Nine states have no income tax at all
Nine U.S. states do not charge income tax on wages, salaries, or investment earnings: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire. New Hampshire is a partial exception—it taxes interest and dividend income but not wages.
The other 41 states and the District of Columbia all collect some form of income tax. The rates, brackets, and what counts as taxable income vary widely from state to state. Even among states with income tax, the amount you owe depends on your income level, filing status, and what deductions or credits your state allows.
Federal income tax is separate from state income tax. You pay federal tax to the IRS no matter which state you live in, unless you are a U.S. citizen living abroad and meet specific conditions. State income tax goes to your state government and funds state services.
Key Takeaways
- Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire have no state income tax on wages.
- New Hampshire taxes investment income but not wages, making it a partial exception to the no-income-tax group.
- The 41 states with income tax charge different rates and have different tax brackets, so your state tax burden depends on where you live and how much you earn.
- State income tax is separate from federal income tax; you owe federal tax regardless of your state's rules.
- Some states without income tax make up revenue through higher sales tax, property tax, or other fees.
States with income tax and their rate ranges
Among the 41 states that do collect income tax, rates range from about 1% to over 13%. Colorado, Illinois, Indiana, Kentucky, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, and Pennsylvania all have flat tax rates—everyone pays the same percentage regardless of income. Most other states use a progressive system, where higher earners pay a higher percentage.
California has the highest top marginal rate at over 13%, though that rate applies only to income above a certain threshold. Hawaii, Oregon, and Vermont also have top rates above 10%. States like Colorado, Illinois, and Indiana charge a flat 4% to 5.75% to all income earners.
Your actual tax bill also depends on deductions and credits your state offers. Some states let you deduct federal income tax paid, mortgage interest, or charitable donations. Others offer credits for dependents, education expenses, or property taxes. These vary significantly, so two people earning the same amount in different states may owe very different amounts.
How to find your state's income tax rate
Your state's department of revenue website lists the current tax rates, brackets, and important date. Search "[your state] department of revenue" or "[your state] income tax" to find the official page. Most states update their rates annually, usually in January or February.
If you are filing taxes yourself, the IRS website also provides links to each state's tax authority. Your employer's payroll department should withhold the correct amount from each paycheck based on the W-4 form you fill out. If you think your withholding is wrong—you are getting a large refund or owing a large amount—you can adjust it by submitting a new W-4 to your employer.
Why some states have no income tax
States without income tax fund their operations through other revenue sources. Sales tax is often higher in these states—Texas, Washington, and Tennessee all have sales tax rates above 8%, compared to the national average of around 7%. Some states without income tax also charge higher property taxes or rely more heavily on business taxes and licensing fees.
The trade-off is not always straightforward. A person earning $50,000 in a no-income-tax state might pay more total tax than someone earning the same amount in a state with income tax, depending on how much they spend and own property. The advantage of no income tax is most obvious for high earners who spend less than they make.
Moving to a different state and income tax
If you move to a new state during the year, you may owe income tax to both your old state and your new state for the portion of the year you lived in each. Most states tax you on income earned while you were a resident. Some states also tax income earned outside the state if you were a resident when you earned it, though this varies.
When you move, update your address with your employer and the IRS. Your employer needs to know so they can withhold the correct state tax. You may need to file part-year returns in both states, or your new state may give you a credit for taxes paid to your old state to avoid double taxation. The rules differ by state, so check both your old and new state's tax authority website.
Remote work and state income tax
If you work remotely for a company in a different state, you generally owe income tax to the state where you live, not the state where your employer is located. This means a person living in Florida (no income tax) and working for a company in New York does not owe New York income tax on those wages.
However, some states have special rules for remote workers or have tried to tax income earned within their borders even if the worker lives elsewhere. These rules change, and the IRS and state tax authorities are still clarifying how remote work affects state tax obligations. If you work remotely across state lines, check your state's tax authority website or speak with a tax professional to confirm your obligations.
Frequently Asked Questions
Do I have to pay state income tax if I live in a no-income-tax state?
No. If you live in Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, or New Hampshire, you do not owe state income tax on wages. You still owe federal income tax to the IRS. New Hampshire residents do not owe tax on wages but do owe tax on interest and dividend income.
What if I earned income in two different states in the same year?
You typically owe income tax to each state on the income you earned while living there. You may need to file part-year returns in both states. Most states offer a credit for taxes paid to another state to prevent paying tax twice on the same income. Check both states' tax authority websites for specific rules.
Does moving to a no-income-tax state save me money on taxes?
Not always. States without income tax often have higher sales tax, property tax, or other fees. Whether you save money depends on your income, spending habits, and property ownership. A high earner who spends less than they make usually saves the most by moving to a no-income-tax state.
Is New Hampshire really a no-income-tax state?
Partially. New Hampshire does not tax wages or salaries, but it does tax interest, dividend, and investment income. If your income comes entirely from wages, you owe no state income tax in New Hampshire. If you earn investment income, you will owe tax on that portion.
How do I know what my state's income tax rate is?
Search "[your state] department of revenue" or "[your state] income tax" to find the official state website. It will list current tax rates, brackets, and any deductions or credits available. Rates change annually, usually in January or February, so check the current year's information.