With Tax Day looming and 91 percent of Americans thinking filing taxes should be free, WalletHub has released its 2025 Taxpayer Survey, as well as its yearly report on the States with the Highest & Lowest Tax Rates, in order to help people better understand this confusing time of year.
Tax Rates in California (1=Lowest; 25=Avg.):
13th – Overall Effective State & Local Tax Rate
11th – Income Tax
17th – Real-Estate Tax
28th – Vehicle Property Tax
42nd – Sales & Excise Taxes
Overall, California ranked at number 13 on the list. Alaska was at number one, the state with the lowest tax rate, with Delaware, Wyoming, Idaho and Montana rounding out the top five.
States with the highest overall tax rate were Pennsylvania, New Jersey, Connecticut, New York and Illinois.
“Every year during tax season, Americans are reminded of just how much of their hard-earned income isn’t theirs to keep. Living in the right state can ease the stress of tax time, though, as taxpayers in the least expensive states pay less than half as much as those in the most expensive states,” said Chip Lupo, WalletHub Writer and Analyst.
2025 Taxpayer Survey
Tax Filing Cost: 91 percent of Americans think filing taxes should be free.
Inflation Concerns: Seven in 10 Americans are more worried about inflation than taxes right now.
Tax vs. Jury Duty: Nearly one in three people would rather do jury duty than their taxes.
Tax Fairness: 77 percent of people believe that the rich don’t pay their fair share in taxes.
Tax Day Fears: 35 percent of people fear not having enough money to pay on Tax Day, while 22 percent worry about making a mathematical mistake, and 20 percent are concerned about identity theft.
Tax Evasion Awareness: More than one in four Americans know someone who has cheated on their taxes.
Expert Commentary
Do people usually consider taxes when deciding where to live? Should they?
“Taxes can play an important role in deciding where to live for certain groups of people, such as retirees. However, for active workers, the job market and salaries are likely to be the more important determining factors. In many high tax areas of the country, such as the Northeast, the salaries for many different types of jobs are higher than in other parts of the country. So, it would make sense to pay higher taxes to be able to earn higher salaries. The calculation for retirees is different and taxes are more important in the determination of where to live. Healthcare access is also an important factor for retirees to consider.”
Dr. David Shock – Professor, Kennesaw State University
“Households are somewhat aware of tax differences among local jurisdictions especially if there are large differences between the level of taxes and the quality and quantity of services provided. Households weigh these differences and choose to live in the place that best serves their needs and where they can afford to live.”
Dagney Faulk, PhD – Director of Research in the Center for Business and Economic Research, Ball State University
How can state and local tax policy be used to attract new residents and stimulate growth?
“Many states exempt different types of retirement income from taxation to lure retirees. In addition, corporate tax incentives can be used to attract certain types of desirable economic activities. For example, the State of Georgia provides substantial tax incentives for the movie industry to film in the state. This has created many new jobs.”
Dr. David Shock – Professor, Kennesaw State University
“It is not just the taxes that households pay but also the quality of goods and services provided by local governments. Local government services contribute substantially to the quality of life that residents experience in an area and that attract new residents. When deciding where to live households with children, for example, value good schools. Other households may value access to parks and other recreational opportunities. Households with two working parents may value access to broadband if one or both work at home or access to good roads if commuting to work.”
Dagney Faulk, PhD – Director of Research in the Center for Business and Economic Research, Ball State University
Should people pay taxes based on where they live or where they work?
“An argument can be made for local income taxes to be imposed on workers in a jurisdiction. These workers use public services, such as roads, without necessarily contributing to the upkeep of the infrastructure. States such as Ohio and Kentucky impose such taxes. These taxes increase the complexity of the tax system and might deter people and businesses from moving into the jurisdiction.”
Dr. David Shock – Professor, Kennesaw State University
“I can’t answer whether they should, but I can tell you that the states and localities that I am familiar with tax you both on where you work and where you live, with agreements between taxing authorities sometimes making sure that you don’t pay taxes twice on the same income.”
Steven Balsam, Ph.D. – Professor; Chair, Department of Accounting, Temple University
