Single filers earning $75,000 a year will pay nearly $6,000 in state income taxes in Oregon, the most of any U.S. state, according to Tax Foundation data provided to CNBC Make It.
On the other end of the spectrum, seven states — Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming — don't levy any income taxes at all.
Like most states, Oregon uses a progressive or marginal income tax, which collects at an increasing rate the more income you earn. While the highest marginal rate in Oregon is 9.9%, it only applies to income above a $125,000 threshold, so any earnings below that amount are taxed at a lower rate.
Of the 10 states with the highest tax burdens for a single tax filer earning $75,000, eight have marginal tax rates, while two, Illinois and Idaho, have flat taxes of 5% and 5.8%, respectively. (Their effective tax rates below are a bit lower due to state-specific tax exemptions.)
A flat tax means every resident pays the same rate, regardless of income. Additionally, every dollar is taxed, unlike some marginal tax states where low earners are exempt from paying taxes.
Here's a look at the 10 states where people earning $75,000 owe the most in state income taxes, based on Tax Foundation calculations. These calculations use effective tax rates, which represent the actual percentage you pay on all taxable income.
- Oregon (7.75% effective tax rate): $5,814
- Hawaii (6.89% effective tax rate): $5,165
- Montana (5.27% effective tax rate): $3,950
- Minnesota (4.97% effective tax rate): $3,724
- Georgia (4.9% effective tax rate): $3,674
- West Virginia (4.83% effective tax rate): $3,620
- Delaware (4.81% effective tax rate): $3,609
- Illinois (4.79% effective tax rate): $3,592
- Maine (4.77% effective tax rate): $3,578
- Idaho (4.73% effective tax rate): $3,547
As mentioned above, with marginal tax rates, you only incur higher rates on income past a certain threshold. That's why effective tax rates are a better measure of a taxpayer's overall bill, according to the Tax Foundation.
The reason why Oregon has the highest effective tax rate for people earning $75,000 is because it levies a relatively high rate starting at a low threshold. Every dollar above $10,200 is taxed 8.75% in Oregon, while many other states tax income under $75,000 around 5%.
The effective tax rate in Oregon is somewhat lowered by the state's standard deduction and a personal exemption credit worth nearly $3,000, but the overall tax burden is still the highest of all states.
Hawaii and Montana have the second- and third-highest tax burdens because both states have marginal rates close to 7% for residents earning $20,000 or more. In contrast, a low-tax state like Maryland only taxes 4.75% on earnings between $3,001 and $100,000.
Other relatively high-tax states like California and New York aren't in the top 10 because they have more gradual tax rate increases for those earning less than $75,000. Californians only pay a marginal tax rate of 4% on earnings between $23,943 and 37,788. In New York, earnings between $13,901 and $80,650 incur a 5.5% marginal tax.
But in case you're wondering, California eventually has the highest state tax rate in the country, with 13.30% charged on any income over $1 million.
Correction: Due to a calculation error, an earlier version of this story overstated the effective tax rate for Mississippi. The story has been updated with a revised list.
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