US Cities where Residents are most likely to Pay State and Local Taxes

State and Local Taxes (SALT) is one of the most frustrating issues of living in a high-tax locale. At the end of 2017, before the passing of the Tax Cuts and Jobs Act, Americans could deduct state and local taxes. Notably, this includes income and property taxes, from federal income taxes. However, under the new tax law, that deduction has been capped at $10,000. The fact is that this change will disproportionately affect people who pay high state and local taxes.

Mount Bonnell Advisors investigated this issue further by looking at local tax data to find the cities where residents are most likely to pay SALT. We compared over one hundred American cities across five factors. In particular, we looked at:

• estimated state and local income taxes owed for the average household,

• homeownership rates,

• effective state and local income tax rates,

• estimated annual property taxes, and

• effective property tax rate percent of households with incomes of at least $150,000

Our experts then compiled the findings to create a list of ten cities where residents are likely to pay more in State and Local Taxes.

San Jose, California

Here, we estimate that a resident would pay over $6,500 per year in state and local income taxes. With the inclusion of local property taxes, a homeowner pays nearly $13,000 per year in total state and local taxes. The situation is even worse because only over 32% of all households take home at least $150,000 per year.

Yonkers, New York

Unfortunately, residents in Yonkers pay both high-income taxes and property taxes. At average, a Yonkers resident can pay nearly $3,700 per year in state and local income taxes. According to our findings, New York state income taxes are quite burdensome ranging between $3,100 and $3,700.

Aurora, Illinois

According to our finding, residents in Aurora pay a relatively low amount in local and state income taxes. Home ownership rate in this city is above 64%. This implies that most residents pay property taxes, and those property taxes are expensive. Average homeowners pay over $4,600 annually in Illinois property taxes, for a rate of at least 2.5%.

Portland, Oregon

The residents of Portland are sublets of very high Oregon income taxes. Our estimates show that the average resident pays nearly 7.5% of their income to state and local income taxes.

San Francisco, California

San Francisco is a city famed for its high earners. However, the local and state government takes delight from that. The average resident can expect to pay nearly $6,700 per year in state and local income taxes. This amount is equal to about 6% of the average income.

Arlington, Virginia

Arlington city is full of residents upset with current local taxes. The average resident pays nearly $5,900 per year in state and local income taxes. This amount is over 5% of the average income. Here, an average homeowner also pays a substantial amount each year in property taxes. Data from the Census Bureau indicates that the average homeowner spends nearly $6,000 per year in Virginia property taxes.

Madison, Wisconsin

Evidently, Madison residents pay one of the highest percentages of their annual incomes to local taxes in this study. The average resident pays roughly $3,500 per year in state and local income taxes. This amount is equivalent to an effective tax rate of about 6%. In addition, homeowners do not get any break on property taxes. An average homeowner pays at least 2% of their home’s value per year in property taxes.

Fremont, California

Just as home values are high in California, so are income taxes. Our findings indicate that an average resident in Fremont would pay $8,400 per year in state and local income taxes. This value is about 7% of the area’s average income. Due to the high home values, a homeowner may pay up to $6,400 per year in California property taxes

Irvine, California

Irvine residents are subjects of similar tax conditions as to Fremont residents. Presently, the local income taxes are high. It is not a surprise for an average resident to pay over $6,100 per year in state and local income taxes. Adding an annual property tax of about $6,600 will make homeowners here feel the pinch.

Huntington Beach, California

When it comes to high California income taxes, Huntington Beach is no exemption. Here, the average resident can expect to pay over $5,000 in annual state and local income taxes. That implies an average state and local income tax rate of nearly 6%. The city has quite a few high earners who can anticipate paying more in income taxes. The Census Bureau estimates that at least 4% of households in Huntington Beach earn at least $150,000 per year.

At Mount Bonnell Advisors, we give advice about local and state tax policies. If you have any questions regarding this, do not hesitate to contact us.