Want to save money on state and local taxes? Move to California.
It turns out the Golden State has the eighth lowest combined state and local tax rate in the United States, with relatively low property and sales taxes compensating for a relatively high state income tax.
That surprising conclusion — surprising because California is routinely criticized as being overtaxed — is based on an annual study by WalletHub, a consumer information website.
With an effective tax rate of 8.79 percent, Californians save compared to tenth-place Florida’s 8.94 percent. However, fifth-place Nevada at 7.66 percent and first-place, oil-rich Alaska at 5.64 percent are better deals.
There’s fine print to the report, however. Even though the effective rate is low, California residents’ tax burden rises because they have considerably higher incomes than the national average. As you make more money, you pay more taxes.
Adjusted for income, the typical California household pays $6,908 in state and local taxes. That’s a high number, but still less than in 16 states and the District of Columbia.