What the Richest 1% Pay in Taxes on the East Coast

Being rich has its perks, but it can get expensive come tax time. An analysis of U.S. government data from the Tax Foundation found that the top 1% of earners in the United States paid average income taxes of $653,730 in 2021, the latest year data are available. That compares to $50,963 for the top 25% of earners and $667 for the bottom 50%.

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Of course, the wealthiest Americans also earn a lot more money than everyone else. The top 1% earned an average annual adjusted gross income of about $2.5 million in 2021, according to the Tax Foundation. The top 25% earned an average of $276,414, boosted by the very high earners. The bottom 50% earned an average of just less than $20,000.

The federal income tax rate you pay depends on how much money you earn — and that is partly influenced by where you live. If you live on the East Coast, you probably earn more money and pay more taxes than those who live elsewhere. That’s especially true if you live in the Northeast. In fact, the East Coast is home to four of the five states where the top 1% of earners pay the most in federal income taxes, according to a GOBankingRates study of IRS data.

Here’s what the richest 1% paid in taxes as of 2020, ranked in order:

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Connecticut

• Minimum income to be considered 1% : $819,630
• Average income of the 1%: $2,994,197
• Average income tax paid by the 1%: $850,486
• Average tax rate of the 1%: 28.40%

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New York

• Minimum income to be considered 1% : $668,039
• Average income of the 1%: $2,636,907
• Average income tax paid by the 1%: $745,923
• Average tax rate of the 1%: 28.29%

Massachusetts

• Minimum income to be considered 1% : $777,052
• Average income of the 1%: $2,616,125
• Average income tax paid by the 1%: $710,286
• Average tax rate of the 1%: 27.15%

Florida

• Minimum income to be considered 1% : $597,787
• Average income of the 1%: $2,610,168
• Average income tax paid by the 1%: $673,926
• Average tax rate of the 1%: 25.82%

Connecticut is where the richest 1% pay the most in average income taxes, followed by Wyoming at an average of $827,796. Even pricey California can’t crack the Top 5, coming in at No. 6 with an average of $655,180. Here are the rest of the Top 10 states:

7. Nevada : $573,199

8. Washington : $551,288

9. New Jersey : $534,143

10. Illinois : $468,366

The way the U.S. tax system works, the highest-earning Americans also pay the highest tax rates. As previously reported by GOBankingRates, the top federal income tax rate in 2024 is 37%. That rate applies to incomes of $609,350 and higher for single taxpayers and $731,200 and higher for couples filing jointly.

It’s worth noting that the top marginal tax rate has been much higher throughout U.S. history. It peaked at 94% in 1944 and 1945, according to the Tax Policy Center. The lowest rate in recent history was 28% in the late 1980s. So while the wealthy still pay the highest rate, they pay much less as a percentage of the total than they did in the past.

Here are the other rates for tax year 2024, according to the IRS:

• 35% for single filer incomes over $243,725 ($487,450 for married couples filing jointly)
• 32% for single filer incomes over $191,950 ($383,900 for married couples filing jointly)
• 24% for single filer incomes over $100,525 ($201,050 for married couples filing jointly)
• 22% for single filer incomes over $47,150 ($94,300 for married couples filing jointly)
• 12% for single filer incomes over $11,600 ($23,200 for married couples filing)

This article originally appeared on GOBankingRates.com : What the Richest 1% Pay in Taxes on the East Coast