In this article we will talk about the 20 US States with the Highest Income Tax Revenue Per Capita. If you want to skip our detailed analysis, you can go directly to see the 5 US States with the Highest Income Tax Revenue Per Capita.
Income Taxes in the US
Income taxes in the United States are imposed by two entities including the federal government and the state government. Federal income taxes in the United States range from 10% to 37%, based on the income of an individual or a household. Income taxes vary from state to state as some states have a flat income tax rate, while others have a progressive tax system or no tax at all. The majority of the US states with the highest income tax revenue per capita are those states with the highest tax burden. Whereas, the least taxed states in the US are mostly those states with no or low income tax rates.
The main revenue drivers for the federal government are the income taxes. According to the Treasury Government Fiscal Data, the US federal government has gathered over $4.08 trillion in revenues from taxes in FY2024, as of August 15. Individual income taxes account for most of revenue with nearly 50% or $2.04 trillion in total revenues in FY2024 so far, while Corporate income taxes have added around $413 billion, accounting for 10.10% of total revenues.
All the states combined generated $1.43 trillion in total taxes in 2023, as per the Census Bureau. Whereas, the total income taxes collected by the states accumulated for around $616 billion. California collected the highest taxes in 2023 and it is the state with the highest tax burden in the US, which is around 22.40%. The total taxes collected by California in 2023 were around $220 billion, with income taxes accounting for almost 74% of the total taxes. New York and Illinois followed California with the most income taxes at $83 billion and $31.6 billion, respectively. The average income tax per capita among all the 51 states in the US was around $1,839 in 2023.
Alaska, Florida, and Tennessee are the only states with no individual income tax, while Ohio is the only state with no corporate income tax. Adding further to the list, there are five states with both zero individual and corporate income taxes including Nevada, South Dakota, Texas, Washington, and Wyoming. The three leading states with highest individual income tax rates are California, Hawaii, and New York with income tax rates at 14.40%, 11%, and 10.90%, respectively. Minnesota, Illinois, and Alaska have the highest corporate income taxes at 9.80%, 9.50%, and 9.40%, respectively.
Earlier this year, the various state governments decided to make income tax cuts. New Jersey made a notable corporate income tax cut from 11.90% in 2023 to 9% in 2024. Montana reduced its individual income tax rate from 6.75% to 5.90%. Iowa and Nebraska made tax cuts on both personal and corporate incomes.
Experts are eyeing the tax plans of both presidential candidates. Former President Trump plans to end social security taxes on seniors. In response to Trump’s take on ending social security taxes, Rep. John Larson, D-Conn., in an interview with CNBC said that the change would let the beneficiaries keep more of their monthly checks. However, Trump’s plan has a “fatal mistake” in that it doesn’t make up for the revenue that would be lost, he added.
On the other hand, Vice President Harris has appointed Minnesota Governor Tim Walz as her running mate. Experts are saying that this could be a reinforcement of the Democratic Party’s de facto presidential nominee’s policy focused on middle-class Americans, including the child tax credit.
READ ALSO: 15 Cheapest States to Buy a House in the US and 15 Most Popular Tax Havens for the Wealthy.
A Leader in Tax Preparation Services
H&R Block, Inc. (NYSE:HRB) is one of the leading tax service providers in the US and has presence in more than 200 countries. The US expats can also use H&R Block services to file their tax returns. The company’s main target is mid-level market and assists both individuals and corporations with tax preparation. The company served over 20 million clients to file their taxes in 2023. H&R Block’s main market lies in the US as the company prepares around 12 million yearly tax returns in the US. In addition, HRB offers various tax service programs from basic level to premium and business. The basic tax service is available with a program starting at as low as $35 and the premium and business option is available at $99.
H&R Block, Inc. (NYSE:HRB) surpassed all the estimates in fiscal year 2024. In Q4 2024, the company posted an EPS of $1.81, surpassing an estimated EPS of $1.74. The revenue for Q4 came in at $1.06 billion, beating revenue estimate by $30 million. HRB’s full-year revenue was $3.6 billion, up by $138.2 million year over year. The EPS for the full year was $4.41, increasing by more than 15% from a year ago. The company has also authorized a share repurchase worth $1.50 billion. In addition, HRB has increased its quarterly dividend by 17%, marking the seventh increase in seven years. HRB has a dividend yield of 2.25%, as of August 15, and the company has consecutively paid dividends since its inception in 1962. The company projects a strong year ahead, with an anticipated increase in both EPS and revenue. Here is what the CEO of HRB said:
“In fiscal 2024 we made strides across our different products and services that provide value to our clients and help enable their financial confidence. We continue to make progress, gain new insight, and translate this client success into value for shareholders, and are well positioned to build on this momentum in fiscal 2025 and beyond.”
