Colorado 17th Most ‘Tax-Friendly’ For Middle Class: Study

COLORADO – Colorado is the 17th most tax-friendly state in the country for the middle class. That’s according to a study published Wednesday by the personal finance site GOBankingRates.

State and local income taxes vary from state to state, and some impact middle-class earners more than others. The authors noted not all states are equal when it comes how much residents pay in taxes due to owning property, buying goods and submitting to a personal income tax.

“The best states for taxes, as well as the worst, exist,” the authors said.
Here’s what the authors found for Colorado:

• Total share of state and local taxes paid by middle 20 percent: 8.9 percent
• Share of personal income tax paid by middle 20 percent: 2.5 percent
• Share of property taxes paid by middle 20 percent: 2.3 percent
• Share of sales and excise taxes paid by middle 20 percent: 4 percent

Colorado taxes are skewed so the middle class benefits, while the poor pay slightly more, percentage-wise, the study found. Within the state, the middle 20 percent of Coloradans pay an 8.9 percent share of total state and local taxes, whereas the second 20 percent, earning less, pay a higher share of 9 percent.

In Colorado, sales and excise taxes of marijuana have been rising since legalization, reaching $927 million since pot was legalized in 2014. But some of that revenue comes from tourism.

The study determined the most tax-friendly states for the middle class by looking at the shares of certain income taxes paid by the middle 20 percent of income earners in 30 states.

Of particular interest, no state in the South — often associated with lower tax rates — cracked the top five most-tax-friendly states for the middle class. And just three managed to crack the top 10.

1. Alaska
2. Delaware
3. Nevada
4. Wyoming
5. Montana
6. Florida
7. Tennessee
8. Idaho
9. South Carolina
10. North Dakota

Alaska ranked as the No. 1 most tax-friendly state for middle class folks. The authors highlighted that the middle 20 percent in Alaska pay the lowest total share of state and local taxes at 4.3 percent. The state also has no personal income tax and has the fifth-lowest share of sales and excise taxes paid by middle class earners at 1.6 percent.

Patch national staffer Dan Hampton contributed to this report.

Photo credit: Scott Olson/Getty Images

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