$100,000 income: Three very different tax bills
April 21, 2014: 11:49 AM ET
There are a lot of differences between Queens, Topeka and Seattle.
One that stands out: People making the same money in each of those places can face very different tax bills.
CNNMoney asked the Tax Institute of H&R Block to compare the combined federal, state and local income tax bill on a gross household income of $100,000 in each of the three cities.
For a dual-earner married couple with two young children, the New York City borough of Queens would deliver the biggest tax bite at $8,719. (We had to make some assumptions about the taxpayer’s situation; see them below.)
By contrast, the same $100,000 couple in Seattle would pay the smallest total income tax bill — just $3,286 — because Washington has no state or local income taxes.
But the order changes a little for everybody if one isolates just the federal tax burden.
In that case, Topeka tops the list. A family of four there could owe $4,066 to Uncle Sam versus $3,076 if they lived in Queens or $3,286 in Seattle.
Here’s why: State and city income, sales and property taxes affect a person’s federal tax burden because they are deductible on the federal income tax return. So the lower those taxes are, the smaller the federal tax deduction and the bigger a person’s federal tax bill.
A key reason why Topeka takes the No. 1 spot among the three cities in terms of the federal income tax burden is because residents there are likely to pay less in mortgage interest and property taxes than they would in either Queens or Seattle.
This story is part of a CNNMoney series exploring Americans’ real tax burden. We’d love to hear how you feel about yours at #YourEconomy.