Connecticut is the nation’s second least tax-friendly state, according to personal finance magazine Kiplinger.
The seventh annual list of most and least tax-friendly states by the Washington, D.C.-based publisher ranks states according to the sum of income, sales, property and gas taxes paid by a hypothetical married couple.Â
Based on this formula, Kiplinger says Connecticut’s tax burden is worse than New York (No. 48), Wisconsin (No. 47), New Jersey (No. 46), Nebraska (No. 45) and Pennsylvania (No. 44), respectively. Illinois ranked as the least tax-friendly state.
The most tax-friendly states in order are Wyoming, Nevada, Tennessee, Florida and Alaska.
The poor ranking, which has been consistent in recent years, is partly due to Connecticut having the country’s fourth-highest property tax rate, Kiplinger said. The state’s gift and luxury taxes also dragged down the ranking. Â
[Read more: Quietly, CT makes derided ‘death’ tax friendlier to state’s wealthiest residents]
The average property tax for a $400,000 home in Connecticut is $8,456 per year. Meantime, residents in high-income areas such as Fairfield County on average pay over $10,000 in property taxes a year, which means their federal tax deductions for state and local taxes, as mandated by the Tax Cuts and Jobs Act of 2017, have been curtailed.
A positive for Connecticut’s tax picture is that local taxes are not added to the state’s 6.35 percent sales tax. However, certain expensive items, including jewelry valued at more than $5,000, and clothing, footwear and accessories priced at over $1,000 per item, are taxed at 7.75 percent.
The state’s income tax ranges from 3 percent to 6.99 percent; the state charges 42 cents on every gallon of gasoline; so-called “sin taxes” on cigarettes and little cigars are $4.35 per park and chewing and smoking tobacco are taxed at 50 percent of the wholesale price.
Estates valued at more than $3.6 million in fiscal year 2019 are subject to estate tax, with progressive tax rates ranging from 7.2 percent to 12 percent. Connecticut is the only state with a gift tax on assets you give away before dying
New state laws effective Tuesday place higher taxes and fees on everyday consumer purchases (like prepared foods) and digital services (on digital downloads like ebooks and streaming services such as Netflix and Spotify).
View Kiplinger’s annual list of most and least tax-friendly states here
