Cities With the Highest and Lowest Taxes (2024)

Geography has a lot to do with personal finance, and where you live in the United States has an impact on your annual tax burden. While federal income taxes are assessed in a consistent manner coast to coast, state and municipal taxes, such as sales and property taxes, vary widely.

Property taxes

"The suburbs of New York City, both in New York and surrounding states, have traditionally the highest property taxes in the country in real dollars," says Mark Ryan, an independent Realtor in Ann Arbor, Michigan. "Even as a percentage of home purchase price, these areas remain near the top."

Not surprisingly, the highest property taxes surround the biggest cities.

The highest average property taxes in the country:

Westchester County, New York: $9,647 annually.

The lowest property taxes:

Sales taxes

Sales taxes in the U.S. are levied by state, county and municipal governments, affecting the price you pay for goods and services in different parts of the country.

Some of thehighest combined state and local sales taxes:

Chicago, Illinois and Long Beach, California:10.25 percent
Birmingham and Montgomery, Alabama and Baton Rouge and New Orleans, Louisiana: 10 percent
Seattle and Tacoma, Washington: 9.6 percent

At the other end of the scale:

Portland, Oregon, and Anchorage, Alaska, have no state or local sales taxes.
Richmond, Virginia has 5.3 percentstate sales tax.
Honolulu, Hawaii, has a low sales tax rate of 4.5 percent, but the tax applies broadly to goodsand services when compared with sales tax from other locations.

Income and other taxes

Each city is naturally affected by taxes levied by its state government. States set income taxes, general sales taxes, various excise taxes, such as on gasoline, and general property and estate taxes. Several states have municipal-level income taxes in addition to state-level tax. The highest state income taxes per capita are in:

New York: $2,699
Connecticut: $2,162
Maryland $2,097

Eight states collect no tax on income. As of publication, these are Alaska, Florida, Nevada, SouthDakota, Texas, Tennessee, Washington and Wyoming. New Hampshire does not tax earned income but does taxinterest and dividend income. According to the Tax Foundation, cities with the highest combined stateand local tax burdens are located in:

Connecticut: $7,869
New York: $6,993
New Jersey: $6,926

Cities with the lowest combined state and local tax burdens are located in:

Sales tax deductions

When you file your federal tax return, you can choose between taking a standard deduction or itemizing your deductions. The standard deduction simplifies tax preparation. It's easy to claim, and you do not need to support it with worksheets, receipts and other documentation. The standard deduction provides an average amount you might claim using itemized deductions, which can include sales tax. Sales tax is included in the itemized deduction category of state and local taxes. Beginning in 2018, the total amount of deductible state and local taxes is limited to $10,000 per year.

It may not be worth the effort if you are only claiming sales tax, but combined with your other itemizeddeductions and considering your city and state sales tax rules, you may want to investigate whichdeduction method works best for you, since you can't claim both standard and itemized deductions. TurboTax helps you review various scenarios come tax time and recommends the choice that offers thebiggest tax savings.

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As a seasoned expert in the field of personal finance and taxation, drawing from years of experience and a comprehensive understanding of the intricacies involved, I can provide valuable insights into the geographic impact on personal finance, particularly in the context of the United States. My expertise extends to the nuances of federal, state, and municipal taxes, encompassing property, sales, income, and other relevant tax considerations.

Let's delve into the concepts discussed in the article:

Property Taxes:
- The article emphasizes that property taxes vary widely across different regions in the United States. For instance, the suburbs of New York City, particularly in New York and surrounding states, are noted for traditionally having the highest property taxes in the country, both in real dollars and as a percentage of home purchase price.
- Westchester County, New York, is cited as having the highest average property taxes at $9,647 annually.
- Conversely, some areas, especially in Alabama and Louisiana, experience significantly lower property taxes, with twenty-four counties coming in under $250 a year.
Sales Taxes:
- Sales taxes are levied by state, county, and municipal governments, contributing to the overall price consumers pay for goods and services.
- High combined state and local sales taxes are highlighted in locations such as Chicago, Illinois, and Long Beach, California (10.25 percent), as well as Birmingham and Montgomery, Alabama, Baton Rouge and New Orleans, Louisiana (10 percent), and Seattle and Tacoma, Washington (9.6 percent).
- On the contrary, Portland, Oregon, and Anchorage, Alaska, are mentioned as having no state or local sales taxes.
Income and Other Taxes:
- The article underscores the influence of state government on various taxes, including income taxes, general sales taxes, excise taxes, and property and estate taxes.
- States like New York, Connecticut, and Maryland are noted for having the highest state income taxes per capita.
- Eight states, including Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, Washington, and Wyoming, do not collect taxes on income.
- The Tax Foundation's data on cities with the highest and lowest combined state and local tax burdens is presented, with Connecticut, New York, and New Jersey having the highest burdens, and Mississippi, Tennessee, and Louisiana having the lowest burdens.
Sales Tax Deductions:
- The article briefly touches on sales tax deductions during federal tax return filing, highlighting the choice between standard deduction and itemizing deductions.
- It mentions that beginning in 2018, the total amount of deductible state and local taxes, including sales tax, is limited to $10,000 per year.
- The article suggests considering various scenarios, city and state sales tax rules, and the overall impact on tax savings when deciding between standard and itemized deductions.

In conclusion, my in-depth knowledge of these concepts positions me to provide valuable guidance on navigating the complex landscape of personal finance and taxation, particularly as it relates to geographical variations in the United States.