New York residents pay some of the highest state and local taxes in the country, according to a new national analysis comparing tax burdens across all 50 states and Washington, D.C.
The study by WalletHub found New York ranks 50th overall for tax burden, meaning only Illinois residents pay a higher share of their income in state and local taxes. The findings come as millions of Americans prepare to file their federal returns ahead of the April 15 tax deadline.
For many households, the difference between states can mean thousands of dollars each year.
New York’s tax burden far above national average
According to the report, the effective total state and local tax rate in New York is 14.95%, significantly higher than the national average of 11.02%.
For a median U.S. household earning about $81,211 per year, that translates to roughly $12,143 in state and local taxes annually in New York.
That tax burden is 35.75% higher than the national average, placing New York among the most expensive states for taxpayers.
The analysis looked at four major categories of taxation:
- Real estate taxes
- Income taxes
- Sales and excise taxes
- Vehicle property taxes
Together, those costs create the overall tax burden residents face depending on where they live.
Property and income taxes drive New York’s ranking
New York’s ranking is largely driven by high property and income taxes compared to much of the country.
WalletHub found the effective real estate tax rate in New York equates to about $5,167 annually for a median household, while income taxes account for another $3,086 on average.
Sales and excise taxes add about $3,890 per year.
When combined, those taxes place New York well above most states, particularly in the Northeast where several states rank near the top for tax burden.
Northeast dominates list of highest-tax states
New York is not alone in the region when it comes to high taxes.
Several neighboring states also ranked near the top:
- Connecticut: No. 49
- Pennsylvania: No. 48
- New Jersey: No. 47
Only Illinois, with an effective tax rate of 16.87%, ranked worse than New York overall.
Meanwhile, states in the South and West generally ranked lower for tax burden.
States with the lowest taxes
The study found the lowest-tax states include:
- Alaska
- Delaware
- Wyoming
- Idaho
- Montana
Residents in those states pay less than half the state and local taxes paid by residents of the highest-tax states.
Why taxes vary so widely by state
Researchers say a state’s tax burden is not determined by income taxes alone.
Some states that advertise no income tax still rank in the middle of the pack because they rely heavily on other taxes such as property taxes or sales taxes.
For example:
- Texas has no income tax but relatively high property taxes.
- Washington also has no income tax but relies heavily on sales and excise taxes.
That means the overall tax burden can still be significant even in states with low or zero income tax.
Taxes influence where Americans choose to live
Experts say tax policy can play a major role in economic growth and migration trends.
High-tax states often face pressure from residents and businesses considering relocation to states with lower costs. At the same time, supporters argue higher taxes can fund public services such as education, infrastructure and healthcare.
With tax season underway, the WalletHub analysis highlights just how dramatically tax burdens can vary depending on where Americans live.
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