Best and Worst States for Taxpayer ROI

While federal income-tax rates are uniform across the country, state funding from Washington varies widely. Which states offer taxpayers the most and least bang for their buck?

According to Gallup, nearly three in five U.S. adults feel they are paying way too much in taxes and that more than half of every tax dollar is wasted by the government. But does the return — in terms of the number and quality of available public services their state — make up for the tax investment?

Many factors are involved in determining how much ROI Americans receive on their tax payments, not the least of which is the state in which they reside. Some states receive significalty more federal funding than others.

To find out which states yielded the best taxpayer ROI, WalletHub put its research team to the test. They contrasted state and local tax collections in each of the 50 states with the public services provided in those states in five categories: education, health, safety, economy and infrastructure and pollution.

Of course, many factors other than geography are involved in determining the public services individual states provide and how efficiently they use their tax dollars. As part of its report, WalletHub asked a number of economists and public policy experts to weigh in on whether states with high tax burdens provide better service and how governments can spend more efficiently to reduce waste.

Source: WalletHub

Here are the five best and the five worst states when it comes to taxpayer ROI.

Best States

1. New Hampshire

  • Lowest percentage of residents living in poverty
  • Fourth lowest violent crime rate in the nation

2. South Dakota

  • Fourth best hospital system in the country
  • Ninth best in total taxes paid per capita, counting only individuals aged 18 and older

3. Florida

  • Third best in total taxes paid per capita, one of the lowest tax rates nationwide
  • Fourth best roads and bridges nationally

4. Virginia

  • Third lowest violent crime rate in the country
  • 15th best in total taxes paid per capita

5. Alaska

  • Third lowest percentage of residents living in poverty
  • Best state in total taxes paid per capita

Worst States

46. New York

  • Some of the worst hospital systems in the country
  • One of the worst water quality scores nationwide

47. California

  • Residents pay more taxes than in other states
  • Quality of governmental services ranks 32nd

48. New Mexico

  • School systems are the second worst in the country
  • Third highest violent crime rate nationwide

49. Hawaii

  • Third worst in roads and bridges
  • Third worst water quality in the country

50. North Dakota

  • Residents pay more in taxes than in any other state
  • Ninth for overall quality of governmental services