Unlike federal income tax (which applies nationwide), state income tax rates vary significantly from state to state in terms of rates and structures. This complicates tax compliance for businesses that operate in multiple states. Read on to learn more about state income tax, including the different types, rates by state, and key filing deadlines you need to know.
What is State Income Tax?
State income tax is a tax levied by individual states on the income of residents and sometimes non-residents who earn income within the state. The revenue collected goes towards funding state-level services and programs, such as education, infrastructure, and public safety.
Types of State Income Tax Rates
States have adopted different approaches to income taxation, generally falling into three main categories:
No State Income Tax
Some states choose not to impose an income tax at all. These states typically make up for the lack of income tax revenue through other means, such as higher sales taxes, property taxes, or natural resource revenues.
While living in a no-income-tax state allows residents to keep more of their paycheck, it’s important to consider the trade-offs. Essential services like education and infrastructure may receive less funding, and other taxes or costs of living may be higher to compensate.
Flat Tax Rate
States with flat tax systems apply the same tax rate to all taxable income, regardless of how much a person earns. While this approach is simpler to administer and calculate, it doesn’t account for differences in income levels. Employees with lower wages may feel the tax burden more acutely than higher earners. Understanding these dynamics can help HR teams better support staff with financial wellness planning and relocation decisions.
Graduated Rate
More than half of the states use graduated, also called progressive, tax systems, where income is taxed at increasingly higher rates as income rises. For example, here’s a breakdown of Alabama’s graduated tax rate of 2% to 5%.
Single filers with adjusted gross income of at least $4,000, head of family filers with adjusted gross income of $7,700, and married couples filing separate returns with adjusted gross income of $5,250 or more pay:
- 2% on the first $500 of taxable income
- 4% on the next $2,500
- 5% on all income earned over $3,000
Married couples filing jointly with an adjusted gross income of $10,500 or more pay:
- 2% the first $1,000
- 4% on the next $5,000
- 5% on all income earned over $6,000
How Do States Decide Their Income Tax Rates?
Each state legislature determines its tax structure based on budget requirements for essential services like education, infrastructure, and public safety.
States also regularly review and adjust their tax rates to align with fiscal priorities, economic conditions, and political objectives. While some states opt for progressive tax systems with multiple brackets to distribute the tax burden based on income levels, others choose flat tax rates for simplicity and ease of administration.
However, a growing number of states have eliminated income taxes altogether, relying instead on alternative revenue streams.
What Factors Influence State Income Tax Rates?
There are several factors that can influence state income tax rates. These factors typically include:
- Budgetary needs: States must fund essential services like education systems, roadway, public safety programs, and healthcare programs.
- Economic competitiveness: Lower tax rates can attract businesses and residents while driving economic growth.
- Alternative revenue sources: States with higher sales, property, or natural resource taxes may impose lower income tax rates.
- Political climate: Public opinion and elected officials’ philosophies shape whether states favor higher or lower taxation.
- Cost of living: States with higher living costs may need higher tax rates to fund adequate public services.
- Population demographics: States with aging populations or specific economic challenges may adjust rates accordingly.
State-By-State Income Tax Rates: Comparative Map
In total, 41 states impose some type of income tax. Take a look at which states have income tax rates:
State Income Tax Rates By State
Tax rates and structures vary significantly, with some states imposing no income tax at all, while others have complex graduated systems with multiple tax brackets and rates reaching over 11%.
Below is a comprehensive chart listing the state income tax rates by state as of 2026:
| State | Tax System | Tax Rates | Tax Due Dates |
|---|---|---|---|
| Alabama | Graduated | 2% – 5% | April 15 |
| Alaska | None | No state income tax | N/A |
| Arizona | Flat | 2.5% | April 15 |
| Arkansas | Graduated | 0% – 3.9% | April 15 |
| California | Graduated | 1% – 12.3% | April 15 |
| Colorado | Flat | 4.25% | April 15 |
| Connecticut | Graduated | 2% – 6.99% | April 15 |
| Delaware | Graduated | 0% – 6.6% | April 30 |
| Florida | None | No state income tax | N/A |
| Georgia | Flat | 5.19% | April 15 |
| Hawaii | Graduated | 1.4% – 11% | April 21 |
| Idaho | Flat | 5.695% | April 15 |
| Illinois | Flat | 4.95% | April 15 |
| Indiana | Flat | 3% | April 15 |
| Iowa | Flat | 3.8% | April 30 |
| Kansas | Graduated | 5.2% – 5.58% | April 15 |
