States with Highest Tax Filers’ Income Percentage: This article examines the twenty states where taxpayers pay the highest percentage of income tax. To bypass our comprehensive analysis, proceed directly to the list of five states where taxpayers remit the greatest proportion of their income in taxes.
2024 Federal Income Tax: Understanding Paycheck Withholdings
An Examination of Income Taxes in America
States in the United States have different tax burdens on their citizens. Tax registrants allocate the greatest proportion of their income to the states with the highest income taxes in the United States. Legislative modifications have been implemented within the United States tax system in 2024, resulting in income tax cuts in several states. In total, thirty-four states implemented significant tax modifications beginning on January 1, 2024. In 2024, the income tax rates of two states, including Michigan and California, will have risen from 13.30% and 4.05% to 14.40% and 4.25%, respectively. The majority of states in the United States have enacted legislation to reduce their tax burdens, which they intend to implement progressively over the next few years. Already, several jurisdictions in the United States do not impose sales tax or income tax.
According to the US Treasury, the federal government of the United States generated nearly $4.44 trillion in total revenue in 2023. Revenue was generated primarily through personal income taxes. The United States federal government has amassed $1.58 trillion in revenue thus far in fiscal year 2024, spanning from October 2023 to January 2024. Personal income taxes constitute approximately 51% of the revenue, amounting to $808 billion of the cumulative revenue thus far in 2024. In 2024, corporate income taxes contributed approximately 10.70% to the total revenue of the federal government.
Between October 2022 and January 2023, the federal government amassed $1.47 trillion in revenue, an increase compared to fiscal year 2023. Since the commencement of fiscal year 2024, the federal government has incurred expenditures amounting to approximately $2.12 trillion, as opposed to $1.93 trillion during the corresponding period of fiscal year 2023. This fiscal year’s deficit has contributed to the nation’s debt, which stands at $34.27 trillion as of February 15, 2024. The federal government borrows additional funds to cover the deficit, resulting in an additional escalation of the national debt.
The Internal Revenue Service (IRS) has reviewed an estimated sixty tax provisions for the tax year 2024. The modifications implemented in the tax year 2024 will apply to taxpayers in 2025. Beginning in 2023, the highest individual tax rate will remain at 37% for taxpayers with incomes exceeding $609,350. Additionally, married couples who file jointly are subject to a 37% maximum tax rate on incomes exceeding $731,200. Individual tax filers with an income of $11,600 or less are subject to a minimum dividend of 10%.
The following alternative tax rates apply to married couples filing jointly and individual taxpayers: 35%, 32%, 24%, 22%, and 12%. The IRS has increased the standard deduction for individual taxpayers and married individuals filing separately by $750 from tax year 2023 to $14,600 as one of the sixty tax provisions for 2024. The IRS has increased the standard deduction for married couples filing jointly by $1,500, bringing it to $29,200 as of tax year 2023. In 2024, the personal exemption will remain unchanged at zero.
Providers of Tax Services in America
Providers of tax services offer an extensive array of consulting and additional services. H&R Block, Inc. (NYSE: HRB), Intuit, Inc. (NASDAQ: INTU), and CBIZ, Inc. (NYSE: CBZ) are globally recognized as prominent providers of tax services.
H&R Block, Inc. (NYSE: HRB) is a leading United States-based tax preparation firm. H&R Block, Inc. (NYSE: HRB) disclosed the retirement of Chief Financial Officer Tony Bowen on February 6. Bowen has expressed his intention to remain with the organization until September 2024, with the expectation that the transition will be seamless. Additionally, the company disclosed its results for the second quarter of 2024 on February 6. H&R Block, Inc. (NYSE: HRB) disclosed its revenue to be $179.08 million, which was $9.63 million higher than the consensus estimate. The following are some remarks made during the Q2 2024 earnings call:
“About the results for the second quarter, work continues to meet expectations, and we reaffirmed our outlook for the fiscal year today. Revenue increased by 8% in the quarter due to a prosperous conclusion to the protracted filing season. Furthermore, we observed customers who needed immediate funds, and a significant number of them resorted to H&R Block’s Emerald Advance service, which we are optimistic about for the upcoming tax season.
CBIZ, Inc. (NYSE: CBZ) is an industry leader in advisory, financial, and insurance services. On February 7, CBIZ, Inc. (NYSE: CBZ) made public its acquisition of Erickson, Brown & Kloster, LLC (EBK), a provider of tax and accounting services. EBK provides accounting and tax services to numerous industry sectors, including medical services, wholesale, real estate, and the automotive sector. EBK documented revenue of roughly $8.9 million in 2023.
A prominent global financial technology company, Intuit Inc. (NASDAQ: INTU), possesses the following applications: Intuit Credit Karma, TurboTax, QuickBooks, and Mailchimp. Intuit Inc. (NASDAQ: INTU) announced on February 7 that it is collaborating with Khan Academy to provide educators and students with free financial education tools. Using this collaboration with Khan Academy, Intuit Inc. (NASDAQ: INTU) aims to furnish complimentary educational materials to fifty million students by the year 2030.
