Tax Disclaimer: This article is for informational purposes only and does not constitute tax advice. State tax laws change frequently. Verify all figures with your state’s revenue department and a licensed tax professional before making relocation or financial decisions. Data sources and methodology are documented at the end of this article.

States with the Highest Effective Tax Burden in 2026

Last updated: March 2026 | Reviewed by Taxo Editorial Team

Key Takeaways
Methodology
The 15 Highest-Tax-Burden States
Breakdown by Tax Type
Income Tax: Where Residents Pay the Most
Property Tax: The Heaviest Bills
Sales and Excise Tax: Hidden Costs
How the OBBBA SALT Change Affects High-Tax States
Lowest-Tax-Burden States for Comparison
What This Means for Taxpayers
Regional Patterns and Analysis
Tax Burden vs. Tax Competitiveness
Frequently Asked Questions
Sources and Data
Related Articles

Key Takeaways

Illinois has the highest effective total state and local tax rate at 16.87% of median household income ($13,699 annually), driven primarily by the nation’s second-highest property taxes.
New York ranks second at 14.95% effective rate ($12,143 annually), with the costliest state and local income taxes in the nation at 5.8% of residents’ income.
Connecticut, New Jersey, and California round out the top five. All five states exceed the national average tax burden by at least 30%.
No single tax type determines overall burden. States with no income tax (like Washington and Tennessee) still rank in the top 20 because of elevated sales, excise, or property taxes.
The OBBBA’s increase of the SALT deduction cap to $40,000 (married filing jointly) provides partial federal relief for residents of high-tax states, but does not eliminate the burden.

Methodology

This analysis combines three authoritative data sources to calculate effective total state and local tax burden as a percentage of median household income:

Tax Foundation 2026 State Tax Competitiveness Index — Evaluates the structure and rates of each state’s tax code across five categories: corporate, individual income, sales, property, and unemployment insurance taxes.
WalletHub 2026 State Tax Burden Study — Calculates effective tax rates by applying each state’s tax code to the median U.S. household income ($81,200 in 2026) to enable apples-to-apples comparison.
U.S. Census Bureau, Annual Survey of State and Local Government Finances (2024, latest available) — Provides actual revenue collected per capita for income, property, sales, and other tax categories.

Why “effective” rate matters: Statutory top rates are misleading. California’s 13.3% top income tax rate applies only to income above $1 million. The effective income tax rate for a median-income household in California is far lower. This analysis uses effective rates, meaning the actual percentage of income paid across all tax types.

Limitations: Tax burden varies by individual circumstances (homeownership status, consumption patterns, income sources). These figures represent the median household experience, not every taxpayer.

The 15 Highest-Tax-Burden States

Rank	State	Effective Total Rate	Annual Tax (Median HH)	Income Tax Rank	Property Tax Rank	Sales/Excise Rank
1	Illinois	16.87%	$13,699	14	2	12
2	New York	14.95%	$12,143	1	8	16
3	Connecticut	14.85%	$13,428	3	4	22
4	New Jersey	14.43%	$11,716	5	1	30
5	California	13.91%	$11,295	2	17	11
6	Vermont	13.17%	$10,694	7	9	15
7	Minnesota	13.02%	$10,572	6	13	14
8	Maryland	12.76%	$10,361	4	12	25
9	Massachusetts	12.42%	$10,085	8	10	23
10	Hawaii	12.28%	$9,972	11	22	1
11	Maine	12.09%	$9,817	10	11	18
12	Wisconsin	11.87%	$9,638	9	7	20
13	Oregon	11.65%	$9,460	5	15	46
14	Rhode Island	11.53%	$9,362	12	6	24
15	Iowa	11.41%	$9,265	13	14	13

Sources: WalletHub 2026 State Tax Burden Study; Tax Foundation 2026 Index; Census Bureau. Sub-rankings are within all 50 states plus D.C.

For complete state-by-state details, see our State Income Tax Comparison: All 50 States and State Tax Comparison.

Breakdown by Tax Type

Understanding how each tax type contributes to overall burden reveals why some states rank higher than expected.

The Three Pillars of State/Local Tax

Tax Type	National Average (% of Income)	What It Funds
Income tax	3.1%	General fund, education, healthcare
Property tax	3.4%	Schools, local services, infrastructure
Sales & excise tax	4.5%	General fund, transportation, specific programs

States can be “high burden” through any combination. Illinois has a flat 4.95% income tax (moderate), but its property taxes average 2.23% of home value, pushing it to #1 overall. Oregon has no sales tax but compensates with income tax rates up to 9.9%.

