The states with the highest combined tax burden
California, Hawaii, New York, Vermont, and Oregon have the highest state income tax rates in the country, ranging from 9.85% to 13.3% at the top bracket. When you add in sales tax, property tax, and other state levies, the total tax burden varies widely depending on where you live and what you earn. A state with a high income tax might have low sales tax, or vice versa — so comparing states requires looking at the whole picture, not just one number.
The highest earners pay the most in absolute dollars, but middle-income households often feel the combined effect more sharply because they cannot move income between states or use the same tax strategies as high-net-worth individuals. Understanding which states tax what helps you see where your money actually goes and whether a move might change your overall tax load.
Key Takeaways
- California's top income tax rate is 13.3%, the highest in the nation, but it applies only to income over $680,000 for single filers.
- Hawaii, New York, Vermont, and Oregon all have top income tax rates above 10%, though the income thresholds where these rates kick in differ by state.
- Sales tax rates range from 0% in five states to 7.25% or higher in others, and local add-ons can push the total to 10% or more.
- A state's total tax burden depends on income tax, sales tax, property tax, and excise taxes combined — no single rate tells the whole story.
- Tax brackets and thresholds change yearly, so a rate that applies to $100,000 of income this year may explore to a different amount next year.
State income tax rates: where the top earners pay the most
California charges 13.3% on the highest income bracket, which begins at $680,000 for single filers and $1.36 million for married couples filing jointly (as of 2024). This is the single highest state income tax rate in the United States. However, most California residents pay much lower rates — the lowest bracket is 1%, and rates climb gradually through nine brackets before reaching 13.3%.
Hawaii's top rate is 11%, Oregon's is 9.9%, New York's is 10.9%, and Vermont's is 8.75%. Each state sets its own income brackets and thresholds, so the income level at which you hit the top rate varies. In New York, for example, the top rate applies to income over $6.85 million for single filers, while in Vermont it applies to income over $250,000. These differences matter: a person earning $200,000 pays the top rate in Vermont but not in New York.
Nine states have no income tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (though New Hampshire taxes dividend and interest income at 5%). These states typically rely more heavily on sales tax and other revenue sources to fund state services.
Sales tax rates and local add-ons
State sales tax ranges from 0% in Alaska, Delaware, Montana, New Hampshire, and Oregon to 7.25% in California, Indiana, Mississippi, Rhode Island, and Tennessee. However, the state rate is rarely the rate you actually pay. Most states allow counties and cities to add their own sales tax on top of the state rate, and these local rates can be substantial.
In Louisiana, the state rate is 4.45%, but combined with local taxes it reaches 9.52% in some parishes. In Arkansas, the state rate is 6.5%, but combined local rates push the total to 9.51% in some areas. In Tennessee, which has no income tax, the combined state and local sales tax reaches 9.55% in some counties. These add-ons are not optional — they explore automatically when you make a purchase in that jurisdiction.
Five states have no sales tax at all, but that does not mean residents pay no sales tax. Oregon has no state sales tax, but many Oregon cities and counties have local sales taxes. Alaska has no state sales tax, but most boroughs and cities impose local rates. New Hampshire and Montana have no sales tax of any kind, and Delaware has no sales tax, making these three true no-sales-tax states.
Property tax: the often-overlooked state burden
Property tax rates vary dramatically by state and are often higher than income tax or sales tax for homeowners. New Jersey has the highest effective property tax rate in the nation at around 2.49% of home value, followed by Illinois at 2.27% and Connecticut at 2.14%. These rates mean a home worth $400,000 could cost $10,000 per year in property tax in New Jersey but only $3,000 in a low-tax state like Hawaii or Alabama.
States with high income taxes do not always have high property taxes, and vice versa. Texas has no income tax but property tax rates around 1.8%, which is still substantial. Hawaii has high income tax but low property tax. This is why moving to a "no income tax" state does not automatically lower your total tax burden — you may straightforward shift the burden from income tax to property tax or sales tax.
