Hawaii is famous for its beautiful beaches, balmy weather and … brutal taxes?
That’s the conclusion of a recent study by personal finance site WalletHub, which ranked the island chain No. 1 on its list of states where residents pay the highest taxes relative to their income (or their “tax burden”).
Hawaii led the way with residents using 13.30 percent of their income to pay state taxes, followed by New York (12.39 percent); Vermont (11.10 percent); New Mexico (10.75 percent); and Maine (10.01 percent).
The Pacific paradise’s polar opposite, Alaska, had the lowest tax burden on the list at 4.92 percent with New Hampshire (5.38 percent), Tennessee (6.21 percent), Florida (6.27 percent) and Delaware (6.28 percent).
WalletHub’s rankings were based on the sum of the percentage of income residents paid for property tax, income tax and taxes required for buying retail goods (income tax) and specific goods like alcohol and tobacco (excise tax).
The percentages aren’t based solely on a state’s given tax rate. Instead, they take into account a resident’s average income plus state tax rates. The result is a ranking that better reflects what state taxes cost residents.
Part of the reason why Hawaii’s tax burden is so high is that it uses a marginal scale for income tax. Instead of charging all residents one income tax rate, it charges higher income tax rates for higher income, the state’s Department of Taxation wrote in a 2023 post.
The higher tax rates take effect pretty quickly, with residents earning $48,000 -$150,000 paying 8.25 percent - higher than the highest income tax rate in all but seven states.
Other factors that can impact how much a resident’s income goes toward taxes are the deductions a state may offer. Bigger deductions can result in lower tax bills - and lower tax burdens.
WalletHub provided rankings for each of its tax categories, too. Vermont ranked highest for property tax as a percentage of income (4.89 percent).
Oregon had the highest tax burden for personal income tax (4.76 percent).
Hawaii’s sales and excise tax burden was highest in the nation (7.48 percent) and eight times higher than the state with the lowest tax burden in the category, New Hampshire (0.91 percent).
Overall, the study painted an expensive picture for residents of states with the highest tax burden: Hawaii, New York, Vermont, New Mexico and Maine.
Hawaii homeowners are likely feeling the worst sting. Not only do they shoulder the highest tax burden in the U.S. but homeowners insurance rates rose 50 percent in 2025 after fires and floods ravaged parts of the state from 2023 to 2025, according to InsuranceNewsNet.
The Pacific paradise’s polar opposite, Alaska, had the lowest tax burden on the list at 4.92 percent followed by New Hampshire (5.38 percent); Tennessee (6.21 percent); Florida (6.27 percent) and Delaware (6.28 percent).
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