The Best And Worst States For Taxes In 2016

Taxes

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By Erin Carlyle

With tax day drawing near, it’s the time of year to gripe about why taxes are so darn high in your state. If you live in New York, New Jersey or Connecticut, that gut feeling you have is dead on. Resident of the Golden State? At least you’re better off than in New York. And Texas, we’re completely jealous.

Tax rates can be tricky to compare across state lines because there are so many variables. When it comes to income taxes, nine states in the U.S. charge residents a flat percentage regardless of the size of their salary. Most states take a graduated approach with multiple income brackets (Missouri and California lead the pack with 10). And seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) charge no state income tax at all.

To come up with the cleanest comparison of taxes by state, we calculated the effectivetax rate for single taxpayers earning a taxable $50,000 in each state. Why use $50,000 for our comparison? Since the median household income for 2014 (the latest year for which Census data is available) was $53,657, it’s reasonable that after taking each state’s standard deduction (from $0 in Indiana to $10,250 in Wisconsin), a single-earner household making the median income might land around a taxable $50,000. In most states, this taxable $50,000 spans multiple tax brackets, with each ascending bracket assessed at a higher rate. To come up with the effective rate at this taxable income level, we crunched the numbers using 2016 tax data from the Tax Foundation, a nonpartisan think tank in Washington, D.C., that tracks tax policy.

“Read the Full Article at www.forbes.com >>>>”

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