How States Raise Their Tax Dollars

FY 2020

How States Raise Their Tax Dollars, FY 2020

Note: this data has been updated.

Taxes make up about half of state government revenue, with two-thirds of states’ total tax dollars coming from levies on personal income (36.5%) and general sales of goods and services (32.2%).

Broad-based personal income taxes are the greatest source of tax dollars in 29 of the 41 states that impose them, with the highest share—67.6%—in Oregon. General sales taxes are the largest source in 16 of the 45 states that collect them. Texas is the most reliant on these taxes, at 63%. Other sources bring in the most tax revenue in a handful of states: severance taxes in Alaska and North Dakota; property taxes in Vermont; license taxes and fees, such as franchise taxes that companies pay to incorporate in a state, in Delaware; and selective sales taxes on particular goods and services, such as tobacco and hotel rooms, in New Hampshire.

This infographic illustrates the sources of each state’s tax revenue.

Mix of Tax Sources by State, FY 2020

Select revenue sources below to highlight them and resort the chart:

Personal income
General sales
Selective sales
Corporate income

Note: Unlike 41 states with broad-based personal income taxes, New Hampshire only taxes certain dividend and interest income. A similar tax was in place in Tennessee in FY 2020 but has been fully phased out as of Jan. 1, 2021.

Source: U.S. Census Bureau’s 2020 Annual Survey of State Government Tax Collections

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Fiscal 50

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Data Visualization

Fiscal 50: State Trends and Analysis, an interactive resource from The Pew Charitable Trusts, allows you to sort and analyze data on key fiscal, economic, and demographic trends in the 50 states and understand their impact on states’ fiscal health.

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Where States Get Their Money, FY 2020

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Pandemic relief aid increased the portion of state government revenue coming from federal dollars to nearly 36% in fiscal year 2020, the highest level on record. The federal share of revenue hit new highs in most states. Federal funds were the largest source of dollars in 18 states, up from just four states a year earlier. Taxes remained the largest revenue source in the other 32 states and overall, at 45.8% of state revenue.


Economic Downturns: Protecting State and Local Budgets

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In particularly challenging times, when revenue is volatile and priorities may need to be reassessed, it is important that lawmakers manage budgets effectively to mitigate fiscal stress.