Forty-one states and the District of Columbia tax individual income, with rates ranging from about 2% to over 13%. The nine states that don’t tax wages at all are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.1Tax Foundation. State Individual Income Tax Rates and Brackets, 2026 Among the states that do tax income, roughly half apply a single flat rate and the other half use graduated brackets. Where you live, where you work, and what kind of income you earn all change the number.
The Nine States With No Income Tax
As of 2026, these states impose no tax on individual income:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
New Hampshire is the newest name on the list. The state historically taxed interest and dividends from bank accounts, bonds, and certain trusts. That tax was phased down over several years and fully repealed on January 1, 2025.2State of New Hampshire Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect New Hampshire residents now owe zero state income tax on any type of personal income.
Washington belongs on the list with an asterisk. The state doesn’t tax wages or salary, but it does tax profits from selling stocks, bonds, and similar financial assets. For 2026, the first $1 million in taxable capital gains is taxed at 7%, and anything above $1 million is taxed at 9.9%.3Washington State Department of Revenue. New Tiered Rates for Washingtons Capital Gains Tax The state Supreme Court upheld the tax by classifying it as an excise tax rather than an income tax. For most wage earners Washington still functions as a no-income-tax state, but anyone selling appreciated assets should plan for the bill.
States With a Flat Income Tax
A flat-tax state charges the same percentage on every dollar of taxable income, whether you earn $30,000 or $3 million. The math is simple and your effective rate is predictable. As of 2026, these states use a flat structure:
- Arizona: 2.50%
- Indiana: 2.95%
- Pennsylvania: 3.07%
- Kentucky: 3.50%
- Iowa: 3.80%
- North Carolina: 3.99%
- Mississippi: 4.00% (first $10,000 exempt)
- Missouri: 4.00%
- Michigan: 4.25%
- Colorado: 4.40%
- Utah: 4.50%
- Illinois: 4.95%
- Massachusetts: 5.00% (plus a 4% surtax on income above $1 million)
- Georgia: 5.19%
- Idaho: 5.30%
Several rates reflect recent legislative changes. Iowa transitioned from graduated brackets to a flat 3.80% in 2026. Georgia moved to a flat 5.19% after years of graduated brackets. Kentucky dropped from 4.00% to 3.50%, and Indiana ticked down from 3.00% to 2.95%.1Tax Foundation. State Individual Income Tax Rates and Brackets, 2026 North Carolina has been on a multi-year reduction and landed at 3.99% for tax years beginning in 2026, down from 4.50% two years earlier.4North Carolina Department of Revenue. Tax Rate Schedules
Massachusetts is worth singling out. The base rate is a flat 5.00%, but voters approved an additional 4% surtax on income above $1 million starting in 2023. That produces an effective top rate of 9.00% on high earners, which makes the state function more like a two-bracket graduated system despite the flat-tax label.1Tax Foundation. State Individual Income Tax Rates and Brackets, 2026
States With Graduated Income Tax Rates
The remaining states use graduated brackets, where the rate climbs as income crosses each threshold. Only the dollars within a given bracket are taxed at that bracket’s rate. If your state’s brackets are 3% up to $50,000 and 5% above $50,000, earning $70,000 means paying 3% on the first $50,000 and 5% on the remaining $20,000. Your effective rate lands somewhere in between.
The highest top marginal rates in 2026 belong to California, New York, New Jersey, Hawaii, and Oregon. California’s top rate reaches 14.4% on income above $1 million, which includes a 1% mental health services surcharge, the highest individual income tax rate in the country by a wide margin. New York’s top rate is 10.9% on income above $25 million for most filers. New Jersey peaks at 10.75% above $1 million, and Hawaii reaches 11% above $325,000 for single filers.
Several states with graduated systems keep their top rates in the 4% to 6% range. The number of brackets also varies widely. Some states use three or four tiers; California uses ten. More brackets don’t necessarily mean higher taxes. They create a finer gradient between the lowest and highest earners.1Tax Foundation. State Individual Income Tax Rates and Brackets, 2026
The practical gap between flat and graduated systems shows up most at the extremes. A middle-income earner in a graduated state often pays an effective rate close to what a flat system would charge. A high earner in California or New York, though, can face a combined federal-plus-state marginal rate above 50%.
