Best State Tax Rates for Wealthy

Taxes are a necessary evil that people try to avoid paying as much as possible. These 10 states are great for the wealthy because the tax rates work in their favor.

Taxes are a necessary evil and one that people try to avoid paying as much as possible. There are the illegal ways (not recommended, obviously), and then there are ways to reduce how much people pay in taxes. Or you could just pick a state with a smaller tax burden.

Pro-golfer Phil Mickelson recently spoke up about how much the rich now have to pay in taxes in California. A new tax change in the state means that the state’s richest will be paying 51.9% in federal and state income taxes. California seems to be the exception to laying the burden on its rich, though.

A January report by the Institute of Taxation and Economic Policy (ITEP) found that in almost every state the tax system takes a greater share of income from middle- and low-income families than wealthy families.

Business Insider claims there’s no greater representation of “the growing chasm between America’s rich and poor than state tax rates.”

Using data from ITEP’s report and from the Tax Foundation’s most recent State Business Climate Index, Business Insider determined the 10 states with the best tax rates for America’s wealthy.

The list orders states based which have the largest tax gaps between the richest and poorest residents. The percentages are how much of each group’s income goes toward state and local taxes.

10. Alabama

The wealthiest: 3.8% of income

The poorest: 10.2% of income

Wealthy resident: Marguerite Harbet, widow of a construction and energy mogul, is worth $1.4 billion.

9. Indiana

The wealthiest: 5.4%

The poorest: 12.30%

Wealthy resident: Gayle Cook, member of board of directors for medical device firm Cook group, is worth $3.4 billion.

8. Pennsylvania

The wealthiest: 4.4%

The poorest: 12%

Wealthy resident: Hansjorg Wyss, chairman of Swiss medical device manufacturer Synthes Holding AG, is worth $7 billion.

7. Arizona

The wealthiest: 4.7%

The poorest: 12.9%

Wealthy resident: Bruce Halle, Sr., founder of Discount Tires.

6. Tennessee

The wealthiest: 2.8%

The poorest: 11.2%

Wealthy residents: Singer Leanne Rimes and Thomas Frist, Jr., founder of the Hospital Corporation of America.

5. Texas

The wealthiest: 3%

The poorest: 8.5%

Wealthy resident: Wal-Mart heiress Alice Walton.

4. Illinois

The wealthiest: 4.9%

The poorest: 13.8%

Wealthy residents: Billionaire real estate investor Sam Zell and hedge fund billionaire Ken Griffin.

4. South Dakota

The wealthiest: 2.1%

The poorest: 10%

Wealthy residents: N/A

3. Florida

The wealthiest: 2.3%

The poorest: 13.2%

Wealthy residents: Billionaires William Koch and Donald Trump.

1. Washington

The wealthiest: 2.8%

The poorest: 16.9%

Wealthy residents: Bill Gates and Amazon CEO Jeff Bezos.

Read more about the state tax gaps.