12 Best Tax States for High Earners

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In a recent report, the personal finance website WalletHub detailed the percentage of income high, medium and low American earners spend on income tax, property taxes and sales and excise taxes. 

WalletHub came up with estimates of the state-specific tax burden on residents at three income levels — high ($150,000), medium ($50,000) and low ($25,000) — in each of the 50 U.S. states and the District of Columbia. Researchers used data from the Institute on Taxation and Economic Policy’s 2024 report, which published tax burden estimates at seven points in the state-specific income distribution. 

In order to compare tax burdens for households at the same income level across the U.S., they fit a regression model to estimate the relationship between income and tax burden for each state and the District of Columbia. They used log transformations to improve model fit and deployed this model to generate predicted tax burdens at the income levels they examined.

The analysis showed that in most states, low- and middle-income families pay a bigger share of income than wealthy families do. In part, this is because many states lack a graduated personal income tax and rely on consumption taxes. 

In 10 of the states with the most favorable tax burden for high earners, their less affluent counterparts shell out more of their income on taxes.

See the gallery for the 12 states in which high earners pay the smallest percentage of their income on taxes, according to WalletHub.

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