Where Your Paycheck Goes: The Big Tax Divide Across America

Taxes shape how much people keep from each paycheck, but those amounts vary wildly depending on where they live. A fresh look at state tax burdens shows Hawaii tops the list, where residents give up 13. 3 percent of their income to state and local taxes—more than double what Alaskans pay. The breakdown shows income taxes aren’t always the main culprit; Hawaii’s sales and excise taxes alone eat up 7. 5 percent of earnings, while Vermont’s property taxes hit 4. 9 percent, over three times what Alabama charges. On the other end, Alaska benefits from no income tax and modest sales taxes, keeping its burden low at 4. 9 percent. Meanwhile, states like Oregon stand out for income taxes, where residents fork over nearly 5 percent of their pay.

Some states avoid income tax entirely, including Florida, Texas, and Wyoming, but they still collect through other fees. Property taxes can swing just as much—New Hampshire charges almost nothing on sales, yet most states rely on a mix of taxes to fund services. The IRS reports the average refund this year is $3, 571, up 11 percent from last year, meaning many will get a small boost. Economists say $335 billion in refunds could help spending in the coming months, but the bigger question is why some states demand so much more than others.

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