In this article, we will look at the 20 US states where you’ll pay most taxes over a lifetime. If you want to skip our detailed analysis, go directly to the 5 US States Where You’ll Pay Most Taxes Over a Lifetime.
Taxation in the US: An Analysis
In 2023, the US federal government generated around $4.44 trillion in revenue, mainly mostly driven by income tax, corporate income tax, and Medicare and Social Security taxes. This year, the federal government has collected around $4.39 trillion in taxes, and individual income taxes have contributed nearly 50% to the total federal tax collection. The Medicare and Social Security taxes have contributed almost 36% to the total federal tax revenue collection in 2024. But how much will the average American pay in income and other taxes throughout their lifetime?
According to research by Self Financial, Inc., the average taxpayer in the US will give away approximately $524,625 of all estimated lifetime earnings out of nearly $1.49 million total earnings in various state and federal taxes. The total amount of taxes paid during the lifetime of an American accounts for almost 34.7% of its total lifetime earnings. Some states charge huge amounts of income, property, and sales taxes, making taxpayers pay even more than the national average. The US states where you’ll pay most taxes over a lifetime are those states with the highest tax burden.
Taxes in the US vary state by state, where some states have high taxes, and some of them have no income tax, sales tax, or property tax at all. Then some states charge flat income taxes and some of them have graduated income taxes. The least taxed states in the US mainly have no income taxes and some of the states have no sales tax.
The state taxes are levied in addition to the federal taxes in the US. The federal income taxes range from 10% to 37%. In 2023, the US states combined gathered total taxes of around $1.43 trillion, as per the Census Bureau. The total state income taxes were around $616 billion. California led the way with the highest number of taxes collected in 2023. California is also one of the states with the highest tax burden in the US, which is around 22.40%. Other states that gathered the highest amount of taxes last year included New York and Texas, generating approximately $125 billion and $86.7 billion in total taxes, respectively. The average income tax per capita among all the 51 states in the US was around $1,839 in 2023.
Tax service providers have an important role in solving the taxation and other financial complications of individuals and firms. Now, let’s take a look at one such tax service provider in the US.
READ ALSO: 20 States with the Highest Gas Taxes in the US and 20 States with the Lowest Gas Taxes in the US.
H&R Block, Inc. (NYSE:HRB) is a leading tax services firm that has a major presence in the US. The company has decently captured the mid-level market. H&R Block assists individuals and firms with income tax return preparation. In 2023, H&R Block served more than 20 million clients in filing taxes, with half of them in person across its 10,000 offices. The firm prepares nearly 12 million tax returns every year in the US and the majority of them are filed online. H&R Block, Inc.’s main tax service plans are from basic to premium and business, with basic tax service plans available from as low as $35 and the premium and business options available at $99.
H&R Block, Inc. (NYSE:HRB) is investing in AI and is working in collaboration with Microsoft Corporation to improve its AI Tax Assist. The company is utilizing Microsoft’s OpenAI and Copilot.
In early August, H&R Block, Inc. (NYSE:HRB) posted earnings for the fourth quarter of 2024, reporting earnings per share of $1.89. The earnings exceeded the consensus estimates by nearly 8.46%. The company posted revenue of around $1.06 billion, surpassing estimates of $1.03 billion. During the fiscal year 2024, the company repurchased and retired nearly 8 million shares, with an accumulated value of $350 million. HRB also approved a new share repurchase authorization of $1.5 billion, during the last quarter.
H&R Block, Inc. (NYSE:HRB) increased its quarterly dividend by 17%, representing the seventh increase in seven years. The quarterly cash dividend is now $0.375 per share. HRB has a dividend yield of 2.36%, as of September 30.
HRB is ranked on our list of the 10 Cheap and High-Quality Stocks Picked by a Former SAC Capital Analyst. While we acknowledge the potential of HRB as an investment, our conviction lies in the belief that under the radar AI stocks hold great promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HRB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Now, let’s take a look at the 20 US states where you’ll pay most taxes over a lifetime.
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Our Methodology
The data for the states where people pay the most taxes over a lifetime was collected from a financial technology firm, Self Financial, Inc.’s database. The research finds out estimated lifetime earnings and the percentage of earnings that will go toward tax payments. The states where you’ll pay most taxes over a lifetime are ranked in ascending order of the percentage of earnings that will go to taxes over a lifetime.
