Who Pays? State-by-State Data

ITEP Tax Inequality Index

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Forty-four states’ tax systems exacerbate income inequality. When the lowest-income households pay the greatest proportion of their income in state and local taxes, gaps between the most affluent and everyone else grow larger.

The ITEP Tax Inequality Index measures the effects of each state’s tax system on income inequality by assessing the impact state tax policy has on the post-tax incomes of taxpayers at different income levels. Essentially, it answers the following question: Are incomes more, or less, equal after state taxes than before?

If high-income taxpayers are left with a higher percentage of their pre-tax income to spend on their day-to-day living and to save for the future than low- and middle-income taxpayers, the tax system is regressive and receives a negative Tax Inequality Index value. This indicates that the income inequality that existed before the levying of state and local taxes has been made worse by those taxes.

ITEP Tax Inequality Index

States in order of rank from most to least regressive

1 Florida 14 Indiana 27 Wisconsin 40 Delaware
2 Washington 15 Ohio 28 West Virginia 41 Maryland
3 Tennessee 16 Oklahoma 29 Utah 42 Oregon
4 Pennsylvania 17 Kentucky 30 Nebraska 43 New Mexico
5 Nevada 18 New Hampshire 31 Missouri 44 Massachusetts
6 South Dakota 19 Mississippi 32 Rhode Island 45 Maine
7 Texas 20 Alaska 33 Georgia 46 New Jersey
8 Illinois 21 Connecticut 34 South Carolina 47 California
9 Arkansas 22 Hawaiʻi 35 Michigan 48 New York
10 Louisiana 23 Iowa 36 Idaho 49 Vermont
11 Wyoming 24 North Carolina 37 Virginia 50 Minnesota
12 Alabama 25 North Dakota 38 Montana 51 District of Columbia
13 Arizona 26 Kansas 39 Colorado

Note: See Appendix B for detailed ITEP Tax Inequality Index and Methodology for more information.

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