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A Comparison of State Withholdings


When you receive your paycheck, do you ever look at the state income tax withholding and think about relocating? I think all of us, unless we're lucky enough to live in a state with no income tax (AK, FL, NV, NH, SD, TN, TX, WA, WY) do that at one time or another. But where do we go?

We decided to do a quick state income tax comparison by calculating annual withholding amounts for two "typical" employees. We realize that by comparing withholding amounts, rather than actual, calculated income tax liabilities, we are only estimating ranking among states but thought the resulting approximation would provide us some food for thought in our relocation consideration.

We first defined our "typical" employees:

(1) Ms. Red is single, has no dependents, claims 1 exemption, does not itemize deductions, and makes $24,000 per year.

(2) Mr. Green is married (and his wife has no income), has two kids, claims 4 exemptions and makes $60,000 per year.

We do not account for any local taxes such as those required in Pennsylvania and Ohio.  No disability withholding is taken into consideration either.  Examples of this are California, New York and Hawaii.

For the example, we visited Paycheck City and set up our two employees in the "Paycheck Calculator". Finally, we ran a payroll for each employee for each state and tabulated the results (shown below).

Tax year 2013 comparison

 

State

Ms. Red

Single- 1

Mr. Green

Married-4

State
Oregon $1,554.00       $3,571.94      Wisconsin
Hawaii $1,271.23 $3,411.00 Oregon
Illinois $1,201.00 $3,331.00 Washington D.C.
Minnesota $958.00 $3,324.00 North Carolina
North Carolina $1,168.00 $3,310.00 Arkansas
Wisconsin $1,154.30 $3,271.22 Hawaii

Washington D.C.

$1,140.00 $3,272.00 Georgia
Georgia $1,112.00 $3,079.12 Kentucky
Idaho $1,098.00 $3,074.00 South Carolina
Kentucky  $1,051.12 $3,024.00 Virginia
South Carolina $1,051.00 $3,004.00 Illinois
Massachusetts $1,020.39 $2,975.75 Iowa
Utah $981.00 $2,934.00 Connecticut
Virginia $951.00 $2,793.10 New York
Mississippi $936.00 $2,761.00 Massachusetts
Montana $904.00 $2,722.00 Montana
Arkansas $880.00 $2,671.00 Utah
Maryland $893.00 $2,624.00 Mississippi
Maine $757.00 $2,295.00 West Virginia
Rhode Island $862.50 $2,347.88 Alabama
Alabama $859.06 $2,239.00 Idaho
Michigan $852.13 $2,052.58 Nebraska
Iowa $846.69 $2,071.00 Louisiana
Colorado $829.00 $2,147.00 Maryland
Indiana $817.00 $2,142.75 Delaware
West Virginia $780.00 $2,086.00 Minnesota
Kansas $634.00 $2,100.00 Rhode Island
Nebraska $674.81 $2,044.00 Indiana
New York $722.50 $1,732.00 Maine
Pennsylvania $736.80 $1,635.00 Kansas
Oklahoma $677.00 $1,976.00 Missouri
Delaware $670.00 $1,925.48 Ohio
Arizona $649.00 $1,907.00 Oklahoma
Vermont $619.48 $1,878.50 Michigan
New Mexico $597.60 $1,842.00 Pennsylvania
Missouri $589.00 $1,771.00 New Jersey
Louisiana $593.50 $1,671.00 Colorado
Ohio $511.04 $1,620.00 Arizona
California $417.12 $1,541.27 California
New Jersey $360.00 $1,360.90 New Mexico
Connecticut $341.00 $1,292.20 Vermont
North Dakota $242.00 $519.00 North Dakota
Alaska $0 $0 Alaska
Florida $0 $0 Florida
Nevada $0 $0 Nevada
New Hampshire $0 $0

New Hampshire

South Dakota $0 $0 South Dakota
Tennessee $0 $0 Tennessee
Texas $0 $0 Texas
Washington $0 $0 Washington
Wyoming $0 $0 Wyoming

 

Again, because our comparison is based upon withholdings (which may or may not take into account excess itemized deduction amounts) and not actual liabilities, take the results with a grain of salt. But the next time you think of relocating, you might have some idea where to start!


Payroll-Taxes.com is a free online resource featuring a compilation of research, collaboration and web tools for use by payroll professionals and more including information about payroll tax articles, federal tax information and state tax information.

 
FYI...  All our calculators are able to address Supplemental withholding rates. Note that Supplemental is an option in the Federal Filing Status field.