A new analysis by the international research think tank Tax Foundation shows which states in the nation collect the least and most taxes per capita as of fiscal year (FY) 2021, the most recent year for which full state-by-state data are available.
“Contrary to initial expectations, the pandemic years were good for state and local tax collections, and while the surges of 2021 and 2022 have not continued into calendar year 2023, revenues remain robust in most states and well above pre-pandemic levels even after accounting for inflation,” the think tank wrote in a press release.
In FY 2021, the District of Columbia surpassed all states with $13,278 in per capita tax collections.
New York followed D.C. at $10,266 in state and local tax collections per person, with Connecticut ($9,458), California ($9,175), New Jersey ($8,303), and Massachusetts ($8,101) following.
Alaska collected the least amount of per capita taxes, as the state collected just $4,192 per person in FY 2021.
“Alaska is an anomaly here: while the state imposes incredibly low tax burdens on residents, its severance taxes generate substantial revenue that often yield relatively high collections per capita,” the think tank explained.
Alabama ($4,245), Tennessee ($4,272), Florida ($4,405), and Mississippi ($4,435) follow Alaska in collecting the least amount of taxes per person in FY 2021.
Arizona collected $4,667 in state and local tax collections per person, Georgia collected $4,590, Ohio collected $5,335, and Virginia collected $6,195 per person.
Tax Foundation created its analysis by using data from the U.S. Census Bureau’s “Annual Survey of State and Local Government Finances.”
“State and local governments fared well in FY 2021, but with all the ways our world has changed since the start of the pandemic, that feels like eons ago…Since FY 2019, the last full fiscal year before the pandemic, state and local tax collections have risen more than 27 percent. Much of that gain is subsumed by inflation, but even after adjusting for inflation, state and local tax revenues are more than 7 percent higher than they were pre-pandemic,” the think tank explained.
“Revenues soared in FY 2021, jumping a full 10 percent (inflation-adjusted) higher than pre-pandemic figures, edging up even higher in FY 2022 (to 12 points up) before coming down to earth a bit in FY 2023. But this should not be alarming. Partly, it is a reversion to the mean: state revenues skyrocketed, and it’s okay for them to level off or even decline a little, as long as the new totals remain higher (in real terms) than before,” the think tank added.
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Kaitlin Housler is a reporter at The Tennessee Star and The Star News Network. Follow Kaitlin on X / Twitter.
WTF? They make it sound like low taxation is a bad thing. I kind of like knowing we are near the bottom of the list. I am also glad we are in the black by hundreds of millions of dollars. This analysis is pretty useless and should also include each State’s budget surplus/shortfall.
“it’s okay for them to level off or even decline a little, as long as the new totals remain higher (in real terms) than before,” the think tank added.” – I disagree! It is better to reduce unnecessary spending and decrease taxation as a result!