Tuesday, January 24, 2006

The Best & Worst States for Taxes

If you live in Maine, New York, Connecticut or Washington, D.C., you are a big spender at tax time, like it or not. Alaska or Alabama? You get to keep a bigger slice of what you make.

While the IRS tends to monopolize our attention when it comes to taxes, it's not the only government agency with its hand out. Many of the taxes that command a piece of our income are collected at the state and local level, and they vary widely.

Where you live can have a big impact on how much you pay in taxes each year. The spread, according to numbers crunched by the nonprofit Tax Foundation, might not be enough to make you pull up stakes and move to a new state, but it can give you a case of tax envy. The state and local burden ranges from 6.4% (Alaska) to 13% (Maine).

Add in the federal tax burden, and the disparity widens to 8.5 percentage points, from 33.5% at the top (Connecticut) to 25% at the bottom (Alaska again). The national average for state and local tax burden is 10.1%; add in federal taxes and the average is 29.1%.

See how your state ranks.

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