Washington has no state income tax; New York has a progressive income tax up to 10.9%

Washington State does not charge a state income tax on wages, salaries, or most other personal income. New York State does charge income tax, with rates that range from 4% on the lowest earners to 10.9% on the highest earners, depending on your filing status and income level. This is the fundamental difference: if you earn wages in Washington, you pay no state income tax to Washington. If you earn the same wages in New York, you will owe New York State income tax.

The comparison is straightforward for wage earners, but the full picture depends on what other income you have and where you live. Both states also collect revenue through other taxes—sales tax, property tax, and business taxes—so the total tax burden is not determined by income tax alone.

Key Takeaways

  • Washington State has zero state income tax on wages, while New York's income tax ranges from 4% to 10.9% depending on your income bracket.
  • New York's income tax is progressive, meaning higher earners pay a higher percentage; the top rate of 10.9% applies only to income above a certain threshold that changes yearly.
  • Washington makes up for no income tax with a higher sales tax (around 8.9% statewide average) and capital gains tax on certain investments.
  • New York also has sales tax (around 8.875% in New York City, varying elsewhere) plus property taxes and other levies, so total tax burden depends on your income type and spending.

How New York's income tax brackets work

New York uses a progressive tax system, which means your income is taxed at different rates depending on how much you earn. You do not pay the top rate on all your income—you pay the top rate only on the portion that falls into the highest bracket. For the 2024 tax year, New York's brackets for single filers range from 4% on income up to $11,200, then step up through 4.5%, 5.85%, 6.25%, 6.85%, 9.65%, and finally 10.9% on income over $1,097,350. The exact dollar thresholds change each year with inflation.

This means a single person earning $50,000 in New York does not pay 10.9% on the whole amount. They pay 4% on the first $11,200, then 4.5% on the next portion, and so on, until all $50,000 is accounted for. The effective rate—the actual percentage of total income paid in tax—is much lower than the top bracket rate.

Washington's capital gains tax and what it covers

Washington State does tax capital gains, which is income from selling stocks, bonds, real estate (with some exceptions), and other investments. The capital gains tax rate is a flat 7% on long-term gains over $250,000 per year. This is a significant difference from New York, which taxes capital gains as ordinary income at the rates described above. If you sell an investment for a large profit in Washington, you may owe state tax on that gain even though you owe no income tax on wages.

Washington does not tax capital gains under $250,000 in a single year, and it does not tax short-term gains (assets held less than one year). New York taxes all capital gains, regardless of size, as part of your ordinary income. For most wage earners with little investment income, Washington's lack of income tax is the bigger factor. For investors or business owners with significant gains, the capital gains tax becomes relevant.

Sales tax and other taxes in both states

Washington compensates for having no income tax by relying heavily on sales tax. The statewide base sales tax rate is 6.5%, but most counties and cities add local sales taxes on top of that, bringing the total to around 8% to 10% depending on location. New York's sales tax is lower: 4% statewide, with local additions bringing the total to around 8% to 8.875% in most populated areas. This means Washington residents pay more sales tax on everyday purchases.

Both states also charge property tax, though rates vary by county and municipality. New York's property taxes tend to be higher than Washington's in many areas, particularly around New York City. Washington also has a real estate excise tax (ranging from 0.5% to 3% depending on county) on the sale of real property. Neither state has a traditional inheritance or estate tax, though New York has an estate tax on estates over $6.94 million (as of 2024).

Which state costs less depends on your income type

For a wage earner with no significant investments, Washington is almost always cheaper because there is no income tax. A person earning $75,000 in wages pays zero state income tax in Washington but would owe roughly $4,500 to $5,000 in New York income tax (depending on deductions and filing status). However, that same person would pay more in Washington sales tax if they spend most of their income on taxable goods.

For someone with substantial investment income or capital gains, the comparison becomes more complex. A retiree living on investment income might pay less total tax in New York if their gains are modest, because New York's income tax rates are lower than Washington's 7% capital gains rate on gains over $250,000. A business owner with high profits might prefer Washington's lack of income tax but should account for the capital gains tax and higher sales tax.

Tax residency and where you actually owe taxes

Your state of residence determines which state income tax you owe. If you live in Washington, you owe Washington taxes (or none, in the case of income tax). If you live in New York, you owe New York taxes. If you work in one state but live in another, the rules depend on your specific situation and the state's sourcing rules. Generally, you owe tax to the state where you live, though some states tax income earned within their borders regardless of where you live.

If you are considering moving between the two states for tax reasons, consult a tax professional about your specific income sources. The difference in total tax burden can be substantial, but it depends on whether you earn wages, have investments, own property, and how much you spend on taxable goods.

Frequently Asked Questions

Does Washington tax retirement income or Social Security?

Washington does not tax Social Security benefits or most retirement income like pensions and distributions from traditional IRAs. New York also does not tax Social Security, but it does tax pension and IRA distributions as ordinary income. This is another advantage for retirees in Washington.

What if I work in New York but live in Washington?

You typically owe income tax to the state where you live, not where you work. However, New York taxes income earned within the state, so if you work in New York and live in Washington, you may owe New York income tax on wages earned there. You would then claim a credit in Washington (though Washington has no income tax to credit against). Consult a tax professional about your specific situation.

Is Washington's 7% capital gains tax the same as income tax?

No. Washington's capital gains tax applies only to investment gains over $250,000 per year and is separate from income tax. New York's income tax applies to wages, salaries, and all capital gains regardless of size. The two states tax investment income very differently.

Which state is cheaper overall for someone earning $100,000 a year?

For a wage earner with no significant investments, Washington is cheaper because there is no income tax. In New York, you would owe roughly $6,000 to $7,000 in state income tax on $100,000 in wages. However, you would pay more in Washington sales tax over time, so the total depends on how much you spend on taxable goods.

Do both states tax business income?

Washington does not have a state income tax on business income, though it does have a capital gains tax on investment gains. New York taxes business income as ordinary income at the progressive rates described above. This makes Washington attractive for self-employed people and business owners, though they should account for sales tax and capital gains tax.