The goal of Tax Freedom Day is to help Americans understand the cost of government, and according to the report, this year Americans will collectively pay $3.39 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of more than $5.19 trillion, or 30 percent of the nation’s income. Meaning Americans will collectively spend more on taxes in 2018 than they will on food, clothing, and housing combined.
Each year, Americans work together for several months to earn enough money to cover the federal, state, and local taxes they owe.
Using that information, the Washington D.C.-based tax policy nonprofit sends out a report determining when the country as a whole, and each state has paid off its tax bill.
This year Tax Freedom Day in Alabama was April 5, making it one of three states with the second lowest average tax burden in 2018. That’s also down four days from where it was last year.
Tax Freedom Day for the nation as a whole is April 19 — 109 days into the year — and three days earlier than it was in 2017.
“The three-day change from last year is largely due to the recently-enacted Tax Cuts and Jobs Act, which substantially lowered federal individual and corporate income taxes,” said Tax Foundation Analyst Erica York.
Here’s how Alabama compares to the rest of the nation: