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Illinois named among '10 least-tax friendly states'

Published: Tuesday, Jan. 7, 2014 11:17 a.m. CDT

By Sally Deneen

Illinois and California rank among the "10 Least Tax-Friendly States," according to finance news website Kiplinger, while Arizona, Nevada and some Southern states dominate its "Most Tax-Friendly" list.

"Sales taxes are steep in the Prairie State. In some municipalities, combined state and local sales taxes are as high as 10 percent," states the Kiplinger report. What's more, "the state has some of the highest property taxes in the United States."

California is dinged for "the highest income tax rates," the report states, thanks to a top rate of 13.3 percent on taxable incomes greater than $1 million.

That's in contrast to some southern and Sun Belt states such as Arizona, where the state sales tax is 5.6 percent and the top income tax rate – 4.54 percent – doesn't kick in until taxable income exceeds $150,000 for individuals or $300,000 for married couples, the report notes.

That benefits residents in an upscale community like Scottsdale, a Phoenix suburb dominated by six-figure salaried couples with children and what Zillow calls "Power Singles" – highly educated professionals "living a hip, upscale life in an urban center."

Louisiana and South Carolina rank among the other "Most Tax-Friendly" states in the Kiplinger report, while New Jersey and Connecticut make the "Least Tax-Friendly" list.

On the bright side, Illinois does appear on a positive Kiplinger list: "States That Don't Tax Social Security." And the state doesn't appear on another negative Kiplinger list – "10 Least Tax-Friendly States for Retirees." However, TopRetirements.com seems to take issue with that, naming Illinois among the "worst states" for retirement.

In the end, low taxes can have a downside, anyway, Kiplinger notes. With less state money for roads, education and other services, it states. "Low taxes don't necessarily lead to a higher quality of life."

To check various types of taxes by state, try the tool from the nonpartisan Tax Foundation.

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