Forbes magazine published a top ten list of the states with the highest individual income tax rates. Hawaii and Oregon were the winners with the highest rates of 11%. California was number 3 at 10.3 percent. The surprise on the list is Iowa at number 4 with a highest rate of 8.98 percent. Finishing out the list is New Jersey, New York, Vermont, Maine, Washington D.C., and Minnesota all with highest individual income tax rates ranging from 8.97 percent down to 7.85 percent.
Since I work mostly in Colorado the top tax rate in Colorado (a flat tax state) is 4.63 percent, well out of the top ten. There are 15 states with a lower income tax rate than Colorado. That puts us in 36th place. There are seven states with no individual income tax and two which tax only dividend and interest income.
Alaska is the most tax friendly state with no income or sales tax.
If you do the comparison of actual tax burden combining income taxes and sales taxes, Colorado has the 15th highest sales tax burden. So if you combine the income tax and sale tax burden Colorado rates 39th. That makes Colorado one of the least “taxing” states.
The average Colorado resident pays $4,011 in income and sales taxes per year.
