Happy tax day: Forbes says Alabama is the 10th best state for taxes

YH Alabama Tax
The web edition of Forbes magazine released its comprehensive ranking of best states for taxes just in time for the filing deadline. On the list, Alabama finished number ten overall, beating out New York, California, Ohio, and Florida. Wyoming finished with the top spot and New York finished in dead last.

Forbes’ ranking was calculated by measuring each state’s effective tax rate for single payers earning $50,000 of taxable income. The effective tax rate is the average rate at which an individual is taxed on earned income.

The Yellowhammer state levies a 2, 4, or 5 percent personal income tax, depending upon the amount earned and filing status. While the state’s general sales tax rate is 4 percent, sales taxes from cities and counties are also added to purchases and will vary.

Alabama’s statistics from the Forbes website can be seen in the chart below.

Alabama tax stats 2016

Because different states tax their residents in different ways, it is generally difficult to do a pure apples-to-apples comparison. Furthermore, $50K is a low-ball of the U.S. median income from 2009 to 2013, according to U.S. Census data. The state tax numbers were generated by the Washington, D.C.-based Tax Foundation, a nonpartisan think tank that tracks tax policy.

The financial website also took into consideration the tax rate at the top income bracket and at what level that tax bracket is set. Only 10 states have special rates for those making more than $200,000 annually, and Alabama is not one of them.

In addition to income taxes, the analysts also examined property and sales taxes that play a large role in states such as Florida that rely heavily on tourism and real estate. The Tax Foundation tabulated these factors into the results as well, along with other miscellaneous government charges such as real estate transfer, personal property taxes on some vehicles, and special tax district fees.

Forbes’ list in it’s entirety can be seen here.

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