A recent study by personal finance website WalletHub has ranked Hawaii as the state with the highest tax burden in the United States, with residents paying 13.30 percent of their income towards state taxes. This places the island paradise ahead of New York (12.39 percent), Vermont (11.10 percent), New Mexico (10.75 percent), and Maine (10.01 percent).
Lowest Tax Burdens
At the opposite end of the spectrum, Alaska boasts the lowest tax burden at just 4.92 percent of residents' income. It is followed by New Hampshire (5.38 percent), Tennessee (6.21 percent), Florida (6.27 percent), and Delaware (6.28 percent).
How Tax Burden Is Calculated
WalletHub's rankings are based on the sum of the percentage of income residents pay for property tax, income tax, sales tax, and excise taxes on specific goods like alcohol and tobacco. Importantly, the percentages consider both a state's tax rates and the average income of its residents, providing a more accurate reflection of the actual cost of state taxes.
Why Hawaii's Burden Is High
Hawaii's high tax burden is partly due to its marginal income tax system. Instead of a flat rate, the state charges higher rates for higher income brackets. For instance, residents earning between $48,000 and $150,000 pay 8.25 percent, which is higher than the top income tax rate in all but seven other states. Additionally, deductions offered by states can lower tax bills, but Hawaii's deductions may not be as generous as those in other states.
Category Rankings
WalletHub also provided rankings for specific tax categories. Vermont had the highest property tax burden at 4.89 percent of income. Oregon led in personal income tax burden at 4.76 percent. Hawaii's sales and excise tax burden was the highest in the nation at 7.48 percent, eight times higher than New Hampshire's 0.91 percent, the lowest in that category.
Impact on Residents
Hawaii homeowners face additional financial pressure, as homeowners insurance rates rose by 50 percent in 2025 following fires and floods that ravaged parts of the state between 2023 and 2025, according to InsuranceNewsNet. The study highlights the significant disparities in tax burdens across the United States, with residents in high-tax states like Hawaii, New York, and Vermont paying substantially more of their income to state taxes compared to those in low-tax states like Alaska, New Hampshire, and Tennessee.
