Here’s how long Washington residents work to pay off taxes – and how other states compare
Washington’s tax burden is higher than most states — but some do have it worse.
That’s the finding of a report from the nonpartisan Tax Foundation. It assigns each state a “Tax Freedom Day,” the day when residents of a state have collectively earned enough money to pay their total tax bill for the year.
Washington residents in theory had to work until April 20 last year to pay those bills, four days longer than the national average. The state is in a 38th place tie for highest tax burden, along with Maine and California.
New York has the biggest tax bills. Its residents worked until May 3 to pay their taxes. Alaska is the least taxed state; its residents were done by March 25.
Of the 110 days Washington residents worked last year to pay taxes, 77 were for federal tax collections, including income, Social Security and Medicare taxes, while 33 were for state and local taxes.
Americans as a whole worked 68 days to pay federal taxes and 37 to pay state and local taxes.
The Tax Freedom Day estimate measures all taxes paid in 2019, including individual income taxes that people are now filing on their tax returns with the Internal Revenue Service before the April 15 deadline.
“People in higher tax states tend to have later Tax Freedom Days, meaning they have to work longer before they collectively earn enough money to cover their federal, state, and local taxes,” explained Janelle Cammenga, Tax Foundation policy analyst.
Income tax burdens are higher where average incomes are higher, like in Washington. In 2018, the latest data available, Washington ranked seventh in per capita income at $62,026, trailing Connecticut, Massachusetts, New York, New Jersey, California and Maryland.
And since federal tax rates, and many state tax rates, are progressive, the more one earns, the higher the marginal tax rate. In 2019 – taxes that are due April 15 – those married and filing jointly earning $19,401 to $78,950 pay at a 12% rate. That jumps to 22% for those making $78,951 to $168,400. Eventually the rate becomes 37% for those earning $612,350 or more
Though Washington has no personal state income tax, other state taxes tended to be higher. Its combined state and local sales taxes were the nation’s fifth highest. Its gasoline tax ranked fourth.
It’s those northeastern states that keep Washington from reaching the top of the tax burden list. Not only do incomes tend to be higher in the Northeast and New England, but they’ve been hit hard by changes in the 2017 tax law that limited state and local income tax deductions.
Nationally, the average Tax Freedom Day was April 16, 2019, the same as in 2018. That’s earlier than past years – in 2015, it was April 24 and has moved steadily sooner ever since.
This story was originally published February 24, 2020 at 5:00 AM with the headline "Here’s how long Washington residents work to pay off taxes – and how other states compare."
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