South Dakota’s low-tax environment not only attracts business, but benefits its residents as well. Just released, The Tax Foundation found South Dakota to have the 3rd lowest State-Local Tax Burden in the nation for FY 2011.
7.1% of the average South Dakotan’s income is paid to state and local taxing authorities vs the U.S. average of 9.8%. The breakdown:
- $4,217 of annual earnings in the Nation are paid for state and local taxes
- $3,052 of annual earnings in South Dakota are paid for state and local taxes
- Of South Dakota’s $3,052 tax burden
- $1,700 is paid to in-state tax authorities (2nd lowest)
- $1,352 are paid to out-of-state tax authorities
- $43, 212 was South Dakota’s per capita income in 2011 (18th highest)
- FY 2010 state-local tax burden was 7.8% (2nd lowest)
- FY 2009 state-local tax burden was 7.8% (2nd lowest)
The two states that ranked better than South Dakota were Alaska (7.0%) and Wyoming (6.9%). The five states with the highest state-local tax burden are:
- New York (12.6%, $6,622)
- New Jersey (12.3%, $6,675)
- Connecticut (11.9%, $7,150)
- California (11.4%, $5,136)
- Wisconsin (11.0%, $4,477)
Not only did this study look at the total taxes paid to state and local authorities but it also factored in a bit of an equalizer with personal income. Other notes of interest from the study:
- Income growth in all states led to smaller state-local tax burdens across much of the nation.
- Over a quarter of all state and local taxes are collected from nonresidents.