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Taxpayers Return on Investment: The Best and Worst States

Whether you live in a high-tax state or low-tax state, are you getting your money's worth?

Taxpayers may often wonder where their money goes. In the states with the highest taxes, are residents getting more bang for their buck? Are they getting great health care, superior education, clean water and enjoying smooth, traffic-free roads and protection from crime and hazards?

To find which states yield the best and worst return on investment for taxpayers, WalletHub compared the quality of government services received by residents to the total state and local taxes they pay in each of the 50 states. They analyzed the quality of government services in each state across five key categories and scored them on a 100-point scale, then compared the government services score to each state’s total taxes paid per capita (per capita includes population over 18). The government services categories were:

  • Education- includes the quality of public schools and universities, graduation rates, and pre-K funding.
  • Health- includes WalletHub’s “Safest Sates During Covid-19” score, number of hospital beds, life expectancy, quality of health care and infant mortality rates.
  • Safety- includes crime rates and vehicle fatality rates,
  • Economy- includes median household income, unemployment and poverty rates,
  • Infrastructure/pollution- includes factors such as the quality of roads and bridges, commute times, parks and recreation expenses, water quality and air pollution.

High taxes don't always translate to better services, nor do low taxes mean the poorest services. The state that comes out on top, with the best taxpayer ROI, is New Hampshire, which ranks second for having a low tax burden and ninth for the quality of government services. 

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High-tax states like California and Hawaii have middling rankings for the quality of government services, leaving them at the bottom of this ranking, while states like North Dakota, Vermont and Minnesota have a more direct correlation: high per-capita taxes and scoring among the best for government services. In South Carolina, the per-capita tax rate is among the five best (meaning low taxes), but services score in the five worst.

Here is the taxpayer return on investment for all 50 states, from best to worst, based on WalletHub’s study.