The 10 Least Tax-Friendly States in the U.S.
This year's tax filing season was more nerve racking than most. It was the first time we had to deal with all the federal tax code changes made by the 2017 tax reform law. U.S. tax rates were lowered, standard deductions were doubled, itemized deductions were limited, and personal exemptions were repealed. Most people had no idea if they would get a refund or owe taxes until they completed their 1040.
And the federal tax craziness trickled down to our state income tax returns, too. That's because most states have you "piggyback" off your federal return and start with either federal adjusted gross income or taxable income to compute your state tax liability. States also have their own rates, and state standard deductions and personal exemptions aren't necessarily the same as their federal counterparts. All this means that your state tax bill could have gone up or down by hundreds or even thousands of dollars depending on how much your state did or didn't do in response to the federal tax law changes.
The shakeup also makes it harder to tell how your state taxes line up with those of a similarly situated person in a neighboring state. Maybe your state taxes went up, while his or hers went down. To help make that comparison, we estimated the tax burden in each state for a hypothetical married couple with a combined earned income of $150,000, $10,000 in dividend income, two dependents and a $400,000 home (with a mortgage). Based on our findings, we revised our annual State-by-State Guide to Taxes so that you can see how your state stacks up against the others. This is particularly useful if you're planning to move to a different state.
We also updated our list of the 10 least tax-friendly states in the U.S. for 2019 (starting with the least-friendly state). Take a look below to see if your state is on the list. We hope it isn't...but if it is, maybe it's time to think about relocating.
1. Illinois
State Income
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