Here’s How Tax-Friendly Your State Is

When it comes to taxes, New England is the land of contrasts. Massachusetts and Rhode Island are considered non tax-friendly states, while New Hampshire counts itself among the most tax-friendly places. But it's the Granite State that's the outlier – outside of New Hampshire, the rest of the region falls more in line with Massachusetts (typically called "Taxachusetts").

The tax-friendly 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 the breakdown for each state:

Massachusetts

Sales tax: 6.2 percent state levy. No local taxes. Most clothing and footwear priced at under $175 per item are exempt.

Effective tax rate: 5.1 percent for single filers, 5.1 percent for joint filers

Property taxes: Average of $1,294 in taxes per $100,000 of assessed home value.

Vehicle taxes: The rate is $25 per $1,000 of assessed value, and the value is set by taking the car's sticker price (MSRP) and discounting it based on the age of the vehicle. Example: A three-year-old car that sold for $30,000 would have a tax bill of $300.

Inheritance and estate taxes: Estates valued at more than $1 million are subject to estate tax. Tax rates range from 0.8 percent to 16 percent. There is an unlimited marital deduction for property left to a surviving spouse and an unlimited charitable deduction for property left to a qualified charity.

See your state’s full tax profile.

Rhode Island

Sales tax: 7 percent state levy. No local taxes. Clothing and footwear priced at $250 or less are exempt.

Effective tax rate: Low: 3.75 percent (on up to $62,250 of taxable income); High: 5.99 percent (on taxable income over $149,150)

Property taxes: Average of $1,723 in taxes per $100,000 of assessed home value.

Vehicle taxes: The 7 percent state sales tax is applied. Rhode Island is moving to phase out its unpopular annual car tax, which has widely varying rates set by municipalities. Residents will see their bills go down as the state exempts more taxable value each year until 2024, when the tax completely disappears.

Inheritance and estate taxes: Rhode Island has an estate tax with an exclusion level that’s indexed to inflation (the 2019 threshold is $1,561,719). Rates range from 0.8 percent - 16 percent.

See your state’s full tax profile.

New Hampshire

Sales tax: No sales tax.

Effective tax rate: New Hampshire doesn’t have an income tax. But there’s a 5 percent tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers).

Property taxes: Average of $2,296 in taxes per $100,000 of assessed home value.

Vehicle taxes: No sales tax is due, but vehicle registration is done at the town and county level, where taxes may be levied based on the vehicle’s value and age.

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.