Forty-one states and the District of Columbia are states with mandatory state tax withholding, meaning employers in those jurisdictions must deduct state income tax from every paycheck and remit it to the state. Nine states impose no tax on regular wages, so employers there withhold nothing at the state level: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
If you work in any of the other 41 states or in DC, your paycheck will show a state income tax deduction. The rate, the calculation method, and any local add-ons depend on where you live and work.
The 41 States That Require Withholding
Every state below, plus the District of Columbia, requires employers to withhold state income tax from wages:
Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia, and Wisconsin.
Employers in the nine no-tax states still handle federal income tax, Social Security, and Medicare deductions. The difference is simply that no state line appears on the stub. Washington is a partial exception worth flagging: the state doesn’t tax wages, but it imposes a 7% tax on long-term capital gains above $278,000 per year, paid directly by the individual at filing rather than through withholding. New Hampshire became a full no-income-tax state in 2025, when the phaseout of its interest and dividends tax completed and the tax was repealed.1New Hampshire Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect
Flat Rate States vs. Progressive Bracket States
The 41 withholding states split into two groups. About 15 use a flat tax, applying one percentage to every dollar of taxable wages. The rest use progressive brackets that rise with income.
Flat-tax rates in 2026 range from under 3% in some states to above 5% in others. Several states have been actively trimming rates or collapsing multi-bracket systems into a single flat rate. Mississippi lowered its flat rate to 4% in 2026 as part of a scheduled phase-down that could eventually end the tax. Oklahoma restructured its brackets and built in a trigger for future reductions. Because legislatures keep changing the tables, the amount withheld from your paycheck can shift from one year to the next even if your salary doesn’t.
Local and Municipal Income Taxes
State withholding is only part of what can come out of your check. Roughly a third of states let cities, counties, or school districts levy their own income taxes, and many of those local taxes are collected through employer withholding.
The states where this is most common include Ohio, Pennsylvania, Indiana, Maryland, Michigan, Kentucky, and New York. Ohio has over 400 municipalities with income taxes. Pennsylvania allows most municipalities to charge an earned income tax. Indiana requires a county income tax in all 92 counties. Maryland imposes county income taxes statewide, with rates that vary by jurisdiction.
Local rates are typically lower than state rates, but they compound. A worker in a major city can face a combined local rate of 2% to 4% on top of state withholding. If you work in one city and live in another, verify the amounts on your stub, because some jurisdictions tax nonresidents who work within their borders while others only tax residents.
Working Across State Lines
Living in one state and commuting to a job in another can create competing withholding claims. Reciprocity agreements are the fix: formal arrangements between neighboring states that let you pay income tax only to your home state, even though your employer sits elsewhere.
About 16 states and DC participate in at least one reciprocity agreement. Some of the active pairings:
- The District of Columbia doesn’t withhold from any nonresident employee’s wages.
- Pennsylvania and New Jersey exempt each other’s residents from work-state withholding.
- Virginia has agreements with DC, Kentucky, Maryland, Pennsylvania, and West Virginia.
- Kentucky has agreements with Illinois, Indiana, Michigan, Ohio, Virginia, and West Virginia.
- Ohio has agreements with Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia.
- Michigan has agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin.
- Illinois has agreements with Iowa, Kentucky, Michigan, and Wisconsin.
- Maryland has agreements with DC, Pennsylvania, Virginia, and West Virginia.
- Minnesota has agreements with Michigan and North Dakota.
- Montana and North Dakota have a mutual agreement.
Reciprocity isn’t automatic. You must file an exemption certificate with your employer, and each state pair uses its own form. Skip it, and your employer will withhold for the state where you physically work, forcing you to recover the money later through a nonresident return.2New Jersey Division of Taxation. PA/NJ Reciprocal Income Tax Agreement
Where no reciprocity agreement exists, cross-border workers generally file a nonresident return in the work state and claim a credit on the home state return for taxes paid to the other state. The credit prevents true double taxation, but if the work state’s rates are higher, you’ll effectively pay the higher rate.
Remote Work and the Convenience of the Employer Rule
Remote work has introduced a wrinkle that reciprocity agreements weren’t built for. Most states only tax income for work physically performed within their borders. A handful apply a different standard called the convenience of the employer rule. Under that doctrine, if you work remotely for your own convenience rather than because the employer requires it, the employer’s state can still tax your wages as if you were working in its office.
New York enforces the most aggressive version. If your primary office is in New York and you telecommute from another state, New York treats those days as New York workdays unless remote work was a necessity for your employer. Alabama, Delaware, Nebraska, and Pennsylvania apply similar full convenience rules. Connecticut and New Jersey use limited versions that apply only to residents of other convenience-rule states. Oregon restricts its version to nonresident managers.
A fully remote worker can end up owing tax to a state they never set foot in. Your home state will generally give a credit for taxes paid to the employer’s state, but if the rates don’t align, the total bill can rise. If your employer sits in a convenience-rule state, raise the issue with payroll; some employers will adjust withholding when you provide documentation, others won’t.
Military Spouse Withholding Protection
Military families relocating under orders get a federal protection that overrides normal state withholding rules. Under 50 U.S.C. ยง4001, a military spouse can keep their legal residence in their home state for tax purposes even after moving because of a service member’s permanent change of station.3Office of the Law Revision Counsel. United States Code Title 50 Section 4001 – Residence for Tax Purposes
A spouse who moves from Texas to Virginia on military orders can continue to claim Texas residency and avoid Virginia withholding entirely, as long as the spouse is in Virginia to be with the service member. Married couples can also elect to use either spouse’s home state, the service member’s home state, or the permanent duty station as their tax residency.3Office of the Law Revision Counsel. United States Code Title 50 Section 4001 – Residence for Tax Purposes
To use the protection, the spouse files an exemption form with their employer. Without it, the employer will default to withholding for the state where the work is performed. The employer cannot refuse to honor the exemption if the federal eligibility requirements are met.
How Your State Withholding Amount Is Set
The dollar amount withheld each pay period depends on your gross pay, pay frequency, filing status, and the allowances or adjustments you claim on your state withholding form. State revenue agencies publish tables that map those inputs to a specific deduction.
Most states use their own withholding certificate, separate from the federal W-4. You fill it out at hiring, and your employer uses it to calculate the deduction. If you don’t turn one in, many states direct employers to withhold at the default rate, which assumes zero allowances and produces the maximum deduction.4Internal Revenue Service. Topic No. 753, Form W-4 Employees Withholding Certificate Some states have no separate form and rely on the federal W-4.
You can request additional withholding beyond what the tables call for by adding a flat dollar amount per pay period. This helps if you have side income, investment gains, or other earnings not subject to withholding.5Internal Revenue Service. Tax Withholding How to Get It Right Review your pay stubs at least once a year, and especially after your state announces a rate change, to catch mistakes early.
Bonuses and Supplemental Wages
Bonuses, commissions, and severance are often withheld at a different rate than your regular paycheck. States use one of two methods.
The flat-rate method applies a fixed percentage to the supplemental payment regardless of your overall income. State rates run from about 1.5% to nearly 12%. California withholds over 10% on bonuses and stock option income; North Dakota’s supplemental rate is 1.5%.
The aggregate method adds the bonus to your regular wages for the pay period and calculates withholding on the combined total using the standard tables. That inflated paycheck usually lands in a higher bracket for that period, so more is withheld. It isn’t a higher tax rate on the bonus itself; the excess comes back at filing if your total liability hasn’t changed. About half of the withholding states let employers pick between the two methods. The rest require the aggregate method. Heavy withholding on a large bonus is almost always the aggregate method at work.