H&R Block, Inc. (NYSE:HRB) continues to improve its financials with an increase in revenue during the last four years. HRB has improved its FCF since 2020, and currently has $677 million of free cash flow compared to $27.2 million in 2020. The S&P 500 Consumer Discretionary Index shows the sector has returned just over 1.2% so far in 2024, while HRB has outperformed the sector with a YTD return of 17.68%, as of August 15. HRB is currently trading at almost 12% discounted price against its sector with a forward P/E of just over 13. Cliff Asness’ Hedge Fund AQR Capital Management has increased its stake in HRB by 40% and has a total stake of $115.4 million in HRB, as of Q2 2024.
While we acknowledge the potential of HRB as a good value stock, our conviction lies in the belief that some AI stocks hold greater 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Now we have discussed income taxes in the US, let’s take a look at the 20 US states with the highest income tax revenue per capita.
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Our Methodology
To compile our list of the 20 US states with the highest income tax revenue per capita, we gathered the income tax revenue and population data by state. We then calculated the income tax revenue per capita by dividing the income tax revenue of each state by its population. The income tax revenue and population data by state was obtained from the US Census Bureau, and updated as of 2023. The US states with the highest income tax revenue per capita are ranked in ascending order of their income tax revenue per capita.
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20 US States with the Highest Income Tax Revenue Per Capita
20. Indiana
Income Tax Revenue: $12,932,158,000
Population: 6,862,199
Income Tax Revenue Per Capita: $1,884
Indiana charges a flat income tax of 3.05% and a corporate income tax of 4.90%. Indiana gathered over $12.9 billion in income taxes during 2023. Indiana ranks 20th among the US states with the highest income tax revenue per capita.
19. Wisconsin
Income Tax Revenue: $11,859,170,000
Population: 5,910,955
Income Tax Revenue Per Capita: $2,006
Wisconsin has a graduated state individual income tax, with rates ranging from 3.50% to 7.65%, while it has a corporate income tax of 7.90%. With an income tax revenue per capita of $2,006, Wisconsin ranks among the US states with the highest income tax revenue per capita.
18. Kansas
Income Tax Revenue: $6,068,526,000
Population: 2,940,546
Income Tax Revenue Per Capita: $2,064
Kansas also has graduated personal income tax rates from 3.10% to 5.70%. In 2023, Kansas accumulated around $6 billion in income taxes.
17. Maine
Income Tax Revenue: $2,933,175,000
Population: 1,395,722
Income Tax Revenue Per Capita: $2,102
Maine has an income tax revenue per capita of almost $2,102 and ranks 17th among the states with the highest income tax revenue per capita. Maine imposes a graduated individual income tax, ranging from 5.80% to 7.15%. The state has one of the highest corporate income tax rates of around 8.93%.
16. Utah
Income Tax Revenue: $7,364,099,000
Population: 3,417,734
Income Tax Revenue Per Capita: $2,155
Utah has a flat individual income tax rate and both individual and corporate income tax rates are 4.55%. Utah gathered around $7.36 billion in total income taxes in 2023.
15. Montana
Income Tax Revenue: $2,594,794,000
Population: 1,132,812
Income Tax Revenue Per Capita: $2,291
Montana has an income tax revenue per capita of around $2,291. The state imposes a graduated individual income tax from 4.70% to 5.90%. Montana ranks 15th among the US states with the highest income tax revenue per capita.
14. Maryland
Income Tax Revenue: $14,192,499,000
Population: 6,180,253
Income Tax Revenue Per Capita: $2,296
Maryland has a graduated individual income tax from as low as 2% to a maximum of 5.75%. The state has a corporate income tax of 8.25%. Maryland collected over $14 billion in income taxes in 2023 and ranks among the US states with the highest income tax revenue per capita.