| Kentucky | Flat | 4% | April 15 |
| Louisiana | Flat | 3% | May 15 |
| Maine | Graduated | 5.8% – 7.15% | April 15 |
| Maryland | Graduated | 2% – 5.75% | April 15 |
| Massachusetts | Flat | 5% | April 15 |
| Michigan | Flat | 4.25% | April 15 |
| Minnesota | Graduated | 5.35% – 9.85% | April 15 |
| Mississippi | Flat | 4.4% (first $10,000 earned is tax exempt) | April 15 |
| Missouri | Graduated | 2% – 4.8% | April 15 |
| Montana | Graduated | 4.7% – 5.9% | April 15 |
| Nebraska | Graduated | 2.46% – 4.55% | April 15 |
| Nevada | None | No state income tax | N/A |
| New Hampshire | None | No state income tax | N/A |
| New Jersey | Graduated | 1.4% – 10.75% | April 15 |
| New Mexico | Graduated | 1.5% – 5.9% | April 30 |
| New York | Graduated | 4% – 10.9% | April 15 |
| North Carolina | Flat | 3.99% | April 15 |
| North Dakota | Graduated | 0% – 2.5% | April 15 |
| Ohio | Flat | 2.75% on income above $26,050 | April 15 |
| Oklahoma | Graduated | 0.25% – 4.5% | April 15 |
| Oregon | Graduated | 4.75% – 9.9% | April 15 |
| Pennsylvania | Flat | 3.07% | April 20 |
| Rhode Island | Graduated | 3.75% – 5.99% | April 15 |
| South Carolina | Graduated | 0% – 6.2% | May 1 (2025 extension) |
| South Dakota | None | No state income tax | N/A |
| Tennessee | None | No state income tax | N/A |
| Texas | None | No state income tax | N/A |
| Utah | Flat | 4.55% | April 15 |
| Vermont | Graduated | 3.35% – 8.75% | April 15 |
| Virginia | Graduated | 2% – 5.75% | May 1 |
| Washington | None | No state income tax | N/A |
| West Virginia | Graduated | 2.22% – 4.82% | April 15 |
| Wisonsin | Graduated | 3.54% – 7.65% | April 15 |
| Wyoming | None | No state income tax | N/A |
| District of Columbia | Graduated | 4% – 10.75% | April 15 |
State Income Tax Rate Changes in 2026
For 2026, a handful of states lowered their state income tax rates or switched from a graduated rate to a flat rate. Key changes include:
Georgia
In Georgia, the flat income tax rate of 5.39% was reduced to 5.19% beginning on July 1, 2025. The standard deductions have also increased to $24,000 for Married filing jointly returns and $12,000 for Single, Head of household, Married filing separately, and Qualifying surviving spouse returns
Nebraska
The top rate in Nebraska reduces from 5.2% to 4.55%. The reduction is part of Legislative Bill 754, which will gradually reduce the top rate to 3.99% by 2027.
North Carolina
The flat rate tax in North Carolina is reduced from 4.25% to 3.99% in 2026. This is the last decrease as part of a phased reduction plan.
Ohio
Ohio moves to a flat 2.75% tax rate on income above $26,050. Income at or below $26,050 remains untaxed.
Oklahoma
The top tax rate is reduced from 4.75% to 4.5%, and the number of tax brackets is now simplified from six to three.
Virginia
There are no rate changes, but the standard deduction increases slightly to $8,750 from $8,500 for single filers.
State Income Tax Filing Deadlines
While most states follow the standard federal tax filing deadline of April 15, there are a few exceptions:
- Oklahoma state income taxes are due on April 20.
- Hawaii state income taxes are due on April 21.
- Delaware, Iowa, and New Mexico state income taxes are due on April 30.
- South Carolina, Virginia state income taxes are due on May 1
- Louisiana state income taxes are due on May 15.
Which States Have the Highest Income Tax Rates?
The states with the highest income tax rates are California, Hawaii, and New York.
Which States Have the Lowest Income Tax Rates?
Not counting the nine states with no income tax, the states with the lowest state income tax rates are Arizona, Indiana, Louisiana, and North Dakota.
Which States Have No Income Tax?
States without income tax include:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
How Paycor Helps You Manage Income Taxes
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FAQs About State Income Tax Rates
Still have questions about state income tax rates? Read on.
How Often Do State Income Tax Rates Change?
State income tax rates can change annually, though major overhauls are less frequent. Most states adjust their tax brackets yearly for inflation, while significant rate changes typically occur when legislatures pass new tax reform bills. It’s common for rates to remain stable for several years between major reforms.
What’s the Difference Between Federal and State Income Tax Rates?
Federal income tax rates apply uniformly across the entire United States, while state income tax rates vary significantly by location.
The federal system uses a progressive bracket structure with rates ranging from 10% to 37%, whereas states may use flat rates, graduated rates, or no income tax at all.
Additionally, states calculate taxable income differently and offer different deductions and credits than the federal system.
How Do You Handle Income Tax Rates with Remote Employees?
Remote employees typically owe income tax to their state of residence, not where their employer is located. However, some states have reciprocal agreements that prevent double taxation, and a few states require withholding based on where work is performed.
Employers should verify each remote worker’s tax residency and may need to withhold income tax for multiple states.