State Income Tax Comparison: Best and Worst States for Taxes

No Income Tax States

Nine states have no state income tax:

Alaska, Florida, Nevada, New Hampshire (dividends/interest only), South Dakota, Tennessee, Texas, Washington, Wyoming

Living in these states means your only income tax obligation is federal. However, many compensate with higher sales, property, or other taxes.

Flat Tax States

Several states use a single flat tax rate:

Arizona: 2.5%

Colorado: 4.4%

Georgia: 5.49% (transitioning to flat rate)

Idaho: 5.8%

Illinois: 4.95%

Indiana: 3.05%

Kentucky: 4.0%

Michigan: 4.25%

Mississippi: 4.7%

North Carolina: 4.5%

Pennsylvania: 3.07%

Utah: 4.65%

Highest Tax States

States with the highest top marginal rates:

California: 13.3%

Hawaii: 11%

New Jersey: 10.75%

Oregon: 9.9%

Minnesota: 9.85%

New York: 10.9% (including NYC)

SALT Deduction Impact

The $10,000 cap on state and local tax (SALT) deductions means high-state-tax residents cannot deduct the full amount on their federal return. This effectively increases the tax burden in high-tax states.

Factors Beyond Income Tax

When comparing states, also consider:

Sales tax rates (0% in Oregon, Montana, Delaware, New Hampshire)

Property tax rates (vary dramatically by locality)

Estate/inheritance taxes

Business taxes if self-employed

Cost of living differences

Use Taxation.ai's salary tax calculator to compare your after-tax income across different states and countries.