Local Income Taxes on Top of State Rates
Your state rate isn’t always the full bill. Around 17 states allow cities, counties, or other local jurisdictions to add their own income taxes. This surprises people who move to a new city and find a payroll deduction they didn’t expect.
Local rates range from fractions of a percent to nearly 4%. New York City’s local income tax runs from about 3.08% to 3.88% depending on income, layered on top of New York State’s already steep graduated rates. Philadelphia charges roughly 3.88% on earned income. Detroit’s city income tax is 2.40%. Ohio alone has over 800 local jurisdictions imposing income taxes at rates from 0.25% to 3.00%.
Maryland requires every county to impose a local income tax, with rates from 1.75% to 3.20%. Kentucky has more than 200 local taxing jurisdictions. Pennsylvania municipalities charge an earned income tax that can reach nearly 3.88% in Philadelphia and averages much lower in smaller communities. Indiana adds county-level income taxes from 0.35% to 3.38% on top of its flat state rate.
If you’re comparing two states on cost of living, leaving local income taxes out can throw off the math. A state with a moderate flat rate plus a hefty city tax can end up costing more than a state with a higher state rate but no local levy.
Which State Gets to Tax You
Which state has a claim on your income depends on residency. Most states apply two tests: domicile (where you consider your permanent home) and physical presence (how many days you spend in the state). Many states treat you as a resident if you spend 183 days or more there during the year, even if you consider another state home. Evidence that matters includes where your driver’s license is issued, where you’re registered to vote, where your kids go to school, and where you keep bank accounts and professional memberships.
If you move mid-year, you’ll usually file a part-year resident return in both the old state and the new one. Each state generally taxes only the income you earned while living there. You start with your full federal adjusted gross income and prorate based on the portion of the year in each state. Move from a graduated-tax state to a no-tax state in July, and the first state typically taxes only income earned through your move date.
Remote workers hit a less intuitive rule. A handful of states apply a “convenience of the employer” rule, which taxes you based on where your employer’s office is located rather than where you physically work. Work from home in New Jersey for a company headquartered in New York, and New York may still claim the right to tax your wages. That creates real double-taxation situations that not all states resolve cleanly through credits.
Reciprocity Agreements for Cross-Border Commuters
About 16 states and the District of Columbia participate in reciprocity agreements that simplify things for people who live in one state and commute to another. Under these agreements, you owe income tax only to your home state, not the state where your office sits. Your employer withholds based on your residence, and you skip filing a return in the work state.
The biggest clusters are in the Mid-Atlantic (Maryland, Virginia, West Virginia, Pennsylvania, and D.C.) and the Midwest (Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Ohio, and Wisconsin). Kentucky has the most, with agreements covering seven other states. To claim the benefit, you typically file an exemption form with your employer at the start of employment.5Tax Foundation. Do Unto Others: The Case for State Income Tax Reciprocity
Without a reciprocity agreement, you’ll generally file a nonresident return in the work state and a resident return at home. To prevent double taxation, most states offer a credit on your resident return for taxes paid to the other state. The credit usually equals the lesser of the tax you paid to the work state or the tax your home state would have charged on the same income. Two returns, but not a doubled bill.
How States Tax Retirement Income
The picture shifts once you stop working. Most no-income-tax states are popular retirement destinations for obvious reasons, but even among states that do tax income, the treatment of Social Security, pensions, and retirement account withdrawals varies widely.
As of 2026, only eight states tax Social Security benefits to any degree: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. West Virginia completed its phase-out of Social Security taxation in 2026, making benefits fully exempt on returns filed in 2027. Even in states that do tax benefits, most offer generous exemptions below certain income thresholds. Colorado fully exempts benefits for residents 65 and older. Connecticut exempts benefits completely for individuals with federal adjusted gross income below $75,000 ($100,000 for joint filers).
Pension income and 401(k) or IRA withdrawals follow different rules. Some states exempt all government pensions but tax private ones. Others offer a blanket deduction on the first $10,000 to $40,000 of retirement income regardless of source. A few states, including Illinois and Pennsylvania, exempt most retirement income entirely, which makes them surprisingly retiree-friendly despite taxing wages.
If taxes are part of your retirement decision, look past the headline rate and check how the state treats the specific income you’ll actually be drawing.