Taxes are high, and where you live can influence this. Some states have income tax, leaving you with less to save or spend. Living in one of these states means you’re paying more than most. The good news? There are ways to soften the blow.
Knowing where your state stands can help you plan smarter—because keeping more of what you earn just makes sense.
California
Living in California comes with sunshine, high costs, and steep taxes. The state’s top rate of 13.3% is the highest nationwide. Taxes fund everything from public schools to infrastructure, making saving harder.
If you live in California, you can use state-specific deductions or retirement savings plans that lower taxable income. Some people move income sources to lower-tax states, especially when planning retirement.
Hawaii
Earning a living in Hawaii? Expect to hand over a large chunk of your earnings. Hawaii has a tax rate of 11% because there’s no sales tax, so the state makes it up by taxing income instead.
Hawaiians can use tax deductions and tax-advantaged savings accounts to help. If you’re retired, planning where your income comes from can help. Some people even relocate part-time.
New York
New York’s top rate reaches 10.9%, and if you’re in NYC, there’s an extra local tax. The state funds public transit, schools, and infrastructure, but that doesn’t make it easier on your wallet.
Check if you can get pre-tax transit benefits, especially if you commute. In addition, New York also offers tax breaks for retirees, so work this into your plans.
New Jersey
New Jersey’s income tax is approximately 10.75%, but that’s not all; property taxes are the highest in the United States. Most tax revenue goes to schools, public pensions, and local services.
Homeowners can check for property tax relief programs. If you rent, you might qualify for state tax credits. You can also use tax-deferred retirement accounts to help lower taxable income.
Oregon
Oregon skips sales tax, but it makes up for it with income tax—up to 9.9%. Since the state relies on these taxes for schools, healthcare, and public services, even middle earners feel the impact.
If you work remotely, confirm where your income is taxed to help manage the effect. Oregon also offers credits for childcare and energy-efficient home upgrades, which might lower your bill.
Minnesota
Minnesota’s income tax is up to 9.85%, most going towards public schools, healthcare, and transportation. Minnesota offers tax credits for education expenses, so if you pay for college or private K-12 tuition, check for potential savings.
Farmers and small business owners can also benefit from certain deductions. If you live in Minnesota, explore the potential programs to get some of your tax money back.
Massachusetts
Living in Massachusetts means cold winters, great seafood, and a high income tax. Massachusetts had a flat 5% income tax, but now high earners (earning $1 million+ annually) pay 9%.
The state funds education and infrastructure, but that money comes from somewhere: your pocket. If you own property, Massachusetts offers tax breaks for seniors and those with disabilities. Parents can also claim deductions for college tuition.
Vermont
Vermont is beautiful, but it’s also expensive. With an income tax of 8.75%, residents pay more to fund schools, healthcare, and public services. Property taxes are also high, which adds to your expenses.
If you own a home, Vermont offers tax credits for weatherization and energy efficiency upgrades. There’s also an income sensitivity provision to help reduce property tax bills.
Wisconsin
Living in Wisconsin means braving cold winters, loving cheese, and paying income tax up to 7.65%. What happens to these funds? Wisconsin uses them to support public education and local services.
However, there is some good news: homeowners can apply for property tax relief programs, and farmers may qualify for agricultural tax credits. If you work from home, you might also deduct some expenses under Wisconsin’s tax laws.
Iowa
Iowa’s income tax rate is 8.53%, and while the cost of living is lower than in some states, taxes still take a large portion of income. Iowa’s budget goes toward schools, agricultural programs, and state-funded healthcare.
Relief comes from tax credits for child and dependent care expenses. You can also get a state tax incentive if you make energy-efficient home improvements.
Maine
Maine stands out because of its coastline and quiet way of life. However, taxes in Maine are 7.15%, and the long winters lead to high heating costs, which add to financial strain.
Maine residents can qualify for tax relief programs, which help homeowners. In addition, small businesses may qualify for special incentives, especially in fishing and farming sectors.
Connecticut
Connecticut has many advantages—coastal towns, proximity to NYC, and strong public schools—but it also has an income tax of up to 6.99%. Unfortunately, property taxes are also extremely high.
Most of Connecticut’s revenue goes toward funding local services and infrastructure. Homeowners in Connecticut can explore the state’s property tax credit, and students might also qualify for a deduction on loan interest.
South Carolina
South Carolina is known for its beaches, barbecue, and a top income tax rate of 6.5%. The state uses this revenue to fund schools, roads, and public services.
Compared to other states, South Carolina’s property tax is lower, but sales tax is higher, especially on groceries and essentials. Depending on the property, homeowners can qualify for a homestead exemption.
Montana
Montana doesn’t charge sales taxes but has an income tax of 6.7%, and the property taxes aren’t cheap. Montana’s vast rural landscape means most state revenue goes toward maintaining roads, schools, and public lands.
If you own a home in Montana, you can explore tax assistance programs, and if you own a business or farm, certain deductions could help lower your overall tax burden.
Delaware
Delaware’s income tax is 6.6%, and there is no sales tax. However, property taxes can be steep. Because Delaware is small and centrally located, most tax revenue is used for infrastructure and public services.
There’s good news if you’re a homeowner over 65, because Delaware has a property tax relief program. There are also credits available for historic home preservation.
