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Kiplinger's Tax Map for Middle-Class Families: About Our Methodology

·3 min read

Our tax maps and related tax content include data from a wide range of sources. To generate our rankings, we created a metric to compare the tax burden for a hypothetical middle-class family in all 50 states and the District of Columbia.

Kiplinger Tax Map, 2019

Data Sources:

Income Taxes – Our income tax information comes from each state's tax agency. Income tax forms and instructions were also used. See more about how we calculated the income tax for our hypothetical family below under "Ranking method."

Property Taxes – The median property tax rate is based on the median property taxes paid and the median home value in each state for 2019 (the most recent year available). The data comes from the U.S. Census Bureau.

Sales Taxes – State sales tax rates are from each state's tax agency. We also cite the Tax Foundation's figure for average combined sales tax, which is a population-weighted average of state and local sales taxes. In states that let local governments add sales taxes, this gives an estimate of what most people in a given state actually pay, as those rates can vary widely.

Motor Fuel Taxes – The American Petroleum Institute prepares semi-annual reports of state motor fuel tax rates. We used July 2020 data but made several updates to reflect new rates effective since July 1, 2020. Values include excise taxes, sales taxes (when applicable) and a variety of fees that states impose.

Sin Taxes – Information about "sin taxes" on tobacco products, alcoholic beverages, and marijuana comes from a variety of sources, including state tax agencies, Federation of Tax Administrators, Campaign for Tobacco-Free Kids, and Distilled Spirits Council of the United States.

Annual Car Taxes and Fees – We used information from state tax agencies and state motor vehicle departments for annual car taxes and fees.

Estate and Inheritance Taxes – Data from each state tax agency was used for estate and inheritance tax information.

Ranking Method:

The "tax-friendliness" of a state depends on the sum of income, sales and property taxes paid by our hypothetical middle-class family.

To determine the income tax component, we prepared returns for a married couple with two dependent children, an earned income of $77,000, long-term capital gains of $1,500, qualified dividends of $1,000, and taxable interest of $500. They had $4,500 in state income taxes withheld from their wages. They also paid $3,000 in real estate taxes, paid $2,800 in mortgage interest, and donated $2,300 (cash and property) to charity. Since some states have local income taxes, we domiciled our filers in each state's capital, from Juneau to Cheyenne. We calculated these 2019 returns using software from Credit Karma.

How much they paid in sales taxes was calculated using the IRS' Sales Tax Calculator, which is localized to zip code. To determine those, we used Zillow to determine zip codes with housing inventory close to our sample assessed value.

How much the hypothetical family paid (and deducted on their income tax return) in property taxes was calculated by assuming a residence with $300,000 assessed value and then applying each state's median property tax rate to that amount.