These are the worst states for wealthy Americans
Wealthy taxpayers are often subject to hefty federal and state taxes, like the estate tax, which can add up to a huge financial burden.
The IRS said the average individual that owed the estate tax paid the agency $3.5 million in 2016, as reported by financial services company SmartAsset.
High-net-worth individuals in coastal states, however, often pay more in taxes, SmartAsset found after conducting an analysis of the income, property and estate tax payments across all 50 states.
Here is where the nation’s wealthiest pay the most:
1. Washington
Rich residents in Washington State are faced with the highest tax burdens in the U.S., driven in large part by its estate tax, which has a top rate of 20 percent. The exemption threshold for the estate tax in Washington is $2.193 million this year, while the top rate is applied to those worth more than $9 million.
According to SmartAsset, a household with $465,626 in income, a home value of $2.328 million and an estate worth $15 million would pay about $3.9 million in taxes.
Washington, however, does not collect a statewide personal income tax.
2. Vermont
Following Washington, the tax burden in Vermont is the second most onerous in the U.S. This state placed high in estate, income and property tax rates.
While it ranks among the top 10 states in terms of highest income tax rates, it also taxes those with estates worth more than $2.75 million at a rate of 16 percent.
3. Oregon
Oregon has a progressive income tax, ranging from 5 percent to 9.9 percent. The top rate is applied to people with incomes in excess of $250,000.
The Oregon estate tax is owed by those with estates valued at more than $1 million, at rates ranging from 10 percent to 16 percent.
SmartAsset estimates that an estate in Oregon valued at $15 million would be on the hook for $3.37 million in total tax dues.
4. Massachusetts
The estate tax in Massachusetts applies to those valued at more than $1 million, topping out at a maximum rate of 16 percent. However, the lowest rate applied is just 0.8 percent.
The Massachusetts state income tax rate is 5.1 percent.
The total tax burden in the state – for a household with $465,626 in income, a home value of $2.328 million and an estate worth $15 million – was calculated to be $3.39 million.
5. Minnesota
The estate tax in Minnesota ranges from 12 percent to 16 percent. Estates worth more than $2.4 million are subject to the tax.
The total tax burden for a household with $465,626 in income, a home value of $2.328 million and an estate worth $15 million is more than $3.38 million.
Rhode Island (6), Illinois (7), Maryland (8), New York (9) and Connecticut (10) round out the top 10 states where wealthy individuals can expect to take the biggest tax hits.
On the other hand, Wyoming is the most favorable state for wealthy residents, where there is no state-implemented estate or income tax. The property rates are also among the lowest in the country. The total tax burden in this state based on SmartAsset’s model household is about $1.64 million.