State and Local Tax Burdens by
State and Rank for Fiscal Year 2008

The information presented in the table that is accessible by clicking the link below is an estimate of the combined state and local tax burden that impacts residents of each state. It is based on calculations made by the Tax Foundation in Washington, D.C., which computes the total amount paid by the residents in taxes, then is divided by the total income in each state to come up with a "tax burden" measure.  It is based on how much of their income residents of each state are paying in state and local taxes rather than how much tax collectors are receiving.

Here are some examples of the difference between collections (focusing on the tax collector) and burdens (focusing on the taxpayer).

• When Connecticut residents work in New York City and pay income tax there to both the state and the city, the Census Bureau will duly tally those amounts as New York tax collections, but the Tax Foundation will count them as part of the tax burden of Connecticut's residents.

• When Illinois and Massachusetts residents own second homes in nearby Wisconsin or Maine, local governments in Wisconsin and Maine will tally those property tax collections, but the Foundation's calculations will shift those payments back to the states of the taxpayers.

• When people all over the country vacation in Disney World or Las Vegas, tax collectors will tally the receipts from lodging, rental car, restaurant and general sales taxes in Florida and Nevada, but the Tax Foundation uses economic tools to tally those payments in the states where the vacationers live.

Much of this interstate tax collecting occurs through no special effort by state and local legislators or tax collectors. Tourists spend as they travel on hotel rooms, rental cars, restaurant meals, and local sales taxes in resort areas, and all those transactions are taxed.  People who own property out-of-state naturally pay property tax out of state.  And the burden of business taxes is borne by the employees, shareholders and customers of those businesses, wherever they live.  In some cases the tax exporting is a wash from the tax collector's perspective.  That is, a state collects about the same amount from non-residents as its own residents pay to out-of-state governments.  But in many cases there's a significant difference.

A table from the Tax Foundation's Special Report No.163 published in August 2008, shows the state and local tax burden for each state.  To view the table, click here. This is the most recent report on this subject prepared by the Tax Foundation.

Visitors should also read the full Tax Foundation report.  It contains a great deal of important information about the table and an explanation of how the calculations were made.  You can view it by going to: http://www.taxfoundation.org/files/sr163pdf