Guide to State Income Tax Rates

State income tax rates vary from 0% to 13% depending on the state, the taxpayer’s income bracket and applicable deductions and exemptions. This variation stems from different tax systems implemented by states. For example, California and Hawaii have a graduated-rate tax system where higher-income taxpayers pay higher taxes. Some states, like Arizona and Colorado, use a flat income tax where taxpayers pay the same tax rate regardless of income. Some states, such as Florida and Texas, do not levy state income tax.

It’s important to note that the information presented here represents marginal tax rates, not effective ones. Tax laws and regulations are complex and subject to change. Consult a qualified tax professional for personalized advice tailored to your financial situation.

"Single filer" refers to an individual taxpayer who files their tax return independently, without including a spouse or dependents. Conversely, "married filing jointly" pertains to couples who combine their incomes and file a single tax return. This method often offers tax benefits depending on the state you file in — some states are more tax-friendly than others. The US map below provides an overview of each state's marginal income tax rate for each filing type.

Source: Tax Foundation

A handful of states in the US do not tax income for various reasons. These states include the following:

Washington and New Hampshire do not levy personal income taxes on wages or salaries but do tax dividends and interest income (New Hampshire) and capital gains (Washington). These states often have alternative revenue sources, such as oil and mineral rights in Alaska and Texas, or tourism and entertainment industries in Nevada and Florida. While they might not charge income tax, many states may compensate with higher sales, property, or other taxes. For example, state and local sales tax in Tennessee can be as high as 9.75%, and Texas and New Hampshire have some of the highest property tax rates in the country.

Several states implement a flat income tax rate, meaning that all taxpayers, regardless of their income level, pay the same percentage in state taxes. These states include:

Opting for a flat tax rate simplifies the tax code, making it easier for residents to understand and comply. It is worth noting that flat tax rate systems are an ongoing discourse. Proponents argue it can reduce administrative costs and economic distortions, while critics argue this system puts additional burden on taxpayers with modest incomes. Setting aside the debate, states with flat tax rates prioritize consistency and simplicity in their tax structures.

A graduated-rate income tax, also known as a progressive tax, is implemented by most states. This form of taxation is often seen as a way to achieve a more equitable tax structure. States with a graduated-rate income tax include:

A graduated-rate or progressive tax system taxes income at increasing rates as it exceeds set thresholds. All taxpayers pay the same initial rate, and only the income in higher brackets is taxed more as earnings rise. This results in high earners paying a larger average percentage of their income in taxes but not on all of their earnings. Supporters argue it eases the burden on lower-income individuals, while critics believe it may deter higher earnings or investments. States with this system aim for a balance between revenue and equitability.

The standard deduction reduces the amount of income you're taxed on, ensuring that all taxpayers — even those not planning to itemize deductions and who have some income that isn't subject to income tax, can benefit. The standard deduction is a fixed dollar amount that varies based on filing status. Personal exemptions serve a similar purpose, allowing taxpayers to deduct a set amount for themselves and any dependents from their taxable income. These are primarily federal income tax deductions, but they function similarly in most states and determine your overall tax liability.

Source: Tax Foundation

State income tax rates and systems are complex, with variations across the U.S. Here, we address some of the most frequently asked questions to provide you with more information about the topic.

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