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Dakota residents have biggest federal tax bills, says study

Federal-tax-bill-check-1024x686_cropped

Nobody likes to owe taxes at filing time. And if you owe too much, you could face added penalties for not having enough money withheld or underpaying estimated taxes throughout the year.

But every year, lots of folks find they have to write a check to the U.S. Treasury or set up a payment plan with the Internal Revenue Service.

The financial technology company SmartAsset.com recently took a look at where the U.S. taxpayers have the biggest tax bills.

High plains tax bills: Sorry, Dakotans. You are the unlucky winners.

Yep, residents of both South and North and South Dakota owed the most based on SmartAsset's analysis. To create the 50 states plus D.C. rankings, the company analyzed IRS data on all 50 states and the District of Columbia, focusing on the number of tax returns that had underpayments and the total amount of underpaid taxes.

That calculation shows North Dakota atop the owing list with an average tax payment equaling $6,806.

South Dakota takes second place, averaging about $100 less at $6,697.

The study gets this weekend's Saturday Shout Out. Check it out to see find out your state's tax-owing average and how it compares to the other jurisdictions.

To whet your reading appetite before you click on over, here are a couple more highlights:

  • Higher-income states tend to owe more taxes. Seven of the top-10 places with the largest tax bills are also some of the highest earning in the country. Massachusetts, Connecticut, Washington, New Jersey, Washington D.C., California and New Hampshire all rank in the top 15 for median household income.
  • States with more self-employed workers have slightly higher tax bills. One of the pitfalls of being self-employed is having to pay your own taxes without automatic withholdings from every paycheck. The top-25 states with the highest average tax underpayment have an average self-employment rate of 10 percent. That figure is a slightly lower 9.5 percent in the bottom-25 states.

And this map of the top 10 tax owing states:

States-largest-tax-bills_2019-top-10_graphic-smartasset

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Comments

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Rajiv Dalui

Thank you for your post. Keep it up.

Patrick

At first I was very confused on what this article was trying to convey. When I think of taxes owed, I assume that means line 11 of the 2018 1040.
After looking through the linked article, now I understand that this is referring to underwitholdings only.

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