What Most Taxpayers in NY, CA, and NJ May Not Know About Taxes
Here’s a concise and eye-opening breakdown of what most taxpayers in high-tax states like New York (NY), California (CA), and New Jersey (NJ) don’t realize about their federal and state tax burden—and what they get in return:
Residents in NY, CA, and NJ:
1. Pay some of the highest state taxes in the country (income, property, sales) and pay more in federal taxes than residents of most other states. Result: These states are net donors to the federal government.
2. Your Federal Tax Dollars Are Funding Other States [based on Fiscal Year 2023/2024 data], for every $1 sent to Washington, these states get less than $1 back:
New Jersey gets about $0.82
New York gets about $0.91
California gets about $0.94
Meanwhile, states like Kentucky, Mississippi, and West Virginia receive $2–$3 for every $1 they send to the federal government.
That’s a net loss of tens of billions annually for NY, CA, and NJ.
3. The SALT Cap Made It Worse
The 2017 Tax Cuts and Jobs Act capped deductions for State and Local Taxes (SALT) at $10,000. This disproportionately hurt taxpayers in high-tax states, since they can no longer deduct the full amount of state taxes paid. In effect, you’re taxed on taxes, especially in NY, CA, and NJ.
4. You're Subsidizing Federal Programs in Lower-Tax States
Your federal tax dollars help fund:
Medicaid expansion
Infrastructure projects
Disaster relief
Social programs
…in states that often pay less in taxes and receive more federal aid per resident.
The Hidden Reality:
State Federal Return per $1 Sent SALT Deduction Cap Impact
New Jersey $0.82 High negative impact
New York $0.91 Very high
California $0.94 High
What Can You Do?
Know your numbers: Work with a tax pro to maximize what you can still deduct.
Advocate: Support efforts to repeal or raise the SALT cap.
Invest smartly: Make use of energy efficiency credits, 529 plans, and retirement savings deductions to reduce your tax liability.
6/23/25