Presently, we shall examine the states in which taxpayers remit the greatest proportion of their income towards taxes.
To assemble a roster of the states where taxpayers remit the greatest proportion of their income as income tax, we have whittled down the twenty states with the highest personal income tax rates as of 2024. Elevated personal income tax rates have been implemented. Furthermore, we have incorporated the per capita income of states, which provides an approximation of the state’s income magnitude. The lists have been ranked according to their highest individual income tax rate. As a tiebreaker, we have utilized the per capita income of the states. The personal income tax rates were obtained from the Tax Foundation, while the US Census Bureau database was queried for the per capita income of each state. The per capita income data remained accessible until 2022.
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Additionally, ‘The District of Columbia (DC)’ does not fall under the jurisdiction of any state, despite not being a state itself. Washington, DC, is included on the list of states where taxpayers remit the greatest proportion of their income as income tax.
Twenty States with the highest percentage of income paid by taxpayers
Twenty-one Idaho
Revenue per capita in 2022: $34,919
5.80% is the personal income tax rate in 2024.
Idaho has a personal income tax rate of 5.80% and a per capita income of USD 34,919. Among the states that impose such obligations, Idaho has the 20th highest percentage of taxpayers who pay income tax.
19. Nebraska State University
Revenue Per Capita in 2022: $38,585
5.84% is the personal income tax rate in 2024.
The per capita income in Nebraska is $38,585, and the state’s individual income tax rate is 5.84%. Nebraska ranks among the states with the highest individual income tax rates.
New Mexico 18.
Revenue Per Capita in 2022: $32,667
5.90% is the personal income tax rate in 2024.
The personal income tax rate in New Mexico is 5.90%, while the per capita income is $32,667. One of the states where taxpayers contribute the greatest proportion of their income to taxes is New Mexico.
Mount 17. Montana
Revenue per capita in 2022: $37,837
5.90% is the personal income tax rate in 2024.
Montana is ranked seventeenth on the list of states with the highest percentage of income that taxpayers contribute to tax revenue. The state of Montana has a per capita income of $37,837 and a personal income tax rate of 5.90%.
Rhode Island (16)
Income Per Capita in 2022: $43,324
5.99% is the personal income tax rate in 2024.
Rhode Island residents are obligated to remit a maximum tax of 5.99% on their incomes. With a per capita income of $43,324, Rhode Island is positioned among the states with the highest percentage of income that taxpayers contribute to taxes.
South Carolina 15.
Revenue Per Capita in 2022: $36,072
Personal Income Tax Rate: 6.40 percent in 2024
The per capita income of South Carolina is $36,072, and the state’s individual income tax rate is 6.40%. The majority of taxpayers pay income tax in South Carolina, among other states.
West Virginia 14.
Revenue per capita in 2022: $31,462
Rate of Personal Income Tax (2024): 6.50%
The state of West Virginia has a per capita income of $31,462 and a personal income tax rate of 6.50%.
Thirteen Delaware
Income Per Capita in 2022: $42,180
Rate of Personal Income Tax (2024): 6.60%
The per capita income of Delaware is $42,180, and the state’s individual income tax rate is 6.60%. Delaware ranks among the states in the United States with the highest income tax rates.
Connecticut (12)
Income Per Capita in 2022: $52,034
6.99% is the personal income tax rate in 2024.
The per capita income in Connecticut is $52,034, while the state’s individual income tax rate is 6.99%. Connecticut is among the states with the greatest proportion of income tax paid by taxpayers.
Maine No. 11
Income Per Capita in 2022: $39,718
Rate of Individual Income Tax (2024): 7.15%
Maine has a personal income tax rate of 7.15% and a per capita income of $39,718. On the list of states where taxpayers pay the highest percentage of income in taxes, Maine is in eleventh place.
Wisconsin 10.
Income Per Capita in 2022: $40,130
7.65% is the personal income tax rate in 2024.
The per capita income in Wisconsin is $40,130, and the state’s individual income tax rate is 7.65%. Wisconsin ranks among the states in the United States with the highest income tax rates.
Vermont 9.
Income Per Capita in 2022: $41,680
8.75% is the personal income tax rate in 2024.
Vermont has a per capita income of $41,680 and a personal income tax rate of 8.75%. On the list of states where taxpayers pay the highest percentage of income in taxes, Vermont is ninth.
Massachusetts (8)
Income Per Capita in 2022: $53,513
9% is the personal income tax rate in 2024.
Massachusetts is positioned as the eighth state in terms of the greatest percentage of income that taxpayers contribute to taxes. Massachusetts has a per capita income of $53,513 and a personal income tax rate of 9%.
Minnesota 7.
Income Per Capita in 2022: $44,947
9.85% is the personal income tax rate in 2024.
The per capita income of Minnesota is $44,947, and the state’s individual income tax rate is 9.85%. Minnesota ranks among the states in the United States with the highest income tax rates.
The sixth Oregon
Income Per Capita in 2022: $41,805
9.90% is the personal income tax rate in 2024.
With a per capita income of $41,805, Oregon levies a 9.90% personal income tax. The majority of taxpayers pay income tax in Oregon, among other states.
