41 states and Washington D.C. collect income tax; 9 states do not

Income tax is a state-level tax on wages, salary, and other earnings. Most states charge it, but nine do not: 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 other eight states have no income tax at all.

Whether your state collects income tax affects how much of your paycheck goes to the state government. If you live in a no-income-tax state, you will not see a state income tax withholding on your pay stub. If you move between states or work remotely for a company in another state, knowing which states tax income matters for your tax return.

Key Takeaways

  • Nine states have no income tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only investment income).
  • The remaining 41 states and Washington D.C. collect income tax on wages and salary, with rates ranging from about 1% to over 13% depending on the state.
  • No-income-tax states often rely more heavily on sales tax, property tax, or other revenue sources to fund government services.
  • If you work remotely or move to a different state, you may owe income tax to your new state even if your employer is located elsewhere.

The nine states with no income tax

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming have no state income tax on wages or salary. These eight states do not tax earned income at all. New Hampshire rounds out the nine—it does not tax wages, but it does tax dividend and interest income at a flat 5% rate.

These states make up their revenue through other means. Most rely heavily on sales tax, which is why you may notice higher prices at the register in states like Florida or Texas. Some also depend on property taxes, business taxes, or natural resource taxes (Alaska, for example, collects oil revenue).

States that do tax income

The other 41 states plus Washington D.C. all collect income tax. The rates vary widely. Some states have a flat tax—everyone pays the same percentage regardless of income. Colorado, Illinois, Indiana, Kentucky, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, and Pennsylvania use a flat rate. Other states use a progressive system, where the tax rate increases as your income goes up, similar to the federal system.

The lowest state income tax rates are around 1% to 2% (Colorado, Illinois, Indiana, and others). The highest are over 13% (California, Hawaii, and New York, depending on income level). Most states fall somewhere in between, typically in the 4% to 6% range.

How income tax works when you move or work remotely

If you move to a new state, you generally owe income tax to your new state of residence starting on your move date. Your employer will update your withholding, and you will report the income on your new state's tax return. If you moved mid-year, you may file part-year returns in both your old and new states.

If you work remotely for a company in another state, the rules depend on where you live. Most states tax income based on where you live, not where your employer is located. So if you live in Florida (no income tax) and work for a New York company, you typically do not owe Florida income tax. However, some states have reciprocal agreements or special rules for remote workers, so it is worth checking your specific situation with your state's tax authority.

Why some states have no income tax

States without income tax made a deliberate policy choice to fund government differently. Some, like Texas and Florida, have large populations and robust sales tax bases. Others, like Alaska, have significant natural resource revenue. The trade-off is that these states often have higher sales taxes or property taxes to compensate.

No-income-tax states sometimes market themselves as tax-friendly to attract residents and businesses. However, the total tax burden—combining income, sales, property, and other taxes—does not always end up lower than in income-tax states. A person's overall tax bill depends on their income level, spending habits, and property ownership, not just whether the state has income tax.

How to find your state's income tax rate

Your state's tax authority website lists the current income tax rate and brackets. Search "[your state] income tax rate" or visit your state's department of revenue or taxation website directly. The site will show you the rate for the current tax year and explain how withholding works.

If you are unsure whether you owe income tax to multiple states—because you moved, worked remotely, or had income from different sources—contact your state's tax authority directly. Many offer phone lines or online chat to answer questions about your specific situation. You can also consult a tax professional if your situation is complex.

Frequently Asked Questions

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

Yes. Federal income tax is separate from state income tax. Everyone in the United States pays federal income tax on their earnings, regardless of which state they live in. Living in a no-income-tax state only means you do not pay state income tax.

If I move from a state with income tax to one without, do I get a refund?

No. You pay income tax based on where you lived during the year. If you moved mid-year, you will file a part-year return in your old state for the months you lived there, and a part-year return in your new state for the months you lived there. You do not receive a refund for taxes already withheld by your old state.

Can I avoid state income tax by working remotely from a no-income-tax state?

Not if you are an employee. Your employer withholds based on where you live, not where the company is located. If you are self-employed and move to a no-income-tax state, you would not owe that state's income tax, but you still owe federal self-employment tax.

Are sales taxes higher in no-income-tax states?

Often, but not always. Some no-income-tax states have high sales taxes (Florida, Tennessee, Washington), while others have moderate ones (Alaska, Nevada). The total tax burden depends on your spending and income, not just one tax type.

What counts as income for state tax purposes?

Wages, salary, self-employment income, and some investment income are taxed in most states. Some states also tax retirement income, pensions, or Social Security, though many exempt these. Check your state's rules to know what income you must report.