Worst states for taxes 2011

New York, California and Connecticut rank in the bottom five for some of the major factors considered in a state tax climate study. Therefore, it is no surprise that these states are on the list of the worst states for taxes in the nation for 2011.

 

States in the worst states for taxes list have many similarities - they almost always have "complex, non-neutral taxes with comparatively high rates," according to the Tax Foundation, the authors of the study.

The organization's study is conducted to compile its annual 2011 State Business Tax Climate Index.

New York is at the bottom because of its ranking in the following categories: worst individual income tax index, fifteenth worst sales tax, and ninth worst property tax index, according to the Tax Foundation.

The 10 worst states for taxes are:

50. New York 45. Iowa
49. California 44. Maryland
48. New Jersey 43. Minnesota
47. Connecticut 42. Rhode Island
46. Ohio 41. North Carolina

[Best states for taxes]

New York and California each dropped one spot to claim the worst and second worst state for taxes, while New Jersey moved up 2 spots after 3 years as the worst state for taxes in the country. From last year's list (2010) North Carolina and Connecticut moved down to the bottom 10 this year, while Wisconsin and Vermont moved out of the list of worst states for taxes.

Connecticut's fall was due to adding a "millionaires" bracket in its income tax, according to the Tax Foundation. Connecticut will tax income over $500,000 at 6.5%, instead of the previous 5%. Connecticut was 38th in the list last year and fell to fourth worst this year.

New York, California and Maryland are ranked in the bottom three respectively for personal taxes, California is the second worst for sales taxes, while Connecticut and New Jersey are ranked as bottom 2 and 3 in property taxes.

The 10 worst states for taxes and their tax rates

  • New York corporate tax 7.1%, top individual income tax 8.97%, state sales tax 4%.
  • California corporate tax 8.84%, top individual income tax brackets 9.55% over $47,000 and 10.55 % over $1 million, state sales tax 8.25%.
  • New Jersey top corporate tax 9.36%, top individual income tax 8.97%, state sales tax 7%.
  • Connecticut corporate tax 7.5%, top individual income taxes 5% over 10,000 6.5% over $500,000, state sales tax 5%.
  • Ohio top corporate tax 3.4% top individual income tax 5.925%, state sales tax 5.5%.
  • Iowa top corporate tax 12%, top individual income tax 8.98% over $64,000, state sales tax 6%.
  • Maryland corporate tax 8.25%, top individual income tax 6.25%, state sales tax 6%.
  • Minnesota corporate tax 9.8%, individual income tax starts at 5% top rate 7.85%, state sales tax 6.88%.
  • Rhode Island corporate tax 9%, top individual income tax 9.9%, state sales tax 7%.
  • North Carolina corporate tax 6.9%, top individual income tax 7.75%, state sales tax 5.75%.

(Please check with appropriate state tax authority for current tax rates)

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New York worst state for taxes