10 States With the Most Painful Tax Policies

Editors' pick: Originally published March 7.

There's so much emphasis on federal taxes this time of year, but let's not forget that our states taxes can be just has burdensome.

Granted, nine states don't even have a personal state tax: Alaska, Florida, New Hampshire Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. But don't be completely fooled. New Hampshire and Tennessee still tax dividend and interest income, and many states and districts have high property, sales and local taxes.

Take D.C. the highest district tax rate is 5.75%, but if you live in the suburbs, you get hit with a 3.2% county tax that can bring the 8.95%, says Jamie Yesnowitz, principal the State and Local Tax Practice in Grant Thorton's National Tax Office.

And just because you have a free ride today doesn't mean it will stay that way. "While Washington doesn't have state tax, Seattle wants a city tax," says Yesnowitz. The trend also seems that the middle of the country wants to get rid of state taxes, while the coastal, or "blue" states, want to raise taxes and target their high-end earners. (And seriously with this soda tax?)

So who knows what will happen.

For now, we want don't want you caught off guard when you sit down and prepare your tax return. Some your states are going to keep a big chunk of your hard-earned money. Below are ten doozies, per the Tax Foundation, a nonpartisan research group. (Notice that they are coastal and often blue states.)

10. Wisconsin: 7.65%
10. Wisconsin: 7.65%

Throw in some local taxes and you could be at 11.1%, according to the Tax Foundation. 

You better be a dedicated Badgers fan to be a resident there.

9. Hawaii: 8.25%
9. Hawaii: 8.25%

At least its sales and property taxes are on the low side.

Mahalo.

8. New York: 8.82%
8. New York: 8.82%

But with all of New York's local taxes, your total could be as high as 12.8%. And residents don't have to be reminded that real estate taxes are super high too. 

New York also is proud to have some of the highest taxes on gasoline and cigarettes.

7. District of Columbia: 8.95%
7. District of Columbia: 8.95%

Living in D.C. may be exciting these days, but that additional 3.2% county tax brings your total to tax 8.95%. 

That's an apolitical bummer.

6. Vermont: 8.95%
6. Vermont: 8.95%

Property taxes are high here too, the eighth-highest in the U.S., according to the Tax Foundation. 

And beware when you go out to eat. Your restaurant meals are taxed at 9%. And if you order an alcoholic beverage, that'll be taxed at 10%.

5. New Jersey: 8.97%
5. New Jersey: 8.97%

Jersey's a mess. While it repealed the death tax, the gas tax jumped from 14.5 cents a gallon to 23 cents. 

And in addition to that high state rate, property taxes are some of the highest in the country. As an example, Passaic County residents pay 8.79% a year.

4. Iowa: 8.98%
4. Iowa: 8.98%

Iowa's personal income tax system has a whopping nine tax brackets. They range from 8.98% to 0.36%. So at least it's kind to its low wage earners.

3. Minnesota: 9.85%
3. Minnesota: 9.85%

The North Star State gets you on both ends of the tax chart. It recently imposed that 9.85% rate for high earners, but even its lowest earners pay 5.35%. And it's cold, to boot.

2. Oregon: 9.9%
2. Oregon: 9.9%

While the state doesn't impose a sales tax, the cost of living is super high, which adds insult to injury.

1. California: 13.3%
1. California: 13.3%

The highest rate actually is 12.3% - but throw in an extra 1% "Millionaire tax" and you're at 13.3%. 

Eleven states that have adopted a millionaire tax, where high earners get hit with an additional 1% surcharge on income over $1 million at the state level. 

That's the price you pay to live in the Golden State.

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