It takes NJ and NY residents the longest to earn enough to pay taxes

Tax Freedom Day is a day when the nation as a whole has earned enough money to pay its federal, state and local tax bill for the year. For 2019, Tax Freedom Day is April 16, the same as it was in 2018. But for some individual states, it's much later.

Tax Foundation's policy analyst Robert Bellafiore said to come up with that date, they take the total of all federal, state and local taxes and divide that number by the nation's income. This year, the total tax bill is 29 percent of national income. April 16 is 29% of the way through the year.

But New Jersey ranked 49th in the nation for having one of the latest tax freedom days. It's April 30 —a full two weeks after the nation as a whole.

Bellafiore said that's because largely because the federal tax system is progressive. In other words, the share of the tax burden rises with income. New Jersey is a high-income state so it has to work longer to pay off its part of the tax bill.

Americans as a whole will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes for a total bill of over $5.2 trillion, said Bellafiore.

He said the biggest tax for Americans is the individual income tax, which will take 42 days to pay. The next biggest tax is the payroll tax, which will take 26 days to pay followed by sales and excise tax, which will take 15 days to pay. It will take 11 days to pay property taxes for Americans as a whole and five days to pay corporate income taxes.

It will take New Jersey 82 days to pay for its federal taxes and then another 43 days to pay for its state and local taxes, according to Bellafiore.

He said there are different state tax policies that play a role in determining a state's individual tax freedom days. New Jersey has one of the highest top marginal individual income tax rates in the country and that contributes to it having a higher tax burden.

One misconception Bellafiore would like to clear up is that Tax Freedom Day is about the nation as a whole. It does not represent how long it takes the average American or the average household to pay off that year's taxes. Tax Freedom Day represents how long the entire country works to pay off its entire tax bill.

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