Here’s How Tax-Friendly Colorado Is

Colorado is considered a 'friendly' state for taxation in the country and is in a group of 10 other states where residents face about the same tax burden.

The designation comes from Kiplinger’s tax map for 2019, which was updated in October. The map divides states up into five categories for taxes: most tax-friendly, tax-friendly, mixed, not tax-friendly and, finally, least tax-friendly.

According to the map, the most tax-friendly state in the country is Wyoming, where there is no state income tax and a 0 percent effective income tax rate. Two other states out West — Nevada and Alaska — along with Tennessee and Florida rounded out the top five spots for the most tax-friendly states.

Here’s what makes Colorado 'tax-friendly':

Sales tax: 2.9% state levy. Localities can add as much as 8.30%, and the average combined rate is 7.63%, according to the Tax Foundation.
Effective tax rate: 4.62% for single filers, 4.74% for joint filers.
Property taxes: In Colorado, residents pay an average of $607 in taxes per $100,000 of assessed home value.
Vehicle taxes: An “ownership tax” is assessed on the original taxable value and year of service. Original taxable value is 85% of the sticker price. Rates are set at the county level.
Inheritance and estate taxes: None.

See your state’s full tax profile.

Illinois topped Kiplinger’s list as the least tax-friendliest state in the nation. Along with Wisconsin, the tri-state area consisting of Connecticut, New York and New Jersey, made up the remainder of the top five least-friendliest states in the U.S.

Kiplinger used tax data from each state’s tax agency, the U.S. Census and other sources to compare each state’s tax burden. The tax-friendliness was calculated based on the sum of income, sales and property tax that a sample filer paid in each state. The full methodology and the profile of the sample filers are found on Kiplinger’s website.

Written by Feroze Dhanoa, Patch national staff.