Where does it not pay to be rich? SmartAsset ran the numbers, which should send the well-heeled packing.
In 2016 the IRS reported that it collected nearly $18.3 billion in estate taxes, from more than 5,200 estates. That is an average tax of $3.5 million per taxable estate. While the estate tax is a punishing one-off payment, the wealthy can also see their annual tax burden pile up due to income and property taxes. The size of the tax burden varies wildly by state however, making it advantageous for the wealthy to live in one state over another. For example, some states have higher income taxes or higher estate taxes. Wealthy Americans without access to expert financial advice, such as from a financial advisor, can find themselves paying sizable portions of their income to the tax collectors.
In order to take a closer look at this subject, SmartAsset modeled income, property and estate tax payments for wealthy households in every American state. We then ranked them from highest to lowest estimated tax burden.
- Estate taxes can hurt – According to our analysis, estate taxes can run into millions of dollars depending on the size of your estate. The good news is that you only have to pay them once, but in the event you have a large estate, your family be ready to fork over quite a bit of money to the taxman
- Being rich is more expensive on the coasts – Seven of top 10 states where it costs the most be rich are located on the East or West Coast. They tend to combine higher than average state income taxes with estate taxes.