Exploring Your State’s Tax Burden: A Comprehensive Analysis
As the 2025 tax season approaches, it’s important to understand the taxes you pay at both the federal and state levels. The Tax Cuts and Jobs Act (TCJA) of 2017 continues to shape the tax landscape, but its future remains uncertain. In the meantime, let’s delve into how each state’s tax burden compares.
Your State’s Tax Ranking
24/7 Wall St. analyzed state and local tax burdens using data from the Tax Foundation. Here’s a look at how the states rank based on their average individual state and local tax burden:
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Keep in mind that this ranking is based on fiscal 2022 data. Tax laws and economic conditions may change, so it’s essential to stay informed.
How This Affects You
Understanding your state’s tax burden can help you plan your finances and make informed decisions. For instance, if you live in a high-tax state, you might consider seeking employment opportunities in a state with a lower tax burden or even moving to a more tax-friendly location. Additionally, understanding the tax implications of major purchases, such as a home or a car, can help you save money in the long run.
The Global Perspective
Taxes aren’t just an issue within the United States. Curious about how the U.S. stacks up against other countries? According to the World Bank, the countries with the highest tax revenues as a percentage of GDP (as of 2020) are:
- Denmark: 45.6%
- France: 45.7%
- Sweden: 46.9%
- Belgium: 48.2%
- Finland: 48.5%
The U.S. tax revenue as a percentage of GDP is around 24.2%. This lower percentage is due, in part, to the fact that many countries collect taxes on a broader range of items, such as value-added taxes (VATs), which the U.S. does not have at the federal level.
Conclusion
Understanding your state’s tax burden is an essential part of financial planning. By staying informed about your state’s tax laws and how they compare to others, you can make informed decisions and potentially save money. Remember, the tax landscape is constantly evolving, so staying up-to-date is crucial.
Additionally, it’s interesting to note that while the U.S. has a relatively lower tax revenue as a percentage of GDP compared to some other countries, the overall tax burden can vary widely within the U.S. based on where you live. Use this information wisely as you navigate the 2025 tax season!