13. Vermont
Income Tax Revenue: $1,510,192,000
Population: 647,464
Income Tax Revenue Per Capita: $2,332
Vermont collected over $1.5 billion in income taxes in 2023. Vermont has a graduated personal income tax, with rates ranging from 3.35% to 8.75%. The state also imposes a graduated corporate income tax from 6% to 8.5%.
12. Hawaii
Income Tax Revenue: $3,447,778,000
Population: 1,435,138
Income Tax Revenue Per Capita: $2,402
Hawaii has the lowest income tax rate of 1.40% going up to a maximum of 11%. With over $3.44 billion in income tax revenue, Hawaii ranks 12th among the US states with the highest income tax revenue per capita.
11. Virginia
Income Tax Revenue: $21,014,676,000
Population: 8,715,698
Income Tax Revenue Per Capita: $2,411
Virginia collected one of the highest income taxes in the US in 2023, over $21 billion. Virginia’s individual income tax ranges from 2% to 5.75%, while it imposes a 6% corporate income tax.
10. Illinois
Income Tax Revenue: $31,673,308,000
Population: 12,549,689
Income Tax Revenue Per Capita: $2,524
Illinois has a flat individual income tax rate of 4.95% and corporate income tax of 9.5%. Illinois gathered around $31.67 billion in total income taxes in 2023. Illinois ranks 10th among the US states with the highest income tax revenue per capita.
9. Delaware
Income Tax Revenue: $2,997,021,000
Population: 1,031,890
Income Tax Revenue Per Capita: $2,904
Delaware has an income tax revenue per capita of around $2,904. The state imposes a graduated individual income tax from 2.20% to 6.60%. Delaware ranks among the states with the highest income tax revenue per capita.
8. New Jersey
Income Tax Revenue: $27,202,053,000
Population: 9,290,841
Income Tax Revenue Per Capita: $2,928
New Jersey has the lowest income tax rate of 1.40% going up to a maximum of 10.75%. With over $27.2 billion in income tax revenue, New Jersey ranks eighth among the US states with the highest income tax revenue per capita.
7. California
Income Tax Revenue: $126,315,948,000
Population: 38,965,193
Income Tax Revenue Per Capita: $3,242
California has the highest tax burden in the US. The state collected over $126 billion in income tax revenue in 2023.
6. Minnesota
Income Tax Revenue: $18,639,011,000
Population: 5,737,915
Income Tax Revenue Per Capita: $3,248
Minnesota collected over $18.6 billion in income taxes in 2023. Minnesota has a graduated personal income tax, with rates ranging from 5.35% to 9.85%. The state imposes a corporate income tax of 9.80%.
5. Connecticut
Income Tax Revenue: $12,344,697,000
Population: 3,617,176
Income Tax Revenue Per Capita: $3,413
Connecticut ranks fifth among the US states with the highest income tax revenue per capita. Connecticut has an income tax revenue per capita of $3,413. The state imposes a graduated personal income tax from 2% to 6.99%.
4. Oregon
Income Tax Revenue: $14,892,772,000
Population: 4,233,358
Income Tax Revenue Per Capita: $3,518
Oregon collected over $14.89 billion in income taxes in 2023. Oregon has a graduated personal income tax, with rates ranging from 4.75% to 9.90%. The state also imposes a graduated corporate income tax from 6.60% to 7.60%.
3. Massachusetts
Income Tax Revenue: $26,479,909,000
Population: 7,001,399
Income Tax Revenue Per Capita: $3,782
Massachusetts has individual income tax ranging from 5% to 9% and a 9% corporate income tax. With an income tax revenue collection of over $26 billion in 2023, Massachusetts ranks third among the US states with the highest income tax revenue per capita.
2. New York
Income Tax Revenue: $83,092,248,000
Population: 19,571,216
Income Tax Revenue Per Capita: $4,246
New York is one of the most populated states in the US and generates huge income tax revenue. With an income tax revenue per capita of over $4,200, New York ranks second among the US states with the highest income tax revenue per capita.
1. District of Columbia
Income Tax Revenue: $4,174,534,000
Population: 678,972
Income Tax Revenue Per Capita: $6,148
The District of Columbia has one of the highest individual income taxes in the US, ranging from 4% to 10.75%. The District of Columbia imposes an 8.25% tax on corporate income. In 2023, DC generated over $4.1 billion in income tax revenue and is the leading US state with the highest income tax revenue per capita.
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Disclosure: None. This article was originally published at Insider Monkey.