January 16, 2003 Taxable Dividends Vary Dramatically by State Scott Hodge Scott Hodge Print this page Subscribe Support our work Fiscal Fact No. 3 Contrary to claims that the Administration’s proposal to eliminate the double tax on dividend income will benefit only a handful of Americans, the latest IRS data show that more than one quarter of all tax returns included dividend income in 2000. That’s 34 million tax returns, representing over 69 million people who claimed $144.6 billion in dividend income. The percentage of taxpayers claiming dividend income varies greatly by state. Connecticut and New Jersey had the highest percentages of taxpayers claiming taxable dividends: 37.3% and 35.7% respectively. Other states with nearly one-third of their taxpayers claiming dividend income were Colorado (30.4%), Massachusetts (32.4%), Minnesota (32.0%), New Hampshire (30.0%), New York (30.4%), Pennsylvania (30.4%), and Wisconsin (30.8%). California led the nation in the total amount of dividends claimed in 2000: $18.7 billion. New York was second with $12.3 billion, followed closely by Florida with $11.9 billion. Illinois and New Jersey rounded out the top five with taxpayers claiming $7.1 billion and $5.9 billion in dividends respectively. Based upon these 2000 returns, Tax Foundation economists have estimated how much each state’s taxpayers would save if dividends are exempted from taxation as the President proposes (see Table below). If dividend income in 2003 matches the 2000 level, taxpayers would save a total of $20.2 billion nationwide – an average of $593 among those tax returns. The states that would receive the most tax relief per taxpayer include: The District of Columbia ($1,221 per-taxpayer); Nevada ($898); Connecticut ($886); Wyoming ($885); and Florida ($881). Year 2000 Year 2003 State Returns With Dividend Income Percent of Returns w/ Dividend Income Total Dividend Income ($thousands) Estimated Tax Relief from Dividend Tax Exclusion ($thousands) Savings Per Tax Return with Dividend Income United States 34,099,783 26.2% $144,673,140 $20,233,057 $593 Alabama 344,337 18.1% $1,301,348 $152,886 $444 Alaska 93,502 28.4% $255,374 $33,965 $363 Arizona 562,837 26.1% $2,422,650 $312,540 $555 Arkansas 209,751 18.8% $1,040,068 $119,926 $572 California 3,909,981 26.3% $18,760,934 $2,859,955 $731 Colorado 636,620 30.4% $2,505,211 $364,286 $572 Connecticut 622,976 37.3% $3,184,709 $552,192 $886 Delaware 109,609 29.0% $378,169 $50,998 $465 Florida 1,973,470 26.3% $11,892,958 $1,738,382 $881 Georgia 800,241 22.0% $3,282,934 $433,018 $541 Hawaii 161,773 28.3% $171,333 $20,128 $124 Idaho 134,351 24.0% $463,083 $53,955 $402 Illinois 1,701,830 29.4% $7,146,114 $1,050,112 $617 Indiana 643,443 22.7% $2,147,396 $265,375 $412 Iowa 397,577 29.4% $1,105,279 $127,000 $319 Kansas 339,549 27.8% $1,204,027 $159,800 $471 Kentucky 346,700 19.8% $1,276,911 $147,949 $427 Louisiana 345,541 18.4% $1,251,115 $150,731 $436 Maine 152,160 25.1% $596,961 $69,458 $456 Maryland 733,391 28.6% $3,028,570 $407,994 $556 Mass. 1,008,963 32.4% $4,798,545 $802,751 $796 Michigan 1,262,007 27.3% $4,691,541 $616,549 $489 Minnesota 763,582 32.0% $2,387,314 $316,617 $415 Mississippi 173,473 14.8% $590,616 $63,324 $365 Missouri 665,460 25.9% $2,433,067 $308,133 $463 Montana 124,028 29.2% $384,355 $42,061 $339 Nebraska 232,926 28.8% $700,433 $85,559 $367 Nevada 197,671 20.7% $1,227,916 $177,455 $898 New Hampshire 191,720 30.0% $824,461 $122,117 $637 New Jersey 1,453,494 35.7% $5,971,989 $943,644 $649 New Mexico 140,281 19.3% $483,089 $50,021 $357 New York 2,610,955 30.4% $12,347,427 $1,895,482 $726 North Carolina 835,750 23.0% $3,208,042 $392,890 $470 North Dakota 83,308 27.5% $190,172 $21,259 $255 Ohio 1,438,884 25.8% $5,168,271 $636,376 $442 Oklahoma 279,477 19.1% $906,470 $106,374 $381 Oregon 428,656 27.4% $1,643,203 $204,588 $477 Pennsylvania 1,763,134 30.4% $7,146,042 $959,074 $544 Rhode Island 135,533 27.4% $493,346 $63,974 $472 South Carolina 355,681 19.7% $1,394,123 $158,838 $447 South Dakota 94,155 26.5% $276,372 $34,278 $364 Tennessee 474,633 18.5% $1,834,325 $233,708 $492 Texas 1,809,168 20.0% $7,937,488 $1,157,181 $640 Utah 193,861 20.6% $651,022 $72,226 $373 Vermont 89,460 29.9% $391,860 $47,600 $532 Virginia 958,021 28.7% $3,768,585 $516,530 $539 Washington 790,470 28.5% $3,431,490 $521,340 $660 West Virginia 138,893 18.5% $469,918 $51,164 $368 Wisconsin 800,505 30.8% $2,502,234 $307,761 $384 Wyoming 64,822 27.6% $385,764 $57,337 $885 D.C. 67,551 24.2% $525,235 $82,469 $1,221 Topics Center for Federal Tax Policy Data Individual Capital Gains and Dividends Taxes Research Tags Putting a Face on America's Tax Returns
