Tennessee has the sixth-lowest tax burden in the nation, Wallethub.com reports, via radio station WMOT. When cost of living is factored in, the state improves to third-lowest.
It is important to distinguish the tax burden–referred to here–from tax structure, in terms of simplicity. Complexity adds its own challenges, but tax burden is also an important consideration for those in business, or those considering entering into it.
Analyst Jill Gonzalez agrees that not having a state income tax helps Tennessee in the rankings, but it’s not the only reason. She says low real estate taxes, almost no vehicle taxes, and an effective tax rate about half that of states like New York and Connecticut help explain it. An accompanying survey found a comparatively cool reception for the new federal tax law, particularly with respect to corporate tax rates. Still, it seems state leaders have crafted an environment to the people’s liking. Tennessee residents pay 7.98% of their income to taxes, which is over 25 percent lower than the average state. Tennessee ranks 6th, behind Alaska, Delaware, Montana, Nevada, and Wyoming. By way of comparison, Alaska collects $3164 from the median US household, compared with Tennessee’s $4449 from the median US household. Within each state, the taxes relative to the median were examined. Alaska collected $4353 from its median household. Tennessee collects $3667 from its median household.
By way of contrast, the state of Illinois ranked lowest in the country, at a figure of $8299 with respect to the national median household, and $8330 for the median household in the state. This tax burden represents a whopping 38.34% more than the average state. Perhaps Illinois residents can take a small comfort in the fact that their state is in fact only 43 out of 51 (including DC) when cost of living is considered.
In any case, if you need a professional Tennessee tax attorney to take advantage of the tax Eden that is our state, you might consider calling Tab Burkhalter. Almost 20 years experience is brought to bear on the tax and accounting needs of people in Tennessee. Get a free consultation at your earliest opportunity.