Forty-one states and the District of Columbia charge a personal income tax, and the state income tax you owe varies sharply by state: rates run from 2% to 13.3%, some states apply a single flat rate to every dollar, others use graduated brackets that climb with income, and nine states tax no wages at all. Where you live, and in some cases where you work, can shift your annual bill by thousands of dollars.
States With No Income Tax
Nine states impose no broad-based personal income tax on wages or salary:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
New Hampshire is the newest on the list. It previously taxed interest and dividend income but repealed that tax for years beginning after December 31, 2024.1NH Department of Revenue Administration. Interest and Dividends Tax If you had interest or dividend income in New Hampshire in 2024 or earlier, a filing obligation may still exist for those prior years; nothing applies going forward.
Washington needs a footnote. It taxes no wages, but it does impose a capital gains excise tax on profits from selling long-term investments such as stocks and bonds. The rate is 7% on gains between roughly $278,000 and $1 million, and 9.9% on gains above $1 million.2Washington Department of Revenue. Capital Gains Tax Most residents never approach those thresholds, but high-earning investors in Washington do pay a state-level tax that residents of Alaska or Wyoming avoid entirely.
No income tax does not mean a low overall tax burden. These states typically make up the revenue through property taxes and sales taxes. Texas and Florida lean heavily on both. Alaska draws on oil revenue but has a high cost of living in many areas. What you save on income tax can come back to you through other channels.
States With a Flat Income Tax
About a third of income-tax states use a flat rate: every dollar of taxable income is taxed at the same percentage no matter what you earn. As of 2026, at least 16 states use this approach.3Tax Foundation. State Individual Income Tax Rates and Brackets, 2026
- Arizona: 2.50%
- Colorado: 4.40%
- Georgia: 5.19%
- Idaho: 5.30%
- Illinois: 4.95%
- Indiana: 2.95%
- Iowa: 3.80%
- Kentucky: 3.50%
- Massachusetts: 5.00%
- Michigan: 4.25%
- Mississippi: 4.00%
- Missouri: 4.00%
- North Carolina: 3.99%
- Ohio: 2.75%
- Pennsylvania: 3.07%
- Utah: 4.50%
Pennsylvania’s 3.07% is among the lowest headline rates in the country; Idaho’s 5.30% sits at the higher end of the flat-rate group. Deductions and exemptions still apply in most of these states, so your effective rate can be lower than the posted number.
Several of these states are recent converts. Georgia moved to a flat 5.19% under 2025 legislation.4Georgia Department of Revenue. Important Tax Updates Iowa landed at 3.80% after years of graduated rates that once exceeded 8%.5Iowa Department of Revenue. IDR Announces 2026 Individual Income Tax and Interest Rates Ohio consolidated its brackets into a single 2.75% rate for most taxpayers, with income below roughly $26,000 exempt.3Tax Foundation. State Individual Income Tax Rates and Brackets, 2026 Kentucky dropped to 3.50% as part of a phased plan that could eventually eliminate its income tax if revenue targets are met.
States With Graduated Income Tax Rates
The remaining 25 or so states with an income tax use graduated brackets, the same structure the federal income tax uses. Your first slice of income is taxed at the lowest rate, the next slice at a slightly higher rate, and so on up through however many brackets the state defines. Only the income inside a bracket is taxed at that bracket’s rate.
That distinction trips people up. If your state’s top bracket starts at $200,000 and you earn $210,000, only the last $10,000 gets taxed at the top rate. Everything below is still taxed at the lower rates.
California has the highest top marginal rate in the country at 13.3%, applied to income above $1 million, across 10 brackets that start at 1%.3Tax Foundation. State Individual Income Tax Rates and Brackets, 2026 New York’s rates run from 4% to 10.9%, with the top rate hitting income over $25 million for joint filers. Hawaii, New Jersey, Oregon, and Minnesota also carry top rates above 9%.
States vary a lot in how many brackets they use and where the cutoffs fall. Some pack most taxpayers into two or three effective rates; Hawaii spreads its system across 12 brackets. If you live in a state with many narrow brackets, getting your withholding right through the year takes more attention than in a flat-tax state.