Income Tax: Where Residents Pay the Most

The effective state and local income tax burden represents the percentage of total personal income paid in income taxes, not just the top marginal rate.

Rank	State	Effective Income Tax Rate	Top Marginal Rate	Structure
1	New York	5.80%	10.9% (state + NYC)	Progressive, 9 brackets
2	California	4.58%	13.3%	Progressive, 10 brackets
3	Connecticut	4.42%	6.99%	Progressive, 7 brackets
4	Maryland	4.35%	5.75% + local (up to 3.2%)	Progressive + county piggyback
5	Oregon	4.28%	9.9%	Progressive, 4 brackets

For detailed state-by-state analysis, see individual guides: New York, California, Connecticut, Maryland, Oregon.

Nine states levy no income tax: Alaska, Florida, Nevada, New Hampshire (interest/dividends only until 2027), South Dakota, Tennessee, Texas, Washington, and Wyoming. See States with No Income Tax.

Property Tax: The Heaviest Bills

Property taxes are the most regressive major tax: they are based on home value rather than income, and they disproportionately burden middle-income homeowners relative to their income.

Rank	State	Effective Property Tax Rate	Median Annual Bill
1	New Jersey	2.47%	$9,876
2	Illinois	2.23%	$5,417
3	New Hampshire	2.09%	$6,432
4	Connecticut	2.02%	$6,153
5	Vermont	1.90%	$4,734

For the full ranking, see Highest Property Tax States 2026 and Lowest Property Tax States 2026.

New Jersey homeowners face the steepest bills in the country, averaging nearly $9,900 per year. The OBBBA’s SALT deduction cap increase to $40,000 helps offset some of this for federal taxpayers, but the state burden remains. See SALT Deduction 2026.

Sales and Excise Tax: Hidden Costs

Sales and excise taxes are often overlooked because they are paid incrementally. However, they represent the largest share of state/local tax burden nationally.

Rank	State	Effective Sales/Excise Rate	State Sales Tax Rate	Avg. Combined Rate (State + Local)
1	Hawaii	7.20%	4.0%	4.44% (GET applies broadly)
2	Washington	6.54%	6.5%	10.37%
3	Tennessee	5.87%	7.0%	9.548%
4	Louisiana	5.41%	4.45%	9.56%
5	Arkansas	5.38%	6.5%	9.44%

Hawaii’s general excise tax (GET) applies to virtually all transactions, including services and business-to-business sales, making it uniquely broad despite a low nominal rate.

Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. See States with No Sales Tax.

For state-specific sales tax details, see guides such as Sales Tax California, Sales Tax Texas, and Sales Tax Florida.

How the OBBBA SALT Change Affects High-Tax States

The One Big Beautiful Bill Act raised the state and local tax (SALT) deduction cap from $10,000 to $40,000 for married couples filing jointly (and $20,000 for single filers). This is the first increase since the 2017 Tax Cuts and Jobs Act imposed the cap.

Impact on high-tax-state residents:

A married couple in New Jersey paying $12,000 in property taxes and $8,000 in state income taxes can now deduct the full $20,000, compared to the $10,000 cap previously. That $10,000 additional deduction saves $2,200-$3,700 in federal taxes depending on their bracket.
For high earners in New York or California with combined SALT exceeding $40,000, the cap still binds but is less painful than before.
The SALT increase does not reduce state tax burden; it reduces the federal tax impact of paying high state taxes.

For a detailed analysis, see SALT Deduction $40,000 in 2026 and One Big Beautiful Bill Tax Changes.

Lowest-Tax-Burden States for Comparison

Rank	State	Effective Total Rate	Annual Tax (Median HH)	Notable Feature
50	Alaska	6.94%	$6,153	No income tax, no state sales tax, Permanent Fund Dividend
49	Delaware	7.22%	$5,863	No sales tax, low property taxes
48	Wyoming	7.50%	$6,090	No income tax, mineral severance revenue
47	Montana	7.82%	$6,352	No sales tax
46	Nevada	8.13%	$6,602	No income tax, gaming revenue offsets

For residents considering relocation to lower-tax states, see Cheapest States to Live (Tax), Best States for Retirees, and States with Lowest Overall Tax Burden.

What This Means for Taxpayers

High-Tax States Are Not Always “Bad” States

Higher taxes often correlate with higher-quality public services. States like Massachusetts, Connecticut, and Minnesota consistently rank among the top states for education, healthcare, and infrastructure. The question is not whether a state has high taxes, but whether you receive value for what you pay. WalletHub’s 2026 Taxpayer ROI report shows that some high-tax states deliver above-average returns, while some low-tax states underperform.

