NY Has the 4th Highest Effective Tax Rates in the USA: Report

As April 18, this year’s tax-filing deadline, looms closer, it’s interesting to see which states have the most and least burdensome tax rates. New York isn't the worst! But it is close.

New York Ranking for Tax Rates (1=Lowest; 25=Avg.):

• 48th – Overall Effective State & Local Tax Rate
• 28th – Vehicle Property Tax
• 15th – Sales & Excise Taxes

The bottom of the rankings is held by Illinois at No. 51, Nebraska, No. 50, and Wisconsin, No. 49. Our neighbors New Jersey and Connecticut post only slightly lesser burdens, ranked No. 42 and No. 46 respectively.

How, you may ask, did WalletHub come up with its conclusions? WalletHub’s analysts compared state and local tax rates in the 50 states and the District of Columbia against national medians.

They calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income. The “Median U.S. Household” has an annual income of $54,286; owns a home valued at $178,600; owns a car valued at $23,070 (the highest-selling car of 2016); and spends annually an amount equal to the spending of a household earning the median U.S. income.

What's the breakdown?

New York has the highest state cigarette tax rates. It has the fourth-highest gas taxes per gallon.

But it could be worse: many states have a tax on food! The worst there are Louisiana, Idaho, Kansas, Mississippi and Tennessee.

New York only ranks No. 41 for effective real estate taxes — which must be a surprise to everyone in the lower Hudson Valley where property taxes, mostly for education, are burdensome.

Professor Minchin G. Lewis of Syracuse University added some perspective.

"Relocating based on employment is way ahead of tax considerations," said Minchin. "After the decision to relocate, schools, public safety, quality of life, and cultural opportunities come before taxes. Taxes enter the picture when it comes to the economics of housing decisions. The higher the total tax burden, the lower the mortgage a buyer will secure. So even though taxes may not be the first consideration, taxes cannot be ignored."

See the entire report here and read more about its methodology here.