CA Has 11th Lowest Tax Rate In The Country

Friday, March 12, 2021

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If you feel as though you have been working harder than you have ever been, but your paychecks are somehow lighter, it's not your imagination or some coronavirus-fueled fever dream.

WalletHub released its annual Taxpayer Survey, a snapshot of each state's taxation obligations. 

The Golden State ranked 11th, just behind Tennesee, in the category of Overall State & Local Tax Rate.

WalletHub comes up with the scores by factoring in a variety of tax obligations, none of which were anything California could really shout about: Tax Rates in California (1=Lowest; 25=Average):

  • 11th – Overall Effective State & Local Tax Rate
  • 13th – Income Tax
  • 16th – Real-Estate Tax
  • 27th – Vehicle Property Tax
  • 33rd – Sales & Excise Taxes

If you or your bank account need a change of scenery this tax season, the survey suggests that Montana, Delaware, and Alaska are lovely this time of year. Those states have the lowest overall tax rates.

But if you do decide to pack up the van and head to The Last Frontier State, don't expect much company.

"There will never be an influx of retirees to Alaska, even though they do not have an income tax.," said Richard Pomp, relocation expert and law professor at the University of Connecticut School of Law.

"My clients take many things into account; the older ones are especially concerned about where their grandchildren are. They want easy access to visit them and to have them visit, which for some means the nearest airport should be a major airport and not a backwater one. The older ones also take into account access to first-rate doctors and hospitals, as well as the cost of living, cultural opportunities, and access to what they value, such as the ocean, or lakes and rivers, or mountains," Pomp said.

You're not happy come tax time, sure, and WalletHub's survey says you have a boatload of company. Their data indicates that 74 percent of people say the government has not handled their tax dollars wisely during the COVID-19 pandemic, and 222 million Americans think the government does not spend taxes wisely, period.

In fact, 38 percent of people surveyed would move to a different country for a tax-free future, and 27 percent would get an "IRS" tattoo if it meant they no longer had to pay taxes.

If you find yourself at the end of your financial rope this April, don't despair: there are always options.

"If you can't afford to pay your tax bill, the first thing you should do is still file a return, because that can help you avoid penalties while you figure out how you're going to pay. If your money issues are temporary, you may want to consider just waiting for a bill or asking for a 120-day extension," said Jill Gonzalez, WalletHub analyst. "People who need a longer amount of time to pay have several other options, such as setting up an installment agreement with the IRS, paying with a credit card or getting a personal loan."

If all this talk about how much you're emptying your pockets for the government this time of year is making you a little jittery, don't even think about it: California taxes cigarettes to the moon, as does New York and Washington D.C.

Category: Economic News, California