Your Personal Tax Burden May Differ Significantly

These rankings are based on median household scenarios. Your actual burden depends on:

Income level: Progressive income tax states hit higher earners harder. A $250,000 earner in California faces a much steeper effective income tax rate than a $60,000 earner.
Homeownership: Renters avoid direct property taxes (though landlords pass some costs through). Homeowners in New Jersey face a very different reality than renters.
Spending patterns: Sales tax burden is proportionally higher for lower-income households that spend a greater share of income on taxable goods.
Employment type: Self-employed workers in states with no income tax still pay self-employment tax at the federal level.

Tax Planning Strategies for High-Tax-State Residents

Maximize the SALT deduction by itemizing if your state/local taxes exceed the standard deduction threshold.
Consider bunching deductions in alternate years to exceed the standard deduction threshold. See Bunching Deductions Strategy.
Use tax-advantaged accounts (401k, IRA, HSA) to reduce state taxable income. See 401k Contribution Limits 2026 and HSA Triple Tax Advantage.
Understand remote work rules if you work across state lines. See Remote Worker Multistate Taxes.
Review your withholding annually using our Tax Withholding Calculator guide or the IRS Withholding Estimator.

Regional Patterns and Analysis

Northeast Corridor: The Highest-Tax Region

Six of the top ten states (New York, Connecticut, New Jersey, Vermont, Massachusetts, Rhode Island) are in the Northeast. This region combines high income taxes, expensive property, and above-average sales taxes. The concentration of high-income earners also means progressive rate structures collect more per capita.

Midwest: Property Tax Driven

Illinois and Wisconsin rank high primarily because of property taxes. Illinois’s reliance on property taxes to fund local services creates one of the highest effective property tax rates in the nation. Midwestern states generally have moderate income and sales taxes but above-average property taxes.

West Coast: Income Tax Driven

California and Oregon rank high because of steep progressive income taxes. Oregon’s lack of a sales tax forces greater reliance on income tax, while California combines high income taxes with moderate property and sales taxes. Washington, despite having no income tax, ranks in the top 25 due to one of the highest combined sales tax rates in the country.

Southern States: Generally Lower

Most Southern states (Texas, Florida, Tennessee, Georgia) have lower overall burdens, but this varies. Tennessee’s high sales tax rate (9.548% combined average) pushes its consumption burden above the national average despite having no income tax.

Tax Burden vs. Tax Competitiveness

The Tax Foundation’s State Tax Competitiveness Index measures something different from tax burden. Competitiveness evaluates how well-structured a state’s tax code is for economic growth, considering factors like rate simplicity, breadth of base, and treatment of capital investment.

State	Tax Burden Rank (Higher = More Tax)	Tax Competitiveness Rank (Higher = Worse Structure)
New York	2	50 (worst)
Illinois	1	36
Wyoming	48	1 (best)
Florida	42	4

A state can have a high burden with a well-structured system (rare) or a low burden with a poorly structured system. For businesses, competitiveness may matter more than burden. For individuals, burden is the more relevant metric.

Frequently Asked Questions

Which state has the highest overall tax burden in 2026? Illinois, with an effective total state and local tax rate of 16.87% of median household income. This is driven primarily by the second-highest property taxes in the nation.

Which state has the highest income tax? By effective rate, New York (5.8% of income). By top marginal rate, California (13.3%). The distinction matters because top marginal rates only apply to the highest slice of income.

Do states with no income tax have lower overall tax burdens? Not always. Washington (no income tax) ranks in the top 25 for overall tax burden due to high sales taxes. New Hampshire (no income or sales tax) offsets with high property taxes. See States with No Income Tax.

How does the SALT deduction change help? The increase from $10,000 to $40,000 (MFJ) allows residents of high-tax states to deduct more of their state/local taxes from federal taxable income. It does not reduce state tax burden, only the federal tax impact. See SALT Deduction 2026.

What is the best state for taxes overall? It depends on your income, property, and spending. Alaska has the lowest overall burden, but it also has a high cost of living and limited services. Wyoming, Delaware, and Montana are also consistently low. See States with Lowest Overall Tax Burden.

Are these numbers exact for my situation? No. These are based on median household income and average consumption/property patterns. Your actual burden depends on your income, homeownership status, spending habits, and which deductions you claim. Use our Tax Bracket Calculator for a personalized estimate.