Key Takeaways
- Where a family lives plays a major role in its income tax burden, as state policies and local living costs vary widely across the U.S.
- The national effective tax rate for a middle-class family of 4 is 13.6%, with an average annual tax bill of $15,522.
- Large coastal metropolitan areas like San Francisco, San Jose, and New York City have the highest tax burdens, topping out at over 20%.
- Places in Texas, Florida, and Tennessee dominate the list of low-tax municipalities — with rates below 10% — mainly because there is no state income tax.
With the recent passage of legislation extending key provisions of the Tax Cuts and Jobs Act (TCJA), the debate over who benefits most from the U.S. tax code has once again come into focus. Originally passed in 2017, the TCJA lowered individual tax rates, increased the standard deduction, and expanded the Child Tax Credit — changes that many experts say offer benefits to low- and middle-income families. At the same time, provisions like reduced rates on high incomes, lower corporate taxes, and expanded estate and gift tax exemptions disproportionately favor wealthier Americans,¹ according to analyses from bipartisan sources.
In light of this ongoing policy debate, we examine where middle-class families — specifically 2-parent households with 2 children — face the highest and lowest income tax burdens across the U.S. By comparing the income required to maintain an adequate standard of living in each location to the resulting federal and state taxes, the study highlights where middle-class families are most and least heavily taxed.
Cities With the Largest Tax Burden
Among the nation’s largest metro areas, San Francisco imposes the greatest income tax burden on middle-class families. A household with 2 adults and 2 children in the San Francisco-Oakland-Fremont area faces an effective tax rate of 20.1%. That translates to $39,285 in combined federal and state income taxes on a pretax income of $195,525, which is the highest income level required for an adequate standard of living in any metropolitan area analyzed.
Close behind is San Jose, California, where middle-class families pay 19.9% of their income in taxes. With a required pretax income of $192,708 and taxes totaling $38,418, San Jose households face a similarly steep cost of living and tax burden, reflecting the broader financial demands of the high-cost Silicon Valley region.
The New York metropolitan area ranks third, with a 17.2% effective tax rate. Families living in and around the Big Apple pay an estimated $25,292 in taxes on pretax incomes of $147,063. Despite a lower income threshold than the Bay Area’s San Francisco and San Jose, the region’s state and local tax structure contributes to a relatively high burden on middle-income earners.
Rounding out the top 10 are several other high-cost urban areas, including San Diego (17.1%), Boston (17.0%), and Washington, D.C. (16.6%). Portland, Oregon; Denver; Los Angeles; and Sacramento, California, also fall within the top 10, each with effective tax rates between 15.7% and 16.6%. Notably, 5 of the 10 metropolitan areas with the highest tax burdens are in California, highlighting the combined effect of elevated living costs and the state’s high taxes.
Cities With the Smallest Tax Burden
San Antonio has the lowest effective tax rate for middle-class families among large U.S. metropolitan areas at just 9.6%. Families of 4 earning $97,875 — the estimated pretax income needed for a modest standard of living — pay $9,357 in federal and state income taxes annually. This light tax burden is largely thanks to Texas’s lack of a state income tax, which significantly reduces overall taxes.
Houston ranks a close second, also with a 9.6% tax rate. Middle-class families there pay $9,425 on a pretax income of $98,033. Like San Antonio, Houston benefits from the absence of state income tax, which allows families to retain more of their earnings relative to similar areas in higher-tax states.
Memphis, Tennessee, ranks third, with a 9.9% effective tax rate. Families earning $93,949 pay $9,310 in annual taxes. Tennessee, like Texas, also does not have an individual income tax, which helps keep tax burdens low for families across the income spectrum.
The rest of the bottom 10 is dominated by areas in other no-income-tax states, including Dallas, Nashville, Jacksonville, Tampa, Las Vegas, and Orlando. Tucson, Arizona, is the only metropolitan area in the bottom 10 in a state that does impose an income tax, though at a relatively low rate. Middle-class families in these cities benefit not only from the absence of (or low) state income taxes but also from generally lower living costs, which reduce the income required to maintain a modest standard of living. As a result, these households face smaller tax bills both in absolute terms and as a share of their income.
Mapped: Middle-Class Tax Rates by State
State-level tax burdens for middle-class families largely mirror the patterns seen at the metropolitan level, with the highest effective rates concentrated along the West Coast and in the Northeast. Hawaii tops the list with an effective tax rate of 17.5%, followed closely by New York, Connecticut, and Massachusetts — all states with relatively high living costs and progressive income tax structures. California also ranks high, at 16.4%.
At the other end of the spectrum, the lowest effective tax rates are concentrated in states with low or no personal income tax. Tennessee and North Dakota tie for the lowest burden at 9.2%, with South Dakota, Texas, Wyoming, and Florida also among the most tax-friendly for middle-class families. In many of these states, lower living costs combined with the absence of a state income tax result in comparatively low pretax income requirements and smaller tax bills overall.
Hot Tip:
While this report focuses on income taxes — especially in light of recent legislative changes — it’s important to note that these savings can be offset by other costs. States with low or no income tax often generate revenue in other ways, such as higher sales or property taxes or reduced public services that shift expenses onto households. In many cases, the gains from income tax reductions may be offset by increased out-of-pocket spending on essentials like health care, utilities, or education.
Full Results
Methodology
This analysis uses data from the 2025 Economic Policy Institute Family Budget Calculator and the U.S. Census Bureau to compare tax burdens on middle-class families across U.S. metropolitan areas and states. It focuses on households with 2 adults and 2 children.
For the purposes of this analysis, a middle-class income is defined as the minimum pretax income required to maintain a modest but adequate standard of living in each city. This definition accounts for the cost of essentials such as housing, food, transportation, child care, health care, and other necessities, as estimated by the Economic Policy Institute. The effective tax rate was then calculated by dividing the total estimated federal and state income taxes — including Social Security and Medicare payroll taxes — by this pretax income level. Because living costs and income needs vary substantially by location, cities with lower effective tax rates may reflect either genuinely lower tax structures, lower income requirements, or a combination of the 2.
County-level data were aggregated to the municipal and state levels using population-weighted averages. Only metropolitan areas with complete data were included. To improve comparability, municipalities were grouped into 3 categories by population size: small (fewer than 350,000 residents), midsize (350,000 to under 1 million), and large (1 million or more).
Final Thoughts
As national discussions about tax fairness and middle-class economic stability continue, the geographic disparities in tax burdens remain striking. While federal rates apply uniformly, differences in state income taxes and local living costs mean that middle-class families in some parts of the country face far higher effective tax rates than others. For households earning enough to attain a modest standard of living, the city or state they live in can significantly influence how much of their income is lost to taxes — and how much is left to support their daily needs.
References
¹ Hernandez, Fredrick; Lautz, Andrew. Bipartisan Policy Center. 2025, April 7. The 2025 Tax Debate: Who Benefits from Tax Cuts?. Retrieved on July 6, 2025, from https://bipartisanpolicy.org/explainer/the-2025-tax-debate-who-benefits-from-tax-cuts/.
