for a comprehensive view of the tax landscape in the country.

    Unpacking the Tax Burden

    Utilizing in-house calculations, GOBankingRates determined marginal tax rates, effective tax rates, and total taxes paid for federal income tax, state income tax, FICA tax, and local sales tax rates. By combining the overall cost of living index with the average expenditure costs for each quintile, a detailed picture of the tax burden on the richest and poorest quintiles in each state emerged.

    Comparing Rich and Poor Tax Burdens

    The crux of the analysis focused on comparing the taxes paid by the richest and poorest residents of each state. By dividing the total spent on federal income tax, state income tax, and state and local sales taxes by the average income, GOBankingRates revealed the disparities in tax burdens. Notably, property tax was excluded due to inconsistent data on home values between different income groups.

    Current and Comprehensive Data

    All the data collected is up to date as of Feb. 12, 2024, offering investors and policymakers a current snapshot of the tax landscape in the United States.

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