in

15 States Where Low-Income Families Face Heavy Tax Burdens

Mikhail Nilov/Pexels

Taxes may seem like an equalizer, but in some states, low-income families shoulder a disproportionate share of the burden. While tax structures vary across the country, specific policies leave those earning the least paying the most relative to their income. Here are 15 states where this imbalance hits hardest.

Florida

Do Ramey Logan/Wikimedia Commons

Without a state income tax, Florida seems appealing at first glance. However, high sales and property taxes hit disadvantaged households the hardest. As they spend a more significant percentage of their earnings on daily necessities, these families contribute a disproportionate amount to the state’s tax revenue.

Washington

Architect of the Capitol’s Office/Wikimedia Commons

Washington state is often considered one of the worst for low-income residents because of its heavy reliance on sales taxes. Without a state income tax, working-class citizens pay more in proportion to their earnings, especially when buying essential goods and services. This means these financially struggling families have less disposable income after taxes.

Texas

Jouaienttoi/Wikipedia

Known for its no-income tax policy, Texas seems like a haven for many. But the reality is more complex; low-income families often bear the brunt of property and sales taxes. The state has exponentially rising property values in the country and homeowners can feel squeezed, while sales taxes hit those who can least afford it the hardest. 

Hawaii

Eric Tessmer/Wikimedia Commons

Despite its tropical allure, Hawaii ranks among the most expensive places to live, compounded by high taxes. The general excise tax functions similarly to a sales tax, impacting families at all income levels. However, those with limited financial resources bear the impact, as soaring living costs and taxation make daily expenses increasingly challenging to manage.

New York

Ivan2010/Wikimedia Commons

With a progressive income tax system, New York often taxes its wealthiest residents heavily. However, low-income families feel the effects of high sales taxes and property taxes as well. These burdens can erode any financial gains made through public assistance programs, leading to a cycle of economic struggle.

Wyoming

Mlewis2005/Wikimedia Commons

Wyoming’s tax structure, heavily dependent on sales and excise taxes, burdens its low-income residents. These families spend a significant portion of their earnings on daily necessities, and this means they bear a larger share of the tax load. Meanwhile, wealthier households benefit from the absence of income taxes.

New Mexico

Ron Reiring/Wikimedia Commons

High sales taxes in New Mexico result in low earners paying a disproportionate amount of their earnings on everyday items. The lack of progressive tax relief measures compounds the issue and it forces families to allocate more of their limited income to taxes. For many, this creates a cycle of financial hardship that’s difficult to break.

Indiana

tpsdave/Wikipedia

Purchasing essentials like groceries and gas quickly becomes costly for financially struggling households in Indiana, where sales taxes are a more significant source of revenue. While the state’s property taxes may not be as high as others, the combined effect of taxes on consumption makes it harder for those earning less to save or get ahead.

Arizona

Melikamp/Wikipedia

In Arizona, the tax system relies heavily on consumption that causes some of the highest sales taxes in the nation. This tax policy affects low-income families, who allocate a larger share of their income to everyday purchases, which means less money for savings and essentials. Meanwhile, property taxes remain more moderate, but sales taxes hit the most. 

Tennessee

Ichabod/Wikimedia Commons

As a state that recently eliminated its tax on interest and dividends, only the wealthier residents benefit, while economically disadvantaged residents haven’t seen the same relief. Tennessee sales tax, one of the highest in the country, is the primary tax source and disproportionately affects low-income people. Low-income families here can pay up to 10% of their tax earnings.

Pennsylvania

Popscreenshot/Wikimedia Commons

A flat income tax system in Pennsylvania means low-paid individuals are taxed at the same rate as higher-income households. Sales and property taxes further contribute to the burden, making it difficult for those struggling to stay afloat. Pennsylvania’s local tax structure also adds to the complexity, with school and municipal taxes increasing costs even more. 

Mississippi

Dudemanfellabra/Wikipedia

This state’s tax system is among the most regressive in the country. High sales taxes, combined with relatively low-income taxes, disproportionately impact lower-income families. The state’s reliance on consumption taxes takes a significant bite out of household budgets. With essential items taxed, families often pay more to get by. 

Louisiana

Stuart Adams, stuadams.com/Wikimedia Commons

Louisiana’s vibrant culture is often overshadowed by its complex tax system, which can be particularly burdensome for low-income families. Everyday essentials become a significant financial strain for those living paycheck to paycheck. Property taxes may vary, but they further contribute to the economic challenges many low-income households face.

South Dakota

Gary Chancey, Black Hills National Forest/Wikimedia Commons

Although South Dakota’s appeal lies in its lack of income tax, this benefit has a downside: high sales and excise taxes. Poorer families often pay an incommensurate share of their income on these taxes, especially for essentials. Without progressive tax policies, the poorest households carry a heavier tax burden in the state.

Nevada

Trevor Bexon/Wikipedia

While Nevada brags no state income tax, high sales and consumption taxes challenge low-income homes. They often spend much of their limited resources on taxable goods and services. Such a system results in a heavier financial burden compared to wealthier residents who pay less in taxes.

Written by Castillo Rancon

Leave a Reply

Your email address will not be published. Required fields are marked *