The Tax Cuts and Jobs Act will reduce federal taxes for millions of taxpayers, with the average family saving more than $1,000 in 2018.
State taxes are another story.
Most states use federal definitions of income–either taxable income or adjusted gross income–as the starting point for determining how to tax their residents. And even though the federal tax overhaul lowered tax rates, increased the child tax credit and doubled the standard deduction, it expanded the amount of income that’s taxable by the feds, mainly by eliminating personal exemptions. At the state level, that could lead to taxing a larger percentage of residents’ income, without the offsetting lower rates and expanded tax credits.
To avoid an April 2019 surprise, several states enacted laws during the 2018 legislative session to preserve personal exemptions for state taxpayers. Others lowered their tax rates or increased other state deductions and credits. But lawmakers in several other states are still debating how to adjust their tax codes. That has made some high-tax states even less friendly for taxpayers.
Making matters worse: The tax overhaul capped the federal tax deduction for state and local taxes at $10,000. In states with high property taxes, the cap will effectively increase homeowners’ tax rates. Some states have sought workarounds that will allow residents to deduct a portion of their property taxes, but so far those efforts have been thwarted by the Treasury Department.
Updated for 2018, here is our list of the 10 least tax-friendly states in the U.S., where you’ll pay above-average taxes on income, property, gas and almost everything you buy.
Take a look. Have a Kleenex handy. And a calculator.