Regressive State Taxes

Following is a national breakdown showing state and local taxes imposed on Non-Elderly Residents, as Shares of 2010 income.

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If you examine the states with they most regressive taxes they share some common characteristics: 1. Four of them to not have personal income taxes, 2. Five state have personal income taxes but structure them to be less progressive; Pennsylvania, Illinois and Indiana use a flat rate taxing all income levels the same. Arizona and Alabama have graduated taxes but there is little difference between the top and bottom earners; 3. Five of them Washington, South Dakota, Tennessee, Arizona, and Alabama rely heavily on regressive sales taxes and excise taxes – about half their tax revenue in contrast to other states at 34%.

The most regressive tax states are: Washington, Florida, South Dakota, Illinois, Texas, Tennessee, Arizona, Pennsylvania, Indiana and Alabama.

The least regressive state and local tax systems are the opposite of the regressive states. They have highly progressive income taxes and rely less on sales and excise taxes. The less regressive states are: Delaware, District of Columbia, New York, Oregon and Vermont.