Local Taxes Hitting Home

2 Minute Read

When it comes to federal income taxes, we’re all created equal—sort of. At least we’re all subject to the same federal tax rates no matter where we live. But when it comes to state and local taxes, tax rates are a whole other story.

Alaska residents, for example, have the lowest local and state tax rate at an average of 6.3% of their income. New Jersey residents’ tax burden is nearly twice that at 12.2%. Look at it another way. The average Alaska resident will work 93 days to make enough money to pay his tax burden, including federal, state and local taxes. The average New Jersey resident will have to work 119 days—more than five extra 40-hour weeks.


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Depending on where you live within a state, you could pay an even higher tax rate than your neighbors. The city of Bridgeport, Connecticut, has the distinction of being the most highly taxed city in the U.S. A Bridgeport family of three pays about 21.4% of their income, or $10,708 in state and local taxes. That’s not including federal income taxes.

So what’s the lesson here? Taxes are an important part of your budget. And depending on where you live, they could be an unnecessarily large part of your budget. Like anything else, you should be an informed consumer about the services your tax dollars buy. If you’re not getting a good deal, it may be time to consider a move.

If you’re already planning a move, check out tax rates before you make your final decision. Even if you aren’t moving to Bridgeport, a significant difference in local tax rates will have an impact on your budget meetings.

And when it comes time to pay taxes, make sure you’re getting all the deductions you deserve. (Some state and local taxes are deductible on your federal income taxes!) Consult an experienced professional like one of Dave’s tax Endorsed Local Providers (ELPs) to see how you can save on taxes.

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