What does the east coast city of Providence, Rhode Island, have in common with the urban giant of Los Angeles, California?
Although they are very different, both cities are among the 1o U.S. cities that had the highest tax burdens in 2010. While federal tax rates stay the same regardless of where the taxpayer lives, the same is not true for state and local taxes. The tax burden of taxpayers living in different parts of the United States varies due to differences in:
- State and local income taxes
- Property taxes
- Sales taxes
- Automobile taxes
Based on a recent study of 51 major metropolitan areas, the list of the ten most expensive cities by taxes for a typical family of three were (from lowest to highest):
#10 Boston, MA
The city of Boston is known as an intellectual center. It is home to many public and private colleges. The 617,594 residents that call Boston home enjoy both the coastal climate and the sharp variances between the seasons.
10.5% is the percentage of their income that a family of three likely spent on various state and local taxes (including sales tax) in 2010. That total tax bill comes to $5,266.
#9 Milwaukee, WI
Milwaukee was first settled by French and French Canadian traders, but today it is known as home to some of the world’s largest breweries. In 2010, 594,833 people lived in the city of Milwaukee.
A family of three living in Milwaukee in 2010 likely spent $5,407 on taxes, or 10.8% of their total annual income.
# 8 Los Angeles, CA
The City of Angels is known worldwide as a major economic and cultural center. The nearly 3.8 million residents who live in Los Angeles also enjoy a subtropical climate.
Taxes are high in Los Angeles, though. Last year an average family of three paid $5,409 in various state and local taxes, or 10.8% of their total income.
#7 Providence, RI
The city of Providence was one of the first industrialized cities in the United States. Today, it is still one of the largest manufacturing centers for jewelry and silverware. In 2010, 178,042 people lived within the city of Providence.
Residents of Providence face fairly high local and state taxes. In 2010, a family of three paid over $5,600, or 11.3% of their annual income, in taxes.
#6 Columbus, OH
This city is the capital of Ohio, named by BusinessWeek magazine as one of the best places to raise a family in 2009. It is also home to 14 colleges and universities, both public and private. 787,033 people lived here in 2010.
In 2010, an average family of three paid close to $5,800 in state and local taxes. That would be 11.6% of their annual income.
# 5 Newark, NJ
Over 270,000 people call Newark home. Newark was once a hub of manufacturing and industry. Today, it is undergoing a renaissance. Recently, Newark’s hockey team, the New Jersey Devils, got a new stadium. Other renovations, such as an upgrade to the library, are planned.
A family of three likely spent 11.9% of their income, or $5,957, in state and local taxes in 2010.
#4 Detroit, MI
The automotive industry and Motown put this city on the map. The city of Detroit has a population 713,777 according to 2010 census figures.
Detroit taxpayers also pay a significant portion of their income in state and local taxes. In 2010, a family of three earning probably paid close to $6,000 ($5,960), or 11.9% of their income, in taxes.
#3 Louisville, KY
Louisville is famed for its many beautiful parks. The city was founded in 1778, just two years after the U.S. Declaration of Independence was signed. In 2010, the Louisville area was home to 741,096 people.
Unfortunately, in 2010 Louisville taxpayers also enjoyed one of the highest state and local tax burdens in the nation. A typical family of three likely spent 12.6% of their income on state and local taxes. That is over $6,000.
#2 Philadelphia, PA
Besides being known for its part in the nation’s history including being the home of the Liberty Bell and Ben Franklin, Philadelphia was home to over 1.5 million people in 2010. It is one of the earliest U.S. cities, with a founding date of 1701.
In addition to its rich history, taxpayers in Philadelphia also enjoy one of the highest tax burdens in the nation. In 2010, a typical family of three would have paid $6,928, or nearly 14% of their income in various state and local taxes.
#1 Bridgeport, CT
This city has the highest population of any city in the state of Connecticut, with approximately 144,229 people. The city is located along the Long Island Sound and is one of the outlying suburbs of New York City.
While it may not be the largest city in the United States, citizens here have the highest tax burden compared to other major metropolitan areas. In 2010, an average family three likely paid 21.4% of the income, or $10,708 in various state and local taxes.
Of course, the news is not all bad for residents of these states. Some state and local taxes can be deducted from federal taxes.
For taxpayers who must pay state taxes, H&R Block can help file state returns as well as federal returns.