State Tax Burdens Ranked: New WalletHub Report

As the 2025 tax season progresses with a federal deadline of April 15, new research from WalletHub highlights the considerable variation in tax burdens across U.S. states. The personal finance website ranked states based on the percentage of residents’ income paid in state and local taxes annually.

How WalletHub Calculated Tax Burdens

WalletHub’s analysis compared states based on three key tax types: property taxes, individual income taxes, and sales and excise taxes. The “total tax burden” for each state was calculated as the sum of these taxes expressed as a percentage of the average resident’s income.

Highest and Lowest Tax Burdens

Hawaii has the highest tax burden, with residents paying 13.3% of their income to state and local governments. This breaks down to 3.2% for income taxes, 2.6% for property taxes, and 7.5% for sales and excise taxes.

In contrast, Alaska has the lowest tax burden at 4.9%. This is attributed to the state’s lack of income tax, and relatively low property and excise/sales taxes, at 3.3% and 1.6% of income respectively.

State-Specific Tax Highlights

  • Oregon has the highest income tax rate, at 4.8% of earnings.
  • Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming do not charge state income tax.
  • Vermont has the highest property taxes, equaling 4.9% of residents’ income.
  • Alabama has the lowest property taxes, at 1.4% of income.
  • Hawaii also leads the nation in sales and excise tax burden, at 7.5%.
  • New Hampshire has the lowest sales and excise tax burden, with no general sales tax and excise taxes under 1% of average income.

Expert Insights on Tax Season

“It’s easy to be dismayed at tax time when you see just how much of your income you lose,” said analysts at WalletHub. “Living in a state with a low tax burden can alleviate some of that stress. Some states charge no income tax or no sales tax, although all states have some form of property taxes and excise taxes.”

Economic Impact of Tax Refunds

According to S&P Global, approximately $335 billion is expected to be distributed through June, representing an 11% increase from the previous year and providing a boost to the economy. As of March 20, the Internal Revenue Service reports an average refund of $3,571 for individual filers, up from $3,221 last year.