Oklahoma ranks low for overall tax burden

Listen to this article

The deadline for filing 2024 tax returns is fast approaching for those who haven’t tackled the unpleasant annual task. Meanwhile, more than 55 million Americans already have received a refund.

The Internal Revenue Service reports that the average refund amount through March 21 was $3,221, roughly 4.6% higher than the average refund of $3,081 at that time last year.

Every year, the average U.S. household pays nearly $14,000 in federal income taxes, according to the IRS.

But there is a significant difference when it comes to state income taxes. Oklahoma is one of 41 states that collect taxes on wages and salaries. Washington state has a tax rate of 7%, but this is only on capital gains income.

The maximum income tax rate ranges from 2.5% in Arizona and North Dakota to 13.3% in California, according to the nonprofit Tax Foundation.

Oklahoma’s 2025 income tax ranges from 0.25% to 4.75%.

Gov. Kevin Stitt has urged legislators to reduce the 4.75% income tax rate by .50% with a path toward elimination. The Senate passed a package of income tax reforms, including one bill that would establish a 4.75% individual income tax rate for everyone. Those bill await action in the House.

To determine where Americans have the biggest tax burdens, WalletHub compared the 50 states based on the cost of three types of state taxes – property taxes, individual income taxes, and sales and excise taxes – as a share of personal income.

Unlike tax rates, which vary widely based on an individual’s circumstances, tax burden measures the proportion of total personal income that residents pay toward state and local taxes.

The analysis shows taxpayers in the most tax-burdened states pay more than twice as much as those in the least-taxed states.

“It’s easy to be dismayed at tax time when you see just how much of your income you lose. Living in a state with a low tax burden can alleviate some of that stress,” WalletHub analyst Chip Lupo said in the report. “Some states charge no income tax or no sales tax, although all states have some form of property taxes and excise taxes.”

Oklahoma ranks 42nd with a low total tax burden of 7%. Residents who earn $50,000 spend nearly 2% of their annual income on income tax and nearly 3.6% on sales and excise taxes.

They pay a median property tax of 1.6 % for a median-priced house. That’s the third lowest percentage of income spent on property tax in the nation, according to WalletHub. Only Arkansas and Alabama pay less.

Hawaii has the highest total tax burden, with residents paying nearly 14% of their income to state and local governments – 4.2% on income taxes, 2.6% on property taxes, and 7.2% in sales and excise taxes.

Alaska has the lowest total tax burden. Its residents pay no income tax. They also pay only 3.5% of their income in property taxes and 1.5% in sales and excise taxes, for a total of 4.9%.

Income tax burden: New York has the costliest state and local income taxes in the nation, at 5.8% of its residents’ income. On the other end of the spectrum, Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming do not charge any income tax.

Property tax burden: Vermont charges the most in property taxes, at 5% of residents’ income. All states have some sort of property tax, but Alabama’s is by far the lowest, at just 1.4%.

 Sales and excise tax burden: Residents of Hawaii pay out around 7.2% of their income in sales and excise taxes every year. New Hampshire residents have the lowest burden. The state does not charge a general sales tax, and other excise taxes only work out to less than 1% of the average resident’s income each year.

Taxpayer concerns

 A lower tax burden is especially helpful during this period of high inflation and concerns that new tariffs will increase prices for consumers.

The biggest tax concerns taxpayers have this year are growing frustration over costs and fairness, according to a WalletHub survey.

Nine in 10 people surveyed think tax-filing assistance should be free, and 77% believe that the rich don’t pay their fair share in taxes.

Inflation right now is a bigger worry than taxes for 7 in 10 Americans.

Among survey respondents, 35% fear not having enough money to pay on Tax Day, while 22% worry about making a mathematical mistake and 20% are concerned about identity theft.