Income Taxes
- New York City: NYC imposes both a state and a city income tax. The city’s income tax rates range from 3.078% to 3.876%, and the state’s income tax rates range from 4% to 10.9%, depending on income. This means that NYC residents can face a combined income tax rate of up to 12.9% for high earners.
- Los Angeles: LA residents only pay California state income taxes, which range from 1% to 13.3%, with the highest rate applying to those earning over $1 million. California has the highest state income tax rate in the country, but without the added burden of a city income tax.
Conclusion: NYC has the potential for a higher overall income tax burden due to the combination of both state and city taxes, while LA’s income tax is solely dependent on the state rate, which is the highest in the U.S.
Sales Taxes
- New York City: The combined sales tax rate in NYC is 8.875%, which includes both the state rate of 4% and the city rate of 4.5%.
- Los Angeles: LA has a higher sales tax rate of 10.25%, which includes California’s base rate of 7.25% and an additional 3% local tax in the city.
Conclusion: LA has a higher sales tax rate than NYC by 1.375%, which can make goods and services more expensive for consumers.
Property Taxes
- New York City: NYC has relatively low property tax rates compared to other major U.S. cities. The average effective rate is around 0.88% of a property’s assessed value.
- Los Angeles: LA’s property tax rate is higher at 1.16% of the property’s assessed value, though California’s Proposition 13 limits the rate of property tax increases.
Conclusion: While LA has a higher property tax rate, NYC’s property taxes are still significant due to high property values in many neighborhoods, especially in Manhattan.
Other Considerations
The cost of living in both cities is high, especially in terms of housing. However, NYC’s real estate market can be more expensive, especially in areas like Manhattan, making property taxes feel particularly burdensome. LA’s property tax rate is higher, but the overall real estate prices might be slightly lower than those in NYC.
Final Verdict
Overall, NYC tends to have a higher income tax burden due to both city and state taxes. However, LA has a higher sales tax rate and slightly higher property taxes. The decision on which city has worse taxes depends on your income level, spending habits, and where you live within each city.
