An annual study by WalletHub has found once again that California is a relatively low-tax state.
Despite heated rhetoric from Sacramento to Washington, the effective rate for all state and local taxes combined on a California household with $58,000 in annual income is a relatively low 8.54 percent.
California has the 12th lowest tax rate by this measure. Popular tax havens like Nevada (5th at 8.20%) and Florida (7th at 8.44%) have only marginally lower taxes. And it’s actually much more expensive to live in Texas, with combined taxes at 12.71% for a ranking of 41st place.
The WalletHub figures combine state and local property taxes, vehicle registration fees, income taxes, sales taxes and excise taxes, and then calculate their combined cost for a household at the median U.S. income.
One reason California does well in a ranking like this is Proposition 13, which has limited property tax increases. Another reason is that the numbers are based on national median income and property values. Californians make more money and have more expensive homes, increasing the amount of tax they owe.
“Low income taxes don’t always mean low taxes as a whole,” noted WalletHub, a Washington, DC-based financial services company, in its report.
“While the state of Washington’s citizens don’t pay income tax, they still end up spending over 8% of their annual income on sales and excise taxes,” said the report’s authors. “Texas residents also don’t pay income tax, but spend 1.83% of their income on real estate taxes, one of the highest rates in the country. Compare these to California, where residents owe almost 5% of their income in sales and excise taxes, and just 0.77% in real estate tax.”