Florida is a low tax state. Not as low as, say, Mississippi or South Dakota, but low enough to attract a lot of people looking to hang on to more of their money. But just how much more?
Most studies look at tax rates or cost of living to come up with a ranking. The number crunchers at technology firm Self Financial Inc. took a different approach. They calculated how much the average person living in each state and Washington, D.C., will pay over a lifetime. No percentages or complicated indexes. Just a straight-up dollar amount.
The typical Floridian? Expect to fork over $378,184. That may sound like a lot, but it’s less than half the $931,698 paid by the average person in New Jersey, the state with the highest individual lifetime tax bill. In fact, Florida slips in at No. 37, right between Georgia and Idaho.
The study’s authors looked at four taxes — property, sales, car and income (both state and federal). They calculated earnings based in part on state averages applied to a 36-year work life. They used state and federal data to determine spending habits in each state, including the average number of vehicles owned over 60 years. Finally, they figured that the average person would live to be 79 years old.
How did Florida measure up against the national average? The typical Floridian pays less in income, property and car taxes, but a little more in sales taxes.
But as a percentage of total taxes, Floridians pay a higher percentage toward property and sales taxes, which makes sense given that the state doesn’t have an income tax.
For just income taxes, an average Washington, D.C., resident can expect to pay the most at a little more than $600,000 over a lifetime. Florida ranked 44th at $220,712. States like Florida with no — or others with very low — state income taxes combined with generally lower average incomes fared well in this category.
For property taxes, New Jersey led the way at $378,087. Florida placed 24th at $116,286.
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For sales taxes, California topped the list at just more than $40,000. Florida was 34th at $27,813. California has a 7.25 percent state sales tax compared to Florida’s 6 percent, though in both states local jurisdictions can add to the tax. The cost of goods can be higher in California, which also contributes to how much the average person will pay in lifetime sales taxes.
For car taxes, Vermont was No. 1 at $73,220. Florida placed 45th at $13,373.
Of course, much higher incomes in some of the states helped inflate the tax bills. More income generally leads to higher taxes, at least in a study like this one. Average New Hampshire residents, for instance, can expect to pay $400,000 more in lifetime taxes than their counterparts in Florida. But they also earn about $400,000 more, so it’s essentially a wash, at least when it comes to the taxes vs. earnings analysis.
Average residents in Washington, D.C., for instance can expect to earn almost $1 million more than the typical Floridian — $2.225 million versus $1.298 million. They will also keep about $500,000 more after paying all those taxes — $1.435 million versus $920,120.
The bottom line, at least based on this set of data: Floridians can enjoy low taxes but might want to avoid comparing pay stubs with friends in Massachusetts, New Jersey or Washington, D.C.