The Tax Foundation released its latest rankings on May 14, showing that New Jersey remains among the top five states for per capita state and local tax collections.
This ranking is significant as it highlights the high level of taxes collected from residents and businesses in New Jersey compared to other states. The data provides insight into how tax structures and sources of revenue impact both the state’s economy and its taxpayers.
According to the Tax Foundation, state and local governments across the United States collected an average of $7,038 per capita in total taxes during fiscal year 2023. The highest collecting states were New York ($12,506), North Dakota ($9,834), Hawaii ($9,758), Connecticut ($9,388), and New Jersey ($9,178). The District of Columbia surpassed all states with $15,009 per capita. In contrast, Mississippi had the lowest collection at $4,868 per capita.
“The District of Columbia, New York, and New Jersey all have highly progressive state income tax structures and a greater reliance on public sector services like transit,” said Nicole Fox, policy analyst at the Tax Foundation. She also noted that “Connecticut also has a progressive income tax structure but to a lesser extent. Hawaii has a highly progressive income tax structure as well but it also has an overly broad sales tax… Hawaii also receives a large amount of tax revenue from tourism.” Fox explained that North Dakota’s position in the top five is due to significant oil and gas revenues despite having one of the country’s lowest income tax rates.
The report described severance taxes—imposed on extracting non-renewable resources—and tourism-related taxes as examples of “tax exporting,” which can make per capita figures appear higher than what residents actually pay. Taxes on businesses may be exported partly to investors or employees outside the state as well. “It is important to keep both legal incidence and economic incidence in mind when evaluating the true costs of any tax,” Fox said. “This helps explain why some states appear high-tax on a per-capita basis even when resident voters bear a relatively low share of the burden.”
This marks the second consecutive year that New Jersey ranked fifth for state and local tax collections; last year’s figure was $9,366 using fiscal year 2022 data.
The business community plays an important role in this context: The New Jersey Business and Industry Association serves as one of the nation’s largest statewide employer associations representing private-sector employers throughout New Jersey while facilitating partnerships among businesses, government entities, and academic institutions according to the official website.
