(Jay Knoll, KARE) -- Is it the Land of 10,000 Lakes or Land of 10,000 Taxes?
Personal finance magazine Kiplinger has named Minnesota the second least tax-friendly state in the country. The state ranked 6th in the 2016 report.
Kiplinger examined all 50 states and ranked each by income taxes, sales taxes, gas taxes, ‘sin’ taxes (tobacco, alcohol) and other tax rules and exemptions. Kiplinger's sources were state tax departments, the American Petroleum Institute, the Tax Foundation, the American Hotel & Lodging Association and the Distilled Spirits Council of the United States.
The report cited the North Star State’s top tax rate of 9.85% as one of the highest in the country.
"But what makes Minnesota really stand out—and not in a good way—is its income tax rate of 5.35% even for the state’s lowest earners," the report reads. "A single resident with income of $45,000 a year would pay more than $2,000 in state income taxes."
A single resident with income of $45,000 a year would pay more than $2,000 in state income taxes.
The report lists Minnesota's median property tax slightly above the average rate, $2,200 on the state's median home value of $186,200.
"Minnesota offers some property-tax relief for qualified homeowners. Homeowners whose property taxes are high relative to their incomes are eligible for a property tax refund," the summary states.
The state has a sales tax of 6.9%, with food, clothing, and prescription and nonprescription drugs exempt. The report states some cities and counties add their own local sales tax, bringing the average combined state and local sales tax rate to nearly 7.3%.
"Minnesota has no inheritance tax. But it does have an estate tax, with an exclusion of $1.6 million in 2016, and increasing gradually to $2 million in 2018. The maximum estate tax rate is 16%," the report states.
Then there are the taxes on alcohol and tobacco.
"The champagne lifestyle will cost you in Minnesota. Bubbly is taxed six times as much as regular wine, even if the alcohol content is the same," the report reads.
Maryland, which was previously unranked, topped Kiplinger's 2017 list due to “some of the highest effective income taxes in the country,” the report mentioned. Wyoming was named this year's most tax-friendly state.
A 2017 24/7 Wall St. analysis listed New York, Connecticut and New Jersey as states having the highest tax burdens. Minnesota came in at No. 8 on that list.
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