As Tax Day approaches, a new study ranks New York as the second most tax-burdened state in the country—trailing only Hawaii. The personal finance site WalletHub released its 2025 report analyzing each state’s overall tax burden, and the Empire State stands out for its sky-high individual income taxes.
How New York Taxes Stack Up
WalletHub’s analysis focused on three key components of state tax burden: property taxes, individual income taxes, and sales and excise taxes, measured as a percentage of personal income. Here’s how New York ranked:
- 2nd Overall Tax Burden – 13.56% of personal income
- 1st in Individual Income Tax Burden – 5.76%
- 4th in Property Tax Burden – 4.28%
- 22nd in Sales & Excise Tax Burden – 3.52%
While some residents may not be surprised to see New York near the top of the list, the numbers highlight just how steep the tax load is—especially for working families and high earners.
The Impact on Residents and the Economy
“It’s easy to be dismayed at tax time when you see just how much of your income you lose,” said WalletHub analyst Chip Lupo. “New York has the highest individual income tax burden in the country, which can significantly impact take-home pay.”
Still, experts caution that tax rates alone don’t tell the full story. Dr. Howard Frank of Florida International University noted that states with higher tax burdens may also offer better public services and quality of life.
“Low-tax states that are service-poor may not grow as fast as high-tax states that offer excellent schools, transportation, and infrastructure,” Frank said.
Does a High Tax Burden Hurt Growth?
The connection between taxes and economic performance isn’t always clear-cut. According to Dr. Steven Lanza of the University of Connecticut, while taxes can stifle certain economic activities, they also fund essential public services—from courts and roads to education and emergency services.
“The key is balance,” Lanza said. “Taxes fund the foundations of a functioning economy.”
That balance is particularly important for states like New York that rely heavily on income taxes. With the state facing rising costs, a changing job market, and post-pandemic recovery challenges, the question remains whether its current tax system is sustainable long-term.
Could New York Improve Its Tax Policy?
Some economists believe that diversifying tax revenue sources can help states like New York weather economic downturns. Dr. Craig Maher of the University of Nebraska at Omaha suggests that relying more on property taxes, which are less volatile than income or sales taxes, could stabilize revenues during tough times.
Additionally, tax relief strategies like income-based property tax credits could help lower-income households stay afloat as home values—and taxes—rise.
“States must find ways to balance fairness with efficiency,” said Dr. Blaine Saito of Ohio State University. “That includes providing relief to those who need it while maintaining stable funding for essential services.”
The Bottom Line for New Yorkers
New York’s heavy tax burden is nothing new, but WalletHub’s latest data confirms that residents here pay more than most Americans. Whether it’s worth it depends on how the state uses those dollars.
As debates continue over income inequality, affordability, and the role of government, one thing is clear: for New Yorkers, taxes remain a central—and costly—part of life.
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