Uncategorized

Mississippi tax rate among highest in the nation

Americans are facing the annual Tax Day, which this year is April 18, when income taxes at the federal and state level are due.  

While the average American household pays nearly $11,000 in federal income taxes annually, but there’s a difference between the states in the local and state obligations.  

WalletHub.com has come out with a ranking of the states and District of Columbia for its tax obligation. The results are not favorable for the state of Mississippi as the ranking puts the Magnolia State in the bottom half of the states and DC.   

Low income taxes don’t always mean low taxes as a whole, with Washington state being an example. That state has no state income tax but residents spend more than eight percent of their annual income on sales and excise taxes.  

WalletHub compared state and local tax rates in the 50 states and the District of Columbia against national medians. To illustrate, WalletHub calculated relative income-tax obligations by applying the effective income tax rates in each state and locality to the average American’s income.

In Mississippi, the state ranks 37th among the states, according to the WalletHub report.  The effective total state and local tax rate on a median U.S. household is 11.93 percent. Annual state and local taxes on a median U.S. household in the state is $8,290. 

The difference between the state and U.S. averages is 10.79 percent higher. The annual state and local taxes on a median state household is $5,834. 

Neighboring states do better than Mississippi in this report. Tennessee is ranked 10th, Alabama is 14th, Louisiana is 25th and Arkansas ranks 29th in the country.  

One thing in Mississippi’s favor is the state has the second-lowest gas tax in the country, second to Alaska. 

In order to identify the states with the highest and lowest tax rates, WalletHub compared the 50 states and the District of Columbia across four types of taxation:

  • Real-Estate Tax: WalletHub first divided the “Median Real-Estate Tax Amount Paid” by the “Median Home Price” in each state. WalletHub then applied the resulting rates to a house worth $244,900, the median value for a home in the U.S., in order to obtain the dollar amount paid as real-estate tax per household.
  • Vehicle Property Tax: WalletHub examined data for cities and counties collectively accounting for at least 50 percent of the state’s population and extrapolated this to the state level using weighted averages based on population size. For each state, WalletHub assumed all residents own the same car: a Toyota Camry LE four-door sedan, 2022’s highest-selling car, valued at $26,220, as of February 2023.
  • Income Tax: WalletHub used the percentage of income (middle income rate) spent on income tax from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $69,508.
  • Sales & Excise Tax: WalletHub used the percentage of income (middle income rate) spent on sales and excise taxes from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $69,508.

You can read the complete report from WalletHub with more information about taxes here

Leave a Reply

Your email address will not be published. Required fields are marked *