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
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
State Income Tax Rates and Brackets
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 2025:
| 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 |
| Arkansa | Graduated | 0% – 3.9% | July 31 (2025 extension) |
| 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 | 5.39% | May 1 (2025 extension) |
| Hawaii | Graduated | 1.4% – 11% | April 20 |
| 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% | November 3 (2025 extension) |
| Lousiana | 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 |
| Minessota | Graduated | 5.35% – 9.85% | April 15 |
| Mssissippi | 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% – 5.2% | 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 15 |
| New York | Graduated | 4% – 10.9% | April 15 |
| North Carolina | Flat | 4.25% | April 15 |
| North Dakota | Graduated | 0% – 2.5% | April 15 |
| Ohio | Graduated | 0% – 3.5% | April 15 |
| Oklahoma | Graduated | 0.25% – 4.75% | April 15 |
| Oregon | Graduated | 4.75% – 9.9% | April 15 |
| Pennsylvania | Flat | 3.07% | April 15 |
| 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 |
| Wast 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 Changes in 2025
For 2025, a number of states lowered state taxes or switched from a graduated rate to a flat rate. Key changes include:
Hawaii
Hawaii modified its tax brackets for 2025. HB 2404 will reduce income tax rates through 2031. For 2025, the lowest tax rate of 1.4% now applies to single-filer income below $9,600 (up from $2,400 in 2024), and the highest rate of 11% applies to income exceeding $325,000 (up from $200,000).
Indiana
Indiana implemented a slight change to its flat tax rate, reducing it from 3.05% to 3%. The staggered income tax cuts go through 2027, when a 2.9% tax rate will apply.
Iowa
The passing of Iowa Senate File 2442 replaced Iowa’s previous graduated income tax rate with a flat rate of 3.8% beginning with the 2025 tax year. Iowans at the top of the graduated rates previously paid 5.7% in income tax.
Louisiana
Louisiana also repealed its graduated income tax in favor of a flat rate. The new income tax rate starting with tax year 2025 is 3%.
Mississippi
In Mississippi, the flat income tax rate of 4.7% was reduced to 4.4% for 2025. Subsequent planned reductions will bring the rate to 3% by 2030.
Missouri
Missouri is implementing a slight change to the graduated rates for 2025. The top marginal income tax rate will decrease from 4.8% to 4.7%. Under Missouri Senate Bills 3 and 5, there will be .1% decreases for the next two years to reach a top rate of 4.5%.
Nebraska
The top rate in Nebraska reduces from 5.84% to 5.2%. The reduction is part of Legislative Bill 754, which will gradually reduce the top rate to 3.99% by 2027.
New Hampshire
New Hampshire eliminated its tax on interest and dividends income, joining the rank of states that don’t impose an income tax. There was previously a 3% tax rate.
New Mexico
New Mexico restructured its tax brackets for year 2025, adding a sixth bracket. The lowest tax rate, previously 1.7% is reduced to 1.5%. The newest bracket imposes a 4.3% tax rate for incomes between $16,500 and $33,500.
North Carolina
The flat rate tax in North Carolina reduces from 4.5% to 4.25% in 2025. This is part of a phased reduction plan to ultimately bring the rate to 3.99%.
West Virginia
West Virginia’s graduated top rate reduces from 5.12% to 4.82% in 2025. As long as revenue goals are met, the state intends to keep lowering the rate.
State By State Income Tax Filing Deadlines
While most states follow the standard federal tax filing deadline of April 15, there are a few exceptions:
- Due to recent severe weather, Arkansas extended its normal April 15 deadline to July 31 for 2025.
- Delaware and Iowa state income taxes are due on April 30.
- Due to Hurricane Helene, Georgia and South Carolina extended their April 15 deadlines to May 1 for 2025.
- Hawaii state income taxes are due on April 20.
- Severe storms and flooding prompted Kentucky to extend the April 15 deadline to Nov. 3, 2025.
- Louisiana state income taxes are due on May 15.
- Virginia state income taxes are due on May 1
State Income Tax Rate FAQs
Still have questions about state income tax rates? Read on.
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 income tax rates are North Dakota, Alabama, and Arizona.
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 Manage Income Tax
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