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Making direct comparisons among state income taxes is facile without acknowledging the marginalized rates. Do California and Minnesota have high tax rates? Yes, but only for high income individuals. California's highest bracket doesn't kick in until you make over $1MM and Minnesota doesn't until you make over $275k. Iowa's top tax bracket begins at $75k as an example. Someone making $80k per year would pay higher income taxes in Iowa than in Minnesota or California yet strangely the internet isn't full of people ranting about the tax rates in Iowa. If you compare effective tax rates versus median income, California and Minnesota aren't even in the top 20 most expensive tax states.


It's hard to compare because it depends on you and policy.

Unless you have unusually high W-2 income, expensive or large property, etc most of the differences between states are pretty marginal when you net everything out.

Many of the "low tax" states have a catch, whether it be sales tax on food, school funding, high property taxes, local governance that encourages HOA, etc. At the end of the day, it doesn't really matter too much. People complaining about taxes is background radiation.


On the contrary, it really matters in some contexts, like for retirement purposes. Taxation of retirement income can really impact retirees.

Tax policy can also make a huge difference for whether rebalancing a portfolio is even viable.


People in Iowa complain about their tax rates. If you don't live in Iowa, you don't hear about it. Iowa's population is too small to make the news for the most part (except at caucus time, but state taxes are not an issue in the national elections).


I live in Iowa. I've literally heard more people here complain about "Liberal California" tax rates than Iowa tax rates. Generally people just have a poor understanding of how taxation actually works. Most Iowa residents probably have no idea that they pay a higher tax rate they they would in California.


Exactly. I live in New York, which is definatly a high tax state. 51% of income tax revenues come from people making >$700k, and much of that money is transferred to people making <$32k. With refundable credits for children and property taxes, those folks have a near-zero or negative income tax rate.




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