Which City Has the Lowest Tax Rate
In the United States, sales taxes are levied not only by state governments, but also by city, county, tribal, and special district governments. In many cases, these local sales taxes can have a profound impact on the overall rate paid by consumers. In addition, property taxes are increasing. Real estate data firm ATTOM reports that $328 billion in property taxes were levied on single-family homes in 2021, up 1.6 percent year-over-year. «It`s hardly surprising that property taxes have risen in 2021, a year in which home prices rose 16 percent across the country,» Rick Sharga, executive vice president of market intelligence at ATTOM, said in a statement. «In fact, the real surprise is that the tax increases have not been higher, suggesting that tax assessments are lagging behind the rise in property values and will likely continue to rise in 2022.» New Orleans is one of the poorest cities in America with an average income of $36,999, but its residents avoid at least a high tax burden. With a median value of $179,800, the average Big Easy homeowner pays just $1,331 in property taxes – the fourth lowest of all the cities included in this study. With a median value of $333,600 in Miami, the average annual property tax is $4,270. It`s one of the highest in this ranking — which could explain why Miami is one of the worst places to live if you`re trying to save money — but having no income taxes helps reduce the property tax burden. The District of Columbia Office of Revenue analyzed estimated property, sales, car and income taxes paid by a family in each state`s largest city in 2011. One of the most important factors in how much a family can expect is the state and local tax rates that affect their city. Income tax is one of the key factors.
Seven states have no income taxes, and six of the 10 cities with the lowest tax burden are in those states. Cities with lower taxes tended to have one of the lowest unemployment rates. Based on Local Government Report: Tax Rates and Tax Burdens in the District of Columbia – A National Comparison, 24/7 Wall St. looked at cities where a family of three in different income brackets would spend the highest and lowest percentage of its income on national and local taxes. On Wall Street 24/7, these are the cities with the lowest tax burden: Manchester, like many other New Hampshire cities, is sometimes referred to as the «donor city» because it relies heavily on property taxes for school funding. However, to be fair, New Hampshire`s other taxes (sales, revenue, etc.) are exceedingly low. Despite difficult economic conditions, the city ended the year with a surplus of several million. Although the sales tax rate of 7.75% is quite high, consumers pay this tax on only 37.4% of goods, with food and many consumer goods exempt from VAT. Net income is an average tax rate of only 5.6% for a family earning $150,000. However, low-income families face a higher average rate of 10.5%. Houston has high sales and property tax rates, but without local or state income taxes, overall tax rates for residents are still low.
Only eight cities surveyed had a tax rate below 5 percent for a family of three earning more than $150,000 a year, with Houston being one of them. Although the city of Anchorage cannot afford to pay its citizens to stay in place, it still manages to keep taxes low. The city has no income or sales taxes, and its effective property tax rates are lower than major cities in the last 48 cities, including Chicago, Baltimore and Minneapolis. This may be due in part to exemptions for veterans and seniors who do not have to pay tax on the first $150,000 of the value of their home in Anchorage. In 2011, Billings residents did not have to pay sales tax to either the city or their state. Sales taxes cost $728 to a family of three earning $25,000 per year and to a family earning $150,000 per year to $2,194. In addition, Montana is a state with low income taxes. At all income levels, Billings had a lower tax burden than any observed city where such a tax was in place. However, not all taxes in Billings were low; In 2011, gasoline taxes were more than four cents per gallon higher than the national average. The state also grants oil and gas companies a controversial tax exemption that allows the production of new wells to be taxed at a rate of less than 1 percent during the first 12 to 18 months of their operation. While not an obvious candidate, Cheyenne, Wyoming, tops the list of U.S. cities with the lowest tax rates.
Cheyenne tax rates are low across the board, with an average rate of 9.7% for low-income families. High-income families fared even better, with an overall rate of just 3.1 percent, including property, automobile, sales and income taxes. Nevada residents benefit from living in a state with no income tax. Las Vegas residents also benefit from low property tax rates, the ability to deduct state and local sales tax payments, and no local income tax. According to the District of Columbia`s Office of Revenue Analysis, Las Vegas residents pay only $1.15 per $100 of property value, a lower rate than most U.S. cities. Property taxes are also relatively low at just 1 percent, which would be $2,593 for the average homeowner in Nashville. Another major city, Birmingham, Alabama (10%), also has a double-digit sales tax rate.
Birmingham also has the highest local option sales tax rate among major cities at 6%, closely followed by Denver, Colorado (5.91%), Baton Rouge, Louisiana (5.50%) and St. Louis, Missouri (5.454%). Baton Rouge and New Orleans, Louisiana, previously had combined rates of 10 percent, but rates in those cities dropped slightly with the partial end of a temporary state sales tax increase in 2018.  Omaha`s local income taxes are non-existent for average wage earners. However, Omaha landed in the top 10 cities with the highest taxes, as it is one of the 11 cities with average property taxes above 2%.