When most Americans think about income tax, they think about the IRS and federal brackets. But depending on where you live, your state could be taking just as big a bite out of your paycheck or none at all. State income taxes vary wildly across the country, and for many workers, they represent the single biggest variable in how much money actually ends up in their bank account.
Whether you are considering a job in another state, thinking about relocating for a lower cost of living, or just curious about how your state stacks up, this comprehensive comparison will help you understand the landscape and make smarter financial decisions in 2026.
The Nine States With No Income Tax
Let us start with the good news for some. Nine states impose no state income tax on earned income whatsoever:
- Alaska
- Florida
- Nevada
- New Hampshire (taxes only interest and dividends, and this is being phased out)
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
If you live in one of these states and earn $100,000, every dollar of your paycheck is free from state income tax. That can translate to savings of $5,000 to $13,000 per year compared to living in a high-tax state, depending on your income level and the state you are comparing against.
However, no-income-tax states are not always the cheapest places to live overall. Many of them make up for the lost revenue through higher property taxes, sales taxes, or other fees. Texas, for example, has no income tax but has some of the highest property tax rates in the nation. Washington state has no income tax but a 6.5 percent state sales tax (plus local additions that can push it over 10 percent). New Hampshire has high property taxes.
The key is to look at the total tax burden, not just income tax in isolation. Use our state tax comparison tool to see how your take-home pay would change in different states.
The Highest-Tax States: Where Your Paycheck Shrinks the Most
On the other end of the spectrum, several states impose significant income taxes that can substantially reduce your take-home pay:
California has the highest top marginal rate in the nation at 13.3 percent, which kicks in at income above $1 million. But even at moderate income levels, California rates are steep. A single filer earning $70,000 faces a marginal rate of 9.3 percent. For high earners in the Bay Area or Los Angeles, the combination of high state income tax, high cost of living, and high housing costs makes California one of the most expensive states for workers.
New York imposes state income tax rates up to 10.9 percent, plus New York City residents pay an additional city income tax of up to 3.876 percent. A New York City resident earning $100,000 could pay over $8,000 in combined state and city income taxes. That is a meaningful chunk of take-home pay that a worker in Miami or Dallas would keep entirely.
New Jersey has a top rate of 10.75 percent on income above $1 million, with rates of 6.37 to 8.97 percent for most higher earners. Combined with some of the highest property taxes in the country, New Jersey consistently ranks among the most taxed states overall.
Oregon does not have a sales tax, which is a genuine benefit. But it makes up for it with income tax rates that top out at 9.9 percent for income above $125,000 (single filers). For middle- and upper-income workers, the lack of sales tax may not fully offset the high income tax rate.
Hawaii has 12 income tax brackets with a top rate of 11 percent. Combined with the extremely high cost of living, Hawaii is one of the toughest states for keeping your paycheck intact.
Flat Tax States: Simplicity With a Catch
Thirteen states use a flat income tax rate, meaning everyone pays the same percentage regardless of income. Flat tax states include:
- Arizona: 2.5 percent
- Colorado: 4.4 percent
- Georgia: 5.49 percent (transitioning to a flat tax)
- Idaho: 5.695 percent
- Illinois: 4.95 percent
- Indiana: 3.05 percent
- Kentucky: 4.0 percent
- Michigan: 4.25 percent
- Mississippi: 4.7 percent
- North Carolina: 4.5 percent
- Pennsylvania: 3.07 percent
- Utah: 4.65 percent
Flat taxes are simple to calculate and plan around. You know exactly what percentage of your income is going to the state. But they are somewhat regressive, meaning lower-income earners pay the same rate as higher earners, which can feel like a heavier burden for those at the bottom of the income scale.
Several states have recently moved to flat tax systems or reduced their rates as part of a national trend toward lower and simpler state income taxes. Arizona, for example, moved to its current 2.5 percent flat rate in 2023, down from a previous top rate of 8 percent.
How State Taxes Affect Real Take-Home Pay
Let us put some real numbers to this. Consider a single filer earning $85,000 per year with a standard deduction and no special credits:
- Texas (no income tax): State tax: $0. Monthly take-home advantage: up to $500+ compared to high-tax states.
- North Carolina (4.5 percent flat): Approximate state tax: $3,400. That is about $283 per month.
- Illinois (4.95 percent flat): Approximate state tax: $3,785. About $315 per month.
- California (progressive, ~8 percent effective): Approximate state tax: $5,600. About $467 per month.
- New York City (state + city, ~8.5 percent effective): Approximate state and city tax: $6,300. About $525 per month.
The difference between the cheapest and most expensive states for this worker is over $6,000 per year. That is enough to fund a solid Roth IRA contribution, pay for a family vacation, or make a real dent in student loan debt.
Our salary calculator automatically factors in your state when calculating take-home pay, so you can see exactly how your state taxes affect your paycheck.
Remote Work Is Changing the Game
The rise of remote work since 2020 has fundamentally changed the state tax equation for millions of Americans. If you can work from anywhere, you can potentially choose where you pay state income tax. A software developer earning $150,000 working remotely for a California company could move to Texas and instantly save over $10,000 a year in state income tax.
But the rules are not always straightforward. Some states have "convenience of the employer" rules that tax you based on where your employer is located, not where you work. New York is the most notable example. If your employer has a New York office and you work remotely from Florida, New York may still claim you owe tax on that income unless your remote arrangement is for the employer's necessity rather than your convenience.
If you work remotely across state lines, it is crucial to understand the specific rules that apply to your situation. Consulting with a tax professional who understands multistate taxation is a smart investment.
For an employer evaluating the total cost of a remote worker in different states, our employer cost calculator can help break down the numbers.
Should You Relocate for Tax Savings?
Relocating solely for tax savings can be tempting, especially when you see the potential savings on paper. But tax is only one factor in the decision. Here are some things to consider before making a move:
- Cost of living. A state with no income tax might have higher housing, insurance, or property tax costs that offset the savings. Use our cost of living calculator to compare total expenses across states.
- Job market. If your job is location-specific, moving to a lower-tax state might mean fewer career opportunities or lower base salaries. Compare typical compensation in your field across regions using our salary comparison tool.
- Quality of life. Schools, healthcare, infrastructure, climate, and proximity to family all matter. No amount of tax savings is worth being miserable.
- Sales and property taxes. As mentioned, states without income taxes often compensate with higher consumption or property taxes. Look at the full picture.
Recent State Tax Trends for 2026
Several states have made notable changes heading into 2026:
- Iowa has continued reducing its flat rate toward 3.9 percent as part of a multi-year phase-down.
- Georgia is transitioning from graduated brackets to a 5.49 percent flat tax, with further reductions planned.
- Arkansas has reduced its top rate as part of ongoing tax reform efforts.
- Massachusetts voters approved a "millionaire tax" surcharge of 4 percent on income above $1 million, on top of the existing 5 percent flat rate, bringing the effective top rate to 9 percent.
The trend nationally is toward lower and simpler state income taxes, with several states explicitly competing to attract workers and businesses by cutting rates. If you are planning a long-term move, consider not just current rates but the direction each state is heading.
The Bottom Line
State income tax is one of the most impactful and most overlooked factors in your personal finances. The difference between living in a no-tax state versus a high-tax state can be worth tens of thousands of dollars over a career, especially as your income grows. At the same time, tax is just one piece of the puzzle. The smartest approach is to understand the full financial picture, including cost of living, job opportunities, and quality of life, before making any big decisions.
Use our state tax comparison tool to see exactly how different states affect your take-home pay, and check your current numbers with our free salary calculator. The more you understand about where your money goes, the better positioned you are to keep more of it.