Here's How RI's Tax Burden Compares To Other States

MASSACHUSETTS — A new analysis shows that Rhode Island is —despite its reputation — middle of the pack when it comes to tax burden. The Bay State ranks No. 30 in "States with the Highest & Lowest Tax Rates" by WalletHub, with residents paying 3.45 percent more than the average American.

However, in the study's adjusted overall rank based on cost of living, Rhode Island is toward the bottom of the pile, at No. 44.

WalletHub, a personal finance site, released the analysis as the country enters tax season.

“Every year during tax season, Americans are reminded of just how much of their hard-earned income isn’t theirs to keep," WalletHub writer and analyst Chip Lupo said. "Living in the right state can ease the stress of tax time, though, as taxpayers in the least expensive states pay less than half as much as those in the most expensive states.”

WalletHub calculated tax burdens by comparing state and local tax rates in the 50 states and the District of Columbia against national medians. The analysis calculated relative income-tax obligations by applying the effective income tax rates in each state and locality to the average American’s income.

The average U.S. household pays nearly $14,000 in federal income taxes. On top of that, taxpayers in the most expensive states pay more than double those in the cheapest states, according to WalletHub.

But while state income tax gets a lot of attention, the states without it don't necessarily come out on top. For example, Texas has no state income tax but a high effective real estate tax rate at 6.06 percent. Overall, Texas ranked No. 42 in the study.

Rhode Island has an effective real estate tax rate of 5.09 percent, coming at No. 39.

Here are the states paying the lowest taxes, according to WalletHub:

1. Alaska
2. Delaware
3. Wyoming
4. Idaho
5. Montana
6. Nevada
7. Colorado
8. Florida
9. South Carolina
10. District of Columbia

And here are the states paying the highest taxes, with those paying more listed first:

1. Illinois
2. New York
3. Connecticut
4. New Jersey
5. Pennsylvania
6. Kansas
7. Nebraska
8. Iowa
9. Ohio
10. Texas

Check out the full study at WalletHub.

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