States With the Highest Top Rates
For high earners, residency can represent a six-figure annual difference. The steepest top marginal rates as of 2026:
- California: 13.3%
- New York: 10.9%
- New Jersey: 10.75%
- Oregon: 9.9%
- Minnesota: 9.85%
- Vermont: 8.75%
These top rates apply only to income above high thresholds, so they touch a small share of filers. But for those filers, the numbers add up quickly. Someone earning $2 million in California pays over $200,000 in state income tax alone.
When Local Income Taxes Stack on Top
A handful of states let counties or cities layer their own income taxes on top of the state rate. Maryland is the most prominent: all 23 counties and Baltimore City charge a local income tax ranging from 2.25% to 3.30% of taxable income, collected alongside the state return.6Maryland General Assembly. Maryland Code Tax – General 10-106 – County Income Tax New York City residents pay a city income tax on top of New York State rates. Ohio has widespread municipal income taxes. In these places, your combined rate can run well above what the state number alone suggests.
Which State Gets to Tax You
Your state income tax obligation depends on where you are considered a resident, and that is not always where your mail arrives. States generally use two tests: domicile and statutory residency.
Domicile is your permanent home, the place you intend to return to even when you are temporarily somewhere else. You can only have one domicile at a time, and it does not change until you physically relocate and take steps showing intent to make the new location your primary base.
Statutory residency is the second path. Many states treat you as a resident for tax purposes if you keep a permanent place to live in the state and spend more than a set number of days there in the year. The most common threshold is 183 days, but the count differs: some states include partial days, others only full 24-hour periods. States also look at where you hold a driver’s license, where your children go to school, where you vote, and where you keep financial accounts.
Under this dual test, you can be treated as a resident by two states at once, for instance if you are domiciled in one but hit statutory residency in another. Most states give a credit for taxes paid to other states to prevent true double taxation, but you have to claim it.
Moving Mid-Year
If you relocate during the tax year, you will likely file as a part-year resident in both states. Each state taxes the income you earned while you were its resident. The split date is typically the day you physically moved and established the new domicile. Keep records that show exactly when the change happened: lease or closing dates, utility start dates, and similar documentation.
Working Across State Lines
Living in one state and commuting to work in another generally means owing tax to both: the work state on income earned there, and the home state on your total income. Your home state usually gives you a credit for taxes paid to the work state, so you are not taxed twice on the same dollars, but you file returns in both places.
Reciprocity agreements simplify this for workers in certain state pairs. Sixteen states and the District of Columbia participate in reciprocal agreements that let you pay income tax only to your home state, even when you physically work in the partner state.7Tax Foundation. State Reciprocity Agreements: Income Taxes Kentucky participates in the most, followed by Michigan and Pennsylvania. You typically file an exemption form with your employer so withholding goes to your home state.
Without a reciprocity agreement, you file a nonresident return in the work state and a resident return in your home state, then claim the credit. The math often comes close to a wash. Not always. If the work state’s rate is higher, you effectively pay the higher rate on your work income; if it’s lower, your home state collects the difference.
The Federal SALT Deduction Cap
State income taxes are deductible on your federal return if you itemize, but the deduction for state and local taxes (SALT) is capped. For 2026, the cap is $40,400 for most filers, or $20,200 for married filing separately. The cap phases down for taxpayers with modified adjusted gross income above $505,000 and eventually drops to $10,000 for the highest earners. In practice, residents of high-tax states may not be able to deduct the full amount of state income tax they pay, which raises their combined federal-plus-state burden beyond what the two rates alone would suggest.
Filing Your State Return
Most states follow the federal April 15 deadline and grant an automatic six-month extension to file, though not to pay. Your state return typically starts from your federal adjusted gross income and then applies state-specific modifications, so you will need your federal Form 1040 or its data, along with W-2s and 1099s.
Each state has its own form. Deductions, credits, and exemptions vary, so a break you claim federally may not exist at the state level, and vice versa. Common state credits include property taxes paid, contributions to state-sponsored education savings plans, and earned income credits that piggyback on the federal version.
Electronic filing through state-approved software or a state web portal is the fastest route to a refund, with most e-filed returns processed in about four weeks. Paper returns often take eight weeks or more. Late-filing penalties in most states mirror the federal structure at 5% of the unpaid tax per month, capped at 25%.8Internal Revenue Service. Failure to File Penalty The penalty applies to tax owed, not to a refund you are expecting, so if you are due a refund there is no late-filing penalty, though you lose access to that money until you file.