These states get the most out of taxpayer dollars

Red states have a lower tax burden than blue states, a new report from WalletHub found.

WalletHub compared the 50 states according to the three types of state tax burdens — property taxes, individual income taxes, and sales and excise taxes — to determine which states get the best (and worst) return on investment (ROI) when state education, health, safety, economy, infrastructure, and pollution rates for 2020 were considered.

Read more: Tax tips for homeowners 2021: Tax credits and breaks

Every American, regardless of state residence, pays the same federal taxes according to their income. However, certain states carry state income tax rates and that’s where things tend to skew, especially when it comes to Democratic- and Republican-leaning states in the most recent presidential election.

“If you're in a red state, you're typically getting a better ROI just from the dollar sense on your taxes,” Jill Gonzalez, WalletHub’s senior analyst, told Yahoo Money.

The best and the worst

The study concluded that the heaviest tax burden and lowest ROI is felt by residents of the Aloha State, meaning the state spending isn’t aligned with what Hawaiians spend on state and local taxes. Hawaiians hold the 49th spot for total taxes paid per capita rank and slightly below average at 33rd for overall government services rank.

Rounding out the bottom-ranking states are California (No. 49); New Mexico (No. 48); North Dakota (No. 47); Delaware (No. 46); Nevada (No. 45); New York (No. 44); Arkansas (No. 43); Louisiana (No. 42), and Vermont (No. 41).

The country’s lowest tax burden and best ROI is seen in New Hampshire. Residents of the Granite State enjoy low state taxes and an individual's earned income is spared from taxes. However, residents are subject to a 5% tax rate on income from dividends and interest. The state ranks highly for lowest occurrences of violent crime and has the lowest percentage of residents living in poverty.

The 2020 U.S. presidential election results. (Yahoo Election Center)
The 2020 U.S. presidential election results. (Yahoo Election Center)

The remaining top 10 states for the lowest tax burdens are Florida (No. 2); South Dakota (No. 3); Virginia (No. 4); Missouri (No. 5); Ohio (No. 6); Texas (No. 7); Georgia (No. 8); Nebraska (No. 9), and Tennessee (No. 10.)

Gonzalez explained that the ROI is based on a purely dollars-for-dollars sense. Because less money is being used for taxes for those state residents, there’s freedom to spend more income on things like recreation or dining.

But there is something to be said for higher taxes when quality public education, health care, lower rates of violent crime, and better water is received in return. “There might be this sense of ‘you get what you pay for,’” Gonzalez said.

“We have generally high tax states, especially when it comes to income tax and property tax, all near the top,” she said, referencing a cluster of mid-Atlantic and New England states like Vermont (No. 2), Connecticut (No. 5), Maine (No. 13), New Jersey (No. 15), and New York (No. 19) that consistently receive high marks for education, health care, and safety.

A pedestrian braves the cold on January 30, 2019 in Minneapolis, Minnesota. - Bitter cold with temperatures lower than Antarctica gripped the American Midwest on Wednesday, grounding flights, closing schools and businesses and raising frostbite and hypothermia fears for homeless residents. (Photo by STEPHEN MATUREN / AFP)        (Photo credit should read STEPHEN MATUREN/AFP via Getty Images)
A pedestrian braves the cold on January 30, 2019 in Minneapolis, Minnesota. (Photo credit should read STEPHEN MATUREN/AFP via Getty Images)

Midwestern states are “trending more and more” to the top and increasing tax burdens, Gonzalez noted. “Minnesota, this year, is now in the top 10; Iowa, North Dakota, Indiana, Nebraska, and Wisconsin [are] all in the top 20. That was not always the case.”

Minnesota, which ranked 33rd overall, took the top spot for overall government services and was singled out for its stellar health care system and low pollution.

Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.