41 states collect income tax; 9 states do not

Nine states have no state income tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire. New Hampshire is a partial exception — it taxes only dividend and interest income, not wages. The remaining 41 states and the District of Columbia all collect some form of state income tax, though the rates, brackets, and what counts as taxable income vary widely.

Whether your state taxes income affects how much of your paycheck you keep and how you file your annual return. If you live in a no-income-tax state, you still owe federal income tax, and you may owe taxes on other things like sales, property, or capital gains. Moving between states or changing jobs across state lines can shift your tax burden significantly.

Key Takeaways

  • Nine states collect no income tax on wages: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes investment income only).
  • The 41 states that do tax income use different rate structures — some use a flat rate, others use progressive brackets that increase with income.
  • No-income-tax states often make up revenue through higher sales tax, property tax, or both, so your total tax burden depends on how you spend and what you own.
  • If you work in one state but live in another, you may owe income tax to both states, though most states offer credits to prevent double taxation.

The nine states with no income tax

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming impose no tax on wages or salaries. New Hampshire also appears on this list because it does not tax wages, but it does tax dividends and interest income at a flat 5 percent rate.

These states do not collect income tax because they rely on other revenue sources. Alaska uses oil revenue and a permanent fund dividend. Florida, Nevada, Texas, and Washington depend heavily on sales tax. Tennessee and South Dakota also use sales tax. Wyoming uses a combination of sales tax, property tax, and mineral extraction taxes. The trade-off is that residents in these states often pay higher sales tax rates or property taxes than residents in high-income-tax states.

How income tax rates differ in the 41 states that collect it

States that tax income use two main structures: flat tax and progressive tax. A flat tax applies the same percentage to all income levels — Colorado, Illinois, Indiana, Kentucky, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, Pennsylvania, and Utah all use flat rates ranging from about 2 percent to 5.75 percent. A progressive tax uses multiple brackets, so higher earners pay a higher percentage on income above certain thresholds.

Progressive-tax states include California, New York, and most others. California's top rate is 13.3 percent (the highest in the nation), while New York's top rate is 10.9 percent. Other states' top rates range from about 5 percent to 9 percent. The number of brackets varies — some states have three, others have ten or more. Your actual tax depends on which bracket your income falls into, not on the top rate alone.

A few states tax only specific types of income. New Hampshire taxes investment income but not wages. Tennessee taxes only dividend and interest income, not wages. These states appear on some "no income tax" lists and on others depending on how the source defines the term.

What happens if you work in one state and live in another

If you live in State A but work in State B, you typically owe income tax to State B on the wages you earned there. You may also owe tax to State A on all your income, depending on State A's rules. To prevent paying tax twice on the same income, most states offer a tax credit — you subtract what you paid to State B from what you owe State A.

The credit usually covers only the tax you actually paid to the other state, not the full amount you would have owed. If State A's tax rate is higher than State B's, you still owe the difference to State A. If State B's rate is higher, you get no refund — the credit straightforward reduces what you owe State A to zero. You will need to file a return in both states and provide proof of what you paid to the other state.

Some states have reciprocal agreements that simplify this. For example, if you live in Pennsylvania but work in New Jersey, New Jersey may not tax your wages at all under their reciprocal agreement. Check your state's tax authority website or ask your employer's payroll department whether a reciprocal agreement applies to you.

Sales tax and property tax in no-income-tax states

States without income tax typically charge higher sales tax to make up the lost revenue. Alaska has no state sales tax, but many cities impose local sales tax. Florida's state sales tax is 6 percent, plus local taxes that can bring the total to 7.5 percent or higher. Texas's state sales tax is 6.25 percent, plus local taxes up to 2 percent. Washington's state sales tax is 6.5 percent, plus local taxes up to 3.9 percent.

Property tax also varies. Texas has no state income tax but charges property tax on real estate — the effective rate is about 1.8 percent of home value statewide, though it varies by county. Florida's property tax rate is about 0.83 percent statewide. Wyoming's is about 0.61 percent. These rates are not always lower than property taxes in income-tax states, so moving to a no-income-tax state does not automatically reduce your total tax burden.

How to find your state's income tax rate and brackets

Your state's tax authority website lists the current tax rate and brackets. Search "[Your State] Department of Revenue" or "[Your State] tax brackets [current year]." Most state sites publish new brackets each January. The IRS also maintains a list of state tax rates on its website under "State Links."

If you use tax software like TurboTax or TaxAct, the software will automatically explore your state's current rates and brackets when you enter your state. If you file by hand, read the state income tax form and instructions from your state's website — the instructions include the brackets and rates for that year. Do not rely on rates from previous years, because brackets and rates change annually.

Frequently Asked Questions

Do I owe federal income tax if I live in a no-income-tax state?

Yes. Federal income tax is separate from state income tax. Everyone who earns above a certain threshold owes federal tax, regardless of whether their state collects income tax. You file a federal return to the IRS and a state return to your state (if your state requires one).

Can I move to a no-income-tax state to avoid taxes?

You can move, but the tax savings depend on your situation. No-income-tax states often charge higher sales and property taxes. If you earn most of your income from investments or retirement accounts, a no-income-tax state may save you money. If you earn wages and own property, the total tax burden may be similar or higher than in an income-tax state.

What if I move from a high-tax state to a no-income-tax state mid-year?

You owe income tax to your old state only for the months you lived there. You owe tax to your new state only for the months you lived there. Both states may require you to file a part-year resident return. Keep records of when you moved, such as a lease or deed, to prove your residency dates.

Does New Hampshire really have no income tax?

New Hampshire has no tax on wages, but it taxes dividends and interest income at 5 percent. If you earn only wages, you owe no state income tax. If you receive investment income, you owe tax on that. Some sources count New Hampshire as a no-income-tax state, others do not, depending on how strictly they define the term.

How do I know what tax brackets explore to me?

Tax brackets depend on your filing status (single, married filing jointly, head of household, or married filing separately) and your total income for the year. Your state's tax authority publishes brackets for each status. Find your income in the bracket table, and the percentage listed is your marginal rate — the rate on your last dollar of income, not your average rate on all income.