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Dakotas, Wyoming have lowest combined dividend tax rates

If you live in the Dakotas or Wyoming and have dividend income, you're in luck. The three states have among the lowest combined federal and state tax rates on dividends, according to the Tax Foundation.

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Wyoming and South Dakota don't have personal income taxes and have the lowest rates nationally at 25 percent. But North Dakota, which does have a state income tax, is just behind at 26.3 percent.

The group calculates the average across the United States at 28.6 percent.

Meanwhile, fellow Northern Plains states are above the national average on dividend taxation. Minnesota has the fifth highest combined rate in the nation at 30.9 percent. Iowa is 10th at 29.6 percent and Montana and Nebraska are tied at 15th at 29.1 percent.

According to the Tax Foundation, most states tax personal dividend income as ordinary income. Thus, states with high income tax rates have the highest taxes on personal dividends.

Californians, according to the group, face the highest top marginal personal dividend tax rate in the United States of 33 percent, followed by New York at 31.5 percent and Hawaii at 31.6 percent.

The Tax Foundation is a non-partisan think tank and tax policy research organization.