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20 US States Where You’ll Pay Most Taxes Over a Lifetime
20. Pennsylvania
Estimated Lifetime Earnings: $1,508,483
Estimated Lifetime Taxes: $532,077
% of Earnings Paid as Taxes: 35.30%
Pennsylvania gathered around $55 billion in total taxes in 2023. The average citizen is estimated to earn around $1.50 million over a lifetime and has to pay around $532,077 in taxes, giving away over 35% of lifetime earnings in taxes. Pennsylvania ranks 20th among the US states where you’ll pay most taxes over a lifetime.
19. Oregon
Estimated Lifetime Earnings: $1,461,612
Estimated Lifetime Taxes: $521,500
% of Earnings Paid as Taxes: 35.70%
Oregon ranks among the 20 US states where you’ll pay most taxes over a lifetime. The average person in the state will earn around $1.46 million over a lifetime, while 35.70% of the earnings will go to state taxes. In 2023, Oregon collected more than $20.8 billion in taxes.
18. Minnesota
Estimated Lifetime Earnings: $1,645,072
Estimated Lifetime Taxes: $589,066
% of Earnings Paid as Taxes: 35.80%
Minnesota gathered more than $34.4 billion in taxes in 2023. Over a lifetime period, the average person in the state will have an estimated earnings of around $1.64 million and nearly $586,066 will be spent in taxes. Minnesota ranks 18th among the US states where you’ll pay most taxes over a lifetime.
17. Iowa
Estimated Lifetime Earnings: $1,443,717
Estimated Lifetime Taxes: $524,580
% of Earnings Paid as Taxes: 36.30%
Iowa has one of the highest tax burdens in the US, almost around 13.22%. Iowa is estimated to gather around $524,580 in lifetime taxes from an individual or a household, which accounts for 36.30% of the total estimated earnings paid as taxes. Iowa is one of the US states where people will pay most taxes over a lifetime.
16. Washington
Estimated Lifetime Earnings: $1,729,531
Estimated Lifetime Taxes: $631,249
% of Earnings Paid as Taxes: 36.50%
Washington collected around $38 billion in total taxes in 2023. The average citizen is estimated to earn around $1.73 million over a lifetime and has to pay over $631,000 in taxes, giving away over 36.50% of lifetime earnings in taxes. Washington ranks among the US states where you’ll pay the most taxes over a lifetime.
15. Texas
Estimated Lifetime Earnings: $1,437,047
Estimated Lifetime Taxes: $531,438
% of Earnings Paid as Taxes: 37%
Texas ranks 15th among the US states where you’ll pay the most taxes over a lifetime. The average person in the state will earn around $1.44 million over a lifetime, while 37% of the earnings will go to state taxes. In 2023, Texas collected more than $86.7 billion in taxes.
14. Kansas
Estimated Lifetime Earnings: $1,405,670
Estimated Lifetime Taxes: $525,482
% of Earnings Paid as Taxes: 37.40%
Kansas ranks among the 20 US states where you’ll pay the most taxes over a lifetime. The average person in the state will earn around $1.40 million over a lifetime, while 37.40% of the earnings will go to state taxes. In 2023, Kansas collected more than $13.13 billion in taxes.
13. Wisconsin
Estimated Lifetime Earnings: $1,497,577
Estimated Lifetime Taxes: $562,204
% of Earnings Paid as Taxes: 37.50%
Wisconsin gathered around $33.7 billion in total taxes in 2023. The average person in Wisconsin is estimated to earn around $1.49 million over a lifetime and has to pay over $560,000 in taxes, giving away over 37.50% of lifetime earnings in taxes. Wisconsin ranks among the US states where you’ll pay the most taxes over a lifetime.
12. Nebraska
Estimated Lifetime Earnings: $1,441,423
Estimated Lifetime Taxes: $546,354
% of Earnings Paid as Taxes: 37.90%
Nebraska has one of the highest tax burdens in the US, almost around 13.47%. Nebraska is estimated to gather around $546,354 in lifetime taxes from an individual or a household, which accounts for 37.90% of the total estimated earnings paid as taxes. Nebraska is one of the US states where people will pay most taxes over a lifetime.
11. Mississippi
Estimated Lifetime Earnings: $1,212,292
Estimated Lifetime Taxes: $481,017
% of Earnings Paid as Taxes: 39.70%
Mississippi is estimated to collect 39.70% of the estimated earnings of an individual as taxes over a lifetime. Mississippi’s total tax count was almost $10.32 billion in 2023. The average person in Mississippi is estimated to have lifetime earnings of more than $1.2 million.
