Local Rates; California, 7, 25%, 1, 57%, 8, 82%; Colorado, 2, 90%, 45, 4, 88%, 7, 78%. While taxes may not be the first thing you consider when deciding where to live, knowing the tax situation of the places you're considering moving to could help you save in the long run, especially when you retire. It should be noted that some New Jersey cities are in “urban business zones,” where eligible sellers can collect and remit half the state sales tax rate of 6.625 percent (3.3125 percent), a policy designed to help local retailers compete with neighboring Delaware, which does not apply any sales tax. State and local governments should be careful to raise rates that are too high compared to their neighbors, as doing so will generate less revenue than expected or, in extreme cases, lost revenues despite the higher tax rate.
States vary in terms of their personal income tax floors, deductions, exemptions, credits, and definitions of taxable income. Often, the biggest tax penalty citizens face after paying the Internal Revenue Service is the one filed by their state. Low personal income tax rates can be misleading; a lack of available tax deductions, for example, can increase the effective rate you pay. The Sales Tax Institute mailing list provides updates on the latest sales tax news, tips and training.
A myriad of property taxes, licenses, state and local sales, property, inheritance, estate and excise taxes on gasoline consume your disposable income. The Retirement Housing Information Center states that calculating the total tax burden, including sales and property taxes, can give you a more accurate reading of affordability, especially if you have a fixed income. Sales taxes in Hawaii and South Dakota have bases that include many services and are therefore not strictly comparable to other sales taxes. Each of these states has a personal income tax limit, deductions, exemptions, credits and different definitions of taxable income that determine what a citizen actually pays.
The Sales Tax Clearinghouse publishes quarterly sales tax data at the state, county and city levels by zip code. The five states with the highest average local tax rates are Alabama (5.25 percent), Louisiana (5.10 percent), Colorado (4.88 percent), New York (4.52 percent) and Oklahoma (4.48 percent). If you're a consumer, keep in mind that all but four states, Oregon, New Hampshire, Montana and Delaware, rely on sales tax for income. This number includes mandatory additional taxes collected by the state but distributed to local governments.
