State Tax Guide: All 50 States

Understanding State Income Taxes

State income tax can significantly impact your take-home pay, and rates vary dramatically across the United States. Some states have no income tax at all, while others impose rates exceeding 13%. Understanding these differences is crucial for financial planning and making informed decisions about where to live and work.

States with No Income Tax

Nine states don't impose state income tax on wages:

• Alaska - No state income tax, but has Permanent Fund Dividend
• Florida - No state income tax, popular retirement destination
• Nevada - No state income tax, growing tech hub
• New Hampshire - No tax on wages, but taxes dividends and interest
• South Dakota - No state income tax, low cost of living
• Tennessee - Eliminated income tax in 2021
• Texas - No state income tax, major business hub
• Washington - No income tax, but high sales tax
• Wyoming - No state income tax, energy industry focused

Highest Tax Rate States

These states have the highest marginal income tax rates for 2025:

Top 10 Highest State Tax Rates

• California: Up to 13.3% (plus 1% mental health tax on income over $1M)
• Hawaii: Up to 11%
• New York: Up to 10.9% (plus NYC tax up to 3.876%)
• New Jersey: Up to 10.75%
• Oregon: Up to 9.9%
• Minnesota: Up to 9.85%
• Maryland: Up to 5.75% state + up to 3.2% local
• Vermont: Up to 8.75%
• Iowa: Up to 8.53%
• Wisconsin: Up to 7.65%

Regional Tax Patterns

Northeast

Generally higher tax states with progressive rate structures:

• Connecticut: Up to 6.99%
• Maine: Up to 7.15%
• Massachusetts: 5% flat rate, plus 4% on income over $1M
• Rhode Island: Up to 5.99%
• Pennsylvania: 3.07% flat rate

Southeast

Mix of low-tax and no-tax states:

• North Carolina: 4.75% flat rate
• Georgia: Up to 5.75%
• Virginia: Up to 5.75%
• South Carolina: Up to 7%
• Kentucky: 4.5% flat rate

Midwest

Moderate tax rates with some variation:

• Illinois: 4.95% flat rate
• Indiana: 3.23% flat rate
• Michigan: 4.25% flat rate
• Ohio: Up to 3.99%
• Missouri: Up to 5.3%

West

Varied approach, from no tax to very high rates:

• Arizona: Up to 4.5%
• Colorado: 4.40% flat rate
• Idaho: Up to 5.8%
• Montana: Up to 6.75%
• Utah: 4.85% flat rate

Special Considerations

Local Income Taxes

Some areas impose additional local income taxes:

• New York City: Up to 3.876% additional
• Philadelphia: 3.8712% additional
• Detroit: 2.4% additional
• Ohio localities: Various rates up to 3%
• Maryland counties: 2.25% to 3.2% additional

Reciprocity Agreements

Some states have agreements to avoid double taxation for border workers:

• Illinois-Iowa, Kentucky, Michigan, Wisconsin
• Indiana-Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin
• Maryland-Pennsylvania, Virginia, West Virginia, DC
• Pennsylvania-Indiana, Maryland, New Jersey, Ohio, Virginia, West Virginia

Tax Structure Types

Progressive Tax States

Tax rates increase with income levels (most common):

• California, New York, Hawaii, Oregon, Minnesota
• Rates start low and increase for higher earners
• Can result in significant tax differences across income levels

Flat Tax States

Single rate applies to all income levels:

• Colorado (4.40%), Illinois (4.95%), Indiana (3.23%)
• Massachusetts (5%), Michigan (4.25%), Pennsylvania (3.07%)
• Simpler calculation, consistent rate regardless of income

Impact on Your Paycheck

Example: $75,000 Annual Salary

Here's how state taxes affect take-home pay in different states:

• Texas (0%): No state tax = $0
• Pennsylvania (3.07%): $2,303 annual state tax
• Illinois (4.95%): $3,713 annual state tax
• New York (6.45% avg): $4,838 annual state tax
• California (8% avg): $6,000 annual state tax

The difference between Texas and California is $6,000 annually, or $500 per month!

Factors Beyond Income Tax

Sales Tax

States with no income tax often have higher sales taxes:

• Tennessee: No income tax, but 7% state sales tax
• Washington: No income tax, but 6.5% state sales tax
• Texas: No income tax, but 6.25% state sales tax

Property Tax

Consider property tax rates when evaluating total tax burden:

• New Jersey: High income tax AND high property tax
• Texas: No income tax but relatively high property tax
• Delaware: Moderate income tax but low property tax

Cost of Living

Higher-tax states often have higher costs of living:

• California: High taxes, high housing costs
• New York: High taxes, high living expenses
• Consider net purchasing power, not just gross income

Tax-Friendly States for Different Groups

Young Professionals

States with good job markets and reasonable taxes:

• Texas: No income tax, strong job market
• North Carolina: Low flat rate, growing tech sector
• Colorado: Moderate flat rate, outdoor lifestyle

Retirees

States that don't tax retirement income:

• Florida: No income tax, no tax on retirement income
• Nevada: No income tax, favorable for retirees
• Pennsylvania: No tax on retirement income

High Earners

States with favorable high-income tax treatment:

• Texas, Florida, Washington: No income tax at any level
• Tennessee: No income tax (eliminated in 2021)
• Wyoming: No income tax, business-friendly

Planning Considerations

Remote Work Implications

With remote work increasing, consider:

• Your employer's state tax withholding requirements
• Potential tax advantages of relocating
• State residency requirements and definitions
• "Convenience of employer" rules in some states

Multi-State Considerations

If you work across state lines:

• File returns in both states (usually)
• Claim credit for taxes paid to other states
• Understand reciprocity agreements
• Track days worked in each state

Using Our Calculator

Our paycheck calculator includes all 50 states and considers:

• Current state tax rates and brackets
• Standard deductions and exemptions
• Progressive vs. flat rate structures
• Integration with federal tax calculations

Use it to compare take-home pay across different states and make informed decisions about where to live and work.

Future Trends

Keep an eye on these developing trends:

• States competing for remote workers with tax incentives
• Potential federal legislation affecting state tax deductibility
• Changes in state tax treatment of remote work
• Economic migration patterns affecting state revenues

Conclusion

State income tax is a major factor in your overall tax burden and take-home pay. While you shouldn't choose where to live based solely on taxes, understanding these differences helps you make informed financial decisions. Use our calculator to see exactly how your state's taxes affect your paycheck, and consider the total tax and cost picture when making location decisions.