Sioux Falls, South Dakota Oct 21, 2026 (Issuewire.com) - If you're considering where to live, work, retire, or invest, taxes can play a major role in your financial future. However, determining the most taxed state in the U.S. isn't typically as simple as looking at income tax rates alone. 

Sales taxes, property taxes, and state income taxes can all influence how much residents pay. The research team at Madison Trust analyzed which states had the highest and lowest Tax Index scoes using data collected from TaxFoundation.org. 

When all three categories are considered together, California ranks as the most taxed state with a tax index score of 86.3. 

The infographic breaks down all 50 states--and Washington, D.C. --compared across sales, property, and income tax.

What Is the Most Taxed State?

According to the data used for this analysis, California is considered the most taxed state in the U.S., ranking number one with a Tax Index score of 86.3.

California has:

• 7.25% state sales tax
• 1.74% average local sales tax
• 8.99% combined state and local sales tax
• 0.70% effective property tax
• 13.30% top marginal state income tax 

Based on the methodology used in this analysis, California has the highest overall Tax Index score.

How Is the Most Taxed State Determined?

The Tax Index in the infographic considers three major types of state and local taxes: 

• Combined state and local sales tax
• Effective property tax
• Top marginal state income tax

Each category is normalized to create a common comparison scale. The highest state in each category receives a score of 100, while other states receive proportional scores. 

The final Tax Index uses the following weighting: 

• State & Local Sales Tax: 50% of the final Tax Index score
• Property Tax: 25% of the final Tax Index score
• State Income Tax: 25% of the final Tax Index score

This means state and local sales taxes have the greatest influence on the overall Tax Index, accounting for half of the total score. Property taxes and state income taxes each contribute one-quarter of the final score.

What Are the Top 10 Most Taxed States?

Based on the Tax Index scores in the infographic, the 10 highest-ranked states are:

1. California -- Tax Index Score: 86.3

2. New Jersey -- Tax Index Score: 78.0

3. New York -- Tax Index Score: 73.6

4. Illinois -- Tax Index Score: 72.9

5. Minnesota -- Tax Index Score: 68.4

6. Washington -- Tax Index Score: 66.8

7. Connecticut -- Tax Index Score: 61.8

8. Kansas -- Tax Index Score: 60.4

9. Wisconsin -- Tax Index Score: 58.8

10. Vermont -- Tax Index Score: 58.3

According to this Tax Index, California ranks first with a score of 86.3, followed by New Jersey at 78.0 and New York at 73.6.

What State Has the Highest Sales Tax? 

Louisiana has the highest combined state and local sales tax rate at 10.11%. Louisiana has a 5.00% state sales tax and 5.11% average local sales tax, for a combined rate of 10.11%. This distinction is considered important as a state that has a modest state sales tax rate can still have high overall sales tax once local taxes are included. 

Which States Have the Highest Combined Sales Tax?

1. New Jersey -- Effective Property Tax Rate: 1.88%

2. Illinois -- Effective Property Tax Rate: 1.88%

3. Connecticut -- Effective Property Tax Rate: 1.54%

4. Vermont -- Effective Property Tax Rate: 1.51%

5. New Hampshire -- Effective Property Tax Rate: 1.50%

Which State Has the Highest Property Tax? 

New Jersey and Illinois have the highest effective property tax rate at 1.88%. The analysis uses mean effective property tax rates on owner-occupied housing, excluding property taxes paid by businesses, renters, and others. 

Which States Have the Highest Property Tax?

1. New Jersey -- Effective Property Tax Rate: 1.88%

2. Illinois -- Effective Property Tax Rate: 1.88%

3. Connecticut -- Effective Property Tax Rate: 1.54%

4. Vermont -- Effective Property Tax Rate: 1.51%

5. New Hampshire -- Effective Property Tax Rate: 1.50%

Which State Has the Highest Income Tax?

California has the highest top marginal state individual income tax rate at 13.30%. The 13.30% represents the top marginal income tax rate, not the percentage every California resident pays on their income. A marginal tax rate applies only to income within a particular tax bracket. 

Which States Have the Highest Income Tax? 

1. California -- Top Marginal Income Tax Rate: 13.30%

2. Hawaii -- Top Marginal Income Tax Rate: 11.00%

3. New York -- Top Marginal Income Tax Rate: 10.90%

4. New Jersey -- Top Marginal Income Tax Rate: 10.75%

5. District of Columbia -- Top Marginal Income Tax Rate: 10.75%

Which States Have No State Income Tax? 

Not every state imposes an individual income tax on wage and salary income. In 2026, states without an individual income tax include Alaska, Florida, Nevada, South Dakota, Texas, and Wyoming. Additionally, Tennessee has no income taxes for earned income, but taxes dividend and interest income. Likewise, Washington does not tax on earned income, but taxes on capital gains income only. 

A state having no individual state income tax typically does not automatically make it a low-tax state. For example, Washington has no state income tax; however, ranks sixth overall, with a 9.51% combined state and local sales tax rate and a 0.75% property tax rate.

How State Taxes Can Influence Retirement Planning

Many investors consider taxes when planning for retirement. Retirees generally have multiple sources of income including Social Security, pensions, investment income, and retirement accounts. The state where someone lives can influence how taxes apply to different sources of income.

While no single tax rate tells the whole story, understanding the combination of a state's income, sales, and property taxes can provide a clearer picture of the tax environment in each state and provide additional knowledge when planning for retirement. For investors exploring ways to build and manage retirement savings, a Self-Directed IRA may provide access to a broader range of alternative assets such as real estate, precious metals, private equity, and more. Schedule a free discovery call to learn more about investing in alternative assets with a Self-Directed IRA. 

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