New York State has the highest total tax burden, with residents paying out around 12% of their income to state and local governments45. California, Hawaii, New York, New Jersey and Washington D.C. have some of the highest marginal state income tax rates, with each having a top tax rate above 10%3. New Hampshire only taxes interest and dividends (at a rate of 5 percent)1. Washington only taxes capital gains (at a rate of 7 percent)1. Massachusetts taxes short-term capital gains at a higher rate (12 percent) than other income (5 percent)1. New Hampshire taxpayers pay 9.7% of their total income to state and local taxes, while Massachusetts taxpayers pay 10.5%2.