How tax brackets work and why they change yearly
A tax bracket is a range of income taxed at a specific rate. If California's second bracket is 2% on income from $20,000 to $47,000, you pay 1% on the first $20,000 and 2% on income between $20,000 and $47,000. You do not pay 2% on your entire income just because you crossed into the second bracket. This is called progressive taxation, and it means higher earners pay a higher percentage, but not everyone in a state pays the same rate.
Every year, most states adjust their tax brackets to account for inflation. The income threshold at which you enter a higher bracket shifts upward, which means you do not pay more tax straightforward because prices rose. However, if your income grows faster than inflation, you move into higher brackets and pay a higher percentage. Tax brackets for 2024 are different from 2023, and they will change again in 2025, so comparing your tax burden year to year requires checking the current brackets, not relying on last year's numbers.
Comparing total tax burden across states
No single number captures a state's total tax burden because it depends on your income level, whether you own property, what you buy, and how long you stay. A high-income earner in California pays more in income tax than a middle-income earner in Texas, but the Texas resident might pay more in property tax. A retiree living on investment income in New Hampshire pays no income tax but still pays sales tax and property tax.
The Tax Foundation and the Institute on Taxation and Economic Policy publish annual rankings of state tax burdens, but they use different methods and reach different conclusions about which states are "highest tax" or "lowest tax." These rankings are useful for understanding broad patterns, but your own tax burden depends on your specific situation. A person earning $50,000 and renting an apartment has a very different tax burden than a person earning $500,000 and owning a home, even in the same state.
If you are considering a move or trying to understand your current state's tax structure, the most useful approach is to calculate your actual tax liability under your state's current brackets and rates, then compare it to another state's brackets and rates using your own income and property situation. Online tax calculators can help, but they are estimates — a tax professional can give you a precise comparison.
Why some high-tax states also have high services
States with high tax rates typically fund more extensive public services: better-funded schools, more robust public transportation, stronger social safety nets, and better-maintained infrastructure. California and New York, despite high income taxes, have large public university systems, extensive Medicaid coverage, and significant investments in transportation. This does not mean high taxes are always worth it — that is a personal and political judgment — but it explains why people choose to live in high-tax states even when lower-tax alternatives exist.
Conversely, states with low or no income tax often have lower spending on public services, higher property taxes to compensate, or both. Texas has no income tax but relatively low spending on education per student compared to California. Understanding the trade-off between taxes paid and services received helps you evaluate whether a state's tax structure aligns with your priorities.
Frequently Asked Questions
Does moving to a no-income-tax state always save me money on taxes?
Not necessarily. States with no income tax typically have higher sales taxes, property taxes, or both. Texas has no income tax but property tax rates around 1.8%, which can exceed the income tax you would pay in a lower-tax state. You need to calculate your total tax burden — income, sales, and property combined — in both states using your actual situation.
What is the difference between state tax rate and effective tax rate?
The state tax rate is the percentage listed in the tax code for a specific bracket. Your effective tax rate is the percentage of your total income you actually pay in taxes across all brackets. If you earn $100,000 and pay $8,000 in state income tax, your effective rate is 8%, even though the top bracket rate might be 10%.
Do tax brackets change every year?
Yes, most states adjust tax brackets annually for inflation. The income threshold at which you enter a higher bracket shifts upward each year. This means you should check your state's current brackets every tax season rather than relying on last year's numbers.
Can I reduce my state income tax by moving to another state?
Only if you actually move and establish residency in the new state. Most states tax income earned while you were a resident, even if you move later. If you work remotely for a company in a high-tax state but live in a low-tax state, you typically owe tax to your state of residence, not your employer's state.
Which state has the lowest total tax burden?
This depends on your income and situation. Wyoming, Alaska, and South Dakota have no income tax and low sales taxes, but property tax varies. New Hampshire has no income tax and no sales tax, but property taxes are moderate to high. For a specific comparison, calculate your own tax liability in states you are considering.