State Income Tax Rates: What They Are and How They Work

Income Taxes, Personal Taxes, Taxes
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State Income Tax Rates: What They Are and How They Work

State income tax rates receive relatively little attention compared with federal taxes, but they can still leave a considerable imprint on your overall bill. How large depends on the amount you earn, as well as where you live and work.

How states tax their residents

In general, states take one of three approaches to taxing residents and/or workers:

  • They don’t tax income at all.
  • They impose a flat tax. That means they tax all income, or dividends and interest only in some cases, at the same rate.
  • They impose a progressive tax. That means they tax higher levels of income at higher rates.

If, like most people, you live and work in the same state, you need to file only one state return each year. But if you moved to another state during the year, lived in one state but worked in another or have, say, income-producing rental properties in multiple states, you might need to file more than one. And because most tax software prices include preparation and filing for only one state, filing multiple state returns can mean paying extra.

» MORE: Try our federal tax calculator

One piece of good news: In Alabama, Iowa, Louisiana, Missouri, Montana and Oregon, you might be able to soothe the sting by deducting some or all of your federal taxes on your state return.

States with no income tax

Seven states currently don’t tax most income earned there:

  • Alaska.
  • Florida.
  • Nevada.
  • South Dakota.
  • Texas.
  • Washington.
  • Wyoming.

The idea of not having to pay state income taxes could give you the urge to throw everything in a U-Haul and head for Dallas, but property taxes, sales taxes or other taxes and fees might be higher in those states.

States with flat income tax rates

Ten states try to keep things simple by applying the same tax rate to most income. Of course, what counts as “income” depends on the state. In New Hampshire and Tennessee, for example, regular income is generally not subject to state tax, but a flat tax rate applies to dividends and interest income. And some states apply their tax rates to taxable income, while others use adjusted gross income.

* On dividends and interest income only
Colorado4.63%
Illinois3.75%
Indiana3.30%
Massachusetts5.10%
Michigan4.25%
New Hampshire*5%
North Carolina5.75%
Pennsylvania3.07%
Tennessee*6%
Utah5%

States with progressive tax structures

The remaining 33 states and the District of Columbia tax income much the way the federal government does: They tax higher levels of income at higher rates.

At the federal level, for example, a single taxpayer pays 10% on the first $9,275 of income, and then 15% of anything between $9,276 and $37,650, 25% of anything between $37,651 and $91,150, and so on. The rates stair-step to 28%, 33%, 35% and finally 39.6% for income of more than $415,051.

State tax rates tend to be lower than federal tax rates. Many range between 1 and 9%. Some states tax as little as 0% on the first few thousand dollars of income. Even high-tax states top out around 12%, but that’s on top of property taxes, sales taxes, utility taxes, fuel taxes and whatever the taxpayer must send to the federal government.

The table below shows the number of tax brackets in the 33 states (plus D.C.) with progressive tax structures. Note that the dollar amounts in the income brackets apply to individual filers; in many states, the income brackets double for joint returns. As is the case for federal returns, the amount you’ll pay to your state is also a function of your marital status, whether you have dependents and whether you qualify for deductions and credits.

Tax rates# of bracketsIncome brackets
Alabama2-5%3$500-3,001
Arizona2.59-4.54%5$10,163-152,434
Arkansas0.9-6.9%6$4,299-35,100
California1-12.3%9$7,850-526,443
Connecticut3-6.99%7$10,000-500,000
Delaware0-6.6%7$2,000-60,001
District of Columbia4-8.95%4$10,000-350,000
Georgia1-6%6$750-7,001
Hawaii1.4-8.25%9$2,400-48,000
Idaho1.6-7.4%7$1,452-10,890
Iowa0.36-8.98%9$1,554-69,930
Kansas2.7-4.6%2Under/over $15,000
Kentucky2-6%6$3,000-75,001
Louisiana2-6%3$12,500-50,001
Maine5.8-7.15%3$21,050-37,500
Maryland2-5.75%8$1,000-250,000
Minnesota5.35-9.85%4$25,180-155,651
Mississippi3-5%3$5,000-10,001
Missouri1.5-6%10$1,000-9,001
Montana1-6.9%7$2,300-17,100
Nebraska2.46-6.84%4$3,050-29,460
New Jersey1.4-8.97%6$20,000-500,000
New Mexico1.7-4.9%4$5,500-16,001
New York4-8.82%8$8,450-1,070,350
North Dakota1.1-2.9%5$37,650-413,350
Ohio0.495-4.997%9$5,200-208,500
Oklahoma0.5-5%6$1,000-7,200
Oregon5-9.9%4$3,350-125,000
Rhode Island3.75-5.99%3$60,850-138,300
South Carolina0-7%6$2,920-14,600
Vermont3.55-8.95%5$37,450-411,500
Virginia2-5.75%4$3,000-17,001
West Virginia3-6.5%5$10,000-60,000
Wisconsin4-7.65%4$11,090-244,270

To learn more about how your state taxes work, visit the website of your state’s taxation and revenue department, or the Federation of Tax Administrators.

Tina Orem is a staff writer at NerdWallet, a personal finance website. Email: torem@nerdwallet.com.