Is Georgia a tax-friendly state? A new ranking says maybe

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Georgia state lawmakers passed the law earlier this year and now some online shops are working to help you keep your money.

Death and taxes may be certain, but depending on where you live taxes may not be as daunting. A new ranking by Kiplinger divides states into five categories for taxes: most tax-friendly, tax-friendly, mixed, not tax-friendly and least tax-friendly.

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Kiplinger's State-by-State Guide to Taxes ranked Wyoming as the most tax-friendly state because there is no state income tax and a 0% effective income tax rate. The least tax-friendly state was Illinois, with a flat income tax rate of 4.95% and the second-highest property taxes in the nation.

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The verdict on Georgia, according to Kiplinger, is the state is “mixed” when it comes to taxes. The state’s high sales taxes and moderate property taxes were the key drivers behind the ranking.

“Georgia’s tax brackets mean that many taxpayers will find themselves paying the top marginal rate, which kicks in at just $10,000 of taxable income for married couples filing jointly or $7,000 for individual filers,” Kinlinger wrote. “For tax year 2019, the top rate dropped 6% to 5.75%. It is slated to drop further, to 5.5% in 2020, if Georgia lawmakers and the governor pass a joint resolution reaffirming that rate during the 2020 legislative session.”

Below are the other key factors that contributed to Georgia’s ranking:

  • Sales tax — 4% state levy: Localities can add as much as 5%, and the average combined rate is 7.33%, according to the Tax Foundation. While the state doesn't tax grocery food sales, localities can.
  • Income tax range — Low: 1% (on the first $1,000 of taxable net income for married couples filing jointly; on the first $750 for individual filers; and on the first $500 for married couples filing separately). High: 6% (on taxable income more than $10,000 for married couples filing jointly; on taxable income more than $7,000 for individual filers; and on taxable income of more than $5,000 for married couples filing separately). Effective tax rate: 5.24% for single filers, 5.8% for joint filers. For tax year 2019, the high rate is 5.75%. It will drop further in 2020, to 5.5%, if the governor and Legislature reconfirm the reduction in that year's legislative session.
  • Property taxes — In Georgia, residents pay an average of $1.000 in taxes per $100,000 of assessed home value.
  • Vehicle taxes — Georgia levies a tax of 7% at registration. Electric vehicles are subject to a $200 annual licensing fee.

The method behind Kiplinger's "tax-friendliness" rankings depends on the sum of income, sales and property tax paid by their sample filers. For the full methodology visit Kiplinger's website.