Hawaii Leads in per Person State Income Tax Collections

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A report recently released by the United States Census Bureau lists Hawaii residents as the greatest contributors (per person) to state taxes in the nation.

Residents in Hawaii’s top income bracket pay a state tax rate of 8.25% (for income over $80,000) - one of the highest rates in the country. According to Realtor.com, this rate is lower only than California, Iowa, Maine, Montana, and Oregon, although all of these states begin taxing the highest bracket at lower incomes.

StateTax RateHighest Income BracketMontana11%Over $76,200California9.3%Over $38,292Oregon9%Over $6,300Iowa8.98%Over $54,495Maine8.5%Over $33,400Hawaii8.25%Over $80,000

Hawaii also taxes its residents with one of the greatest number of income increases in the United States - jumping tax rates nine different times before reaching the highest bracket. Of the other states that have nine or ten different tax brackets (including Montana, Ohio, Missouri and Iowa) income of Hawaii residents moves up tax brackets at one of the highest incomes.

StateTax RateLowest Income BracketIowa0.36%Under $1,211 Ohio0.743%Under $5,000Hawaii1.4%Under $4,000Missouri1.5%Under $1,000Montana2%Under $2,200

Majority of states in the US delegate control of education and health care to counties or municipal level. Hawaii’s state government maintains control of these entities, requiring greater state funding for programs than states that delegate control of these programs.

In 2003, Hawaii’s residents paid around $2,838 in state tax, an increase of $101 from the previous year. Closely following were residents of Connecticut, where the per capita state tax bill was $2,730. Despite the highest tax bracket in Connecticut being taxed at a rate of only 4.05%, Connecticut residents pay a large amount of taxes because this bracket begins after residents report an income of only $10,000. Minnesota paid the third highest per capita state tax at $2,649 last year. Even though the highest tax rate in Minnesota begins for incomes over 108,660, this amount is not surprising, because the lowest tax bracket in Minnesota is 5.35%.

The states with the lowest state taxes – Alaska, Texas, Florida, Tennessee, Washington, Wyoming, South Dakota, Nevada, and New Hampshire (taxes on interest and dividends). Income tax for lucky residents in these states is 0%.

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