SALT LAKE CITY – It’s tax season again, so it’s likely that you’ve at least thought about moving to a state without income taxes while filing your state returns.
That might be a pleasant pipe dream, but financial experts warn that’s all it is, because even states without income tax get their money – which is actually your money – some other way.
“States with no income tax don’t automatically mean lower taxes,” according to Benjamin Adams, the operator of American Money 101, a financial management initiative on YouTube.
“Some ‘low-tax’ states quietly make it up elsewhere,” he adds. “What matters isn’t one tax – it’s the total burden that counts.”
Take Florida, for example. Not only does the Sunshine State have no income tax, but Gov. Ron DeSantis is also talking about gradually phasing out non-school property taxes through a voter referendum planned for 2026.
Florida gets the majority of its revenue, however, from a statewide sales/use tax of 7 percent and a tax on the state’s multi-billion dollar tourism industry of 5 percent of rental receipts for hotels and other accommodations.
At present, those taxes result in a 9.2 percent tax burden for Florida residents, Adams notes. That might seem high, but not compared to an 11.6 percent total tax burden on Utahns.
To celebrate another tax season, Adams has compiled a list of the 15 states where the tax burden is lowest and highest across the nation.
That comparison takes into account total state and local taxes paid by residents divided by the state’s share of national income, including income, sales, property and excise taxes.
He found that the states with the lowest overall taxes to be Alaska, Wyoming, Tennessee, South Dakota and Michigan, with tax burdens ranging from a low of 4.4 percent to 8.6 percent.
Of those five, all but Michigan have no income tax.
At the other end of the spectrum were the states of New York, Connecticut, Hawaii, Vermont and California, with tax burdens ranging from 15.9 percent to 13.5 percent.
Despite recent effort by the Legislature to chip away at income tax levels, Utah was ranked 39 among the 50 states with an 11.6 percent tax burden.
Adams reports that the national average was an 11.2 percent tax burden on all Americans.
“Most people only look at income tax when comparing states,” he notes. “That’s where they get misled.
“If you’re thinking about where to live, work or buy a home,” Adams emphasizes, “you need the full picture, not just the headline.”
With more than 20 years in the banking industry, Adams’ postings on YouTube are intended to help Americans achieve financial independence by making informed monetary decisions.