State Income Tax Rates

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not tax wage income at the state level. These nine states represent about 30% of the U.S. population. They fund government through a combination of sales taxes, property taxes, severance taxes on natural resources, and, in Alaska's case, sovereign wealth fund distributions.

The no-income-tax group is economically diverse. Texas and Florida are large, high-growth states that substitute a sales tax burden. New Hampshire has neither income nor sales tax and instead relies on among the highest property tax rates in the country. Tennessee long taxed investment income but eliminated that levy in 2021. Washington state has no income tax but funds government partly through a 6.5% sales tax and business and occupation taxes.

New Hampshire has no income tax and no sales tax, which sounds like a low-tax state. But its property tax rate of 1.66% is the fourth-highest in the country. Local governments in New Hampshire fund public schools almost entirely through property taxes, because no broad-based state revenues replace the income and sales tax streams that most states rely on.

A household owning a $400,000 home in New Hampshire pays roughly $6,600 per year in property taxes. The same household in Tennessee, which also has no income tax but a lower property tax rate of 0.48%, pays around $1,920. The absence of one tax type frequently shifts burden toward another. Total state and local tax burden gives a more accurate picture than any single rate. See states by property tax for the full comparison.

Twelve states use a flat income tax, a single rate applied to all taxable income regardless of amount. Illinois (4.95%), Indiana (3.15%), and Michigan (4.05%) are examples. Flat-tax states are simpler to administer but apply the same percentage to a minimum-wage worker and a millionaire.

Progressive systems, used by most states, apply higher rates only to income above specific thresholds. California's 9.3% rate kicks in above $66,295 for single filers; income below that level is taxed at lower rates starting from 1%. Most residents in high-rate states pay effective rates far below the headline top marginal rate. The top marginal rate is relevant primarily for high earners and for comparing state policy choices.