10. Maine
Estimated Lifetime Earnings: $1,420,847
Estimated Lifetime Taxes: $581,750
% of Earnings Paid as Taxes: 40.90%
Maine gathered around $6.43 billion in total taxes in 2023. The average citizen is estimated to earn around $1.42 million over a lifetime and has to pay around $581,750 in taxes, giving away over 40% of lifetime earnings in taxes. Maine ranks 10th among the US states where you’ll pay the most taxes over a lifetime.
9. California
Estimated Lifetime Earnings: $1,589,377
Estimated Lifetime Taxes: $659,224
% of Earnings Paid as Taxes: 41.50%
California has one of the highest tax burdens in the US, which is more than 22%. In 2023, California gathered the highest amount in total taxes, accounting for nearly $220 billion. The average citizen is estimated to earn around $1.58 million over a lifetime and has to pay around $659,224 in taxes, giving away over 41% of lifetime earnings in taxes.
8. Illinois
Estimated Lifetime Earnings: $1,580,130
Estimated Lifetime Taxes: $665,286
% of Earnings Paid as Taxes: 42.10%
Illinois gathered more than $62.98 billion in taxes in 2023. Over a lifetime period, the average person in the state will have an estimated earnings of around $1.58 million and nearly $665,000 will be spent in taxes. Illinois ranks eighth among the US states where you’ll pay the most taxes over a lifetime.
7. Rhode Island
Estimated Lifetime Earnings: $1,600,495
Estimated Lifetime Taxes: $684,828
% of Earnings Paid as Taxes: 42.80%
Rhode Island ranks among the 20 US states where you’ll pay the most taxes over a lifetime. The average person in the state will earn around $1.60 million over a lifetime, while 42.80% of the earnings will go to state taxes. In 2023, Rhode Island collected more than $4.73 billion in taxes.
6. New Hampshire
Estimated Lifetime Earnings: $1,674,402
Estimated Lifetime Taxes: $722,610
% of Earnings Paid as Taxes: 43.20%
New Hampshire is estimated to collect 43.20% of the estimated earnings of an individual as taxes over a lifetime. New Hampshire’s total tax count was almost $3.54 billion in 2023. The average person in New Hampshire is estimated to have lifetime earnings of more than $1.67 million.
5. Massachusetts
Estimated Lifetime Earnings: $1,857,438
Estimated Lifetime Taxes: $816,700
% of Earnings Paid as Taxes: 44%
Massachusetts has one of the highest tax burdens in the US, over 16%. Massachusetts is estimated to gather around $816,700 in lifetime taxes from an individual or a household, which accounts for 44% of the total estimated earnings paid as taxes. Massachusetts is one of the US states where people will pay most taxes over a lifetime.
4. New York
Estimated Lifetime Earnings: $1,658,872
Estimated Lifetime Taxes: $748,199
% of Earnings Paid as Taxes: 45.10%
New York has one of the highest taxes in the US and the total tax burden is around 16.30%. In 2023, New York gathered the second-highest amount in total taxes, accounting for nearly $125 billion. The average citizen is estimated to earn around $1.65 million over a lifetime and has to pay around $748,000 in taxes, giving away over 45% of lifetime earnings in taxes.
3. Vermont
Estimated Lifetime Earnings: $1,442,094
Estimated Lifetime Taxes: $651,434
% of Earnings Paid as Taxes: 45.20%
Vermont ranks third among the US states where you’ll pay the most taxes over a lifetime. The average person in the state will earn around $1.44 million over a lifetime, while 45.20% of the earnings will go to state taxes. In 2023, Vermont collected more than $4.49 billion in taxes.
2. Connecticut
Estimated Lifetime Earnings: $1,731,261
Estimated Lifetime Taxes: $855,307
% of Earnings Paid as Taxes: 49.40%
Connecticut has a tax burden of nearly 15% and more than 49% of the estimated lifetime earnings are to be paid in taxes. An average person in the state is expected to earn around $1.73 million over a lifetime. Connecticut ranks second among the US states where you’ll pay the most taxes over a lifetime.
1. New Jersey
Estimated Lifetime Earnings: $1,818,191
Estimated Lifetime Taxes: $987,117
% of Earnings Paid as Taxes: 54.30%
New Jersey has the second highest tax burden rate in the US, which is just under 20%. New Jersey is estimated to gather over 52% of the estimated earnings of an individual or a household in taxes. New Jersey ranks first on our list of the US states where you’ll pay the most taxes over a lifetime.
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Disclosure. None. This article was originally published on Insider Monkey.