Location is everything if you want to save a few dollars on your taxes. As of 2021, state tax rates range from zero to more than thirteen percent.
California, Hawaii, New York, New Jersey, and Oregon have the highest state income tax rates. In contrast, eight states have no income tax at all. Another ten have a flat tax rate, meaning that no matter how much money you make, you pay the same proportion.
Find out which states have the highest tax rates, no taxes, or flat taxes, as well as a comprehensive list of tax rates for each state in the country.
State Income Tax Rates in 2021
The top 10 states with the highest income tax rates are listed below.
Income Tax Rates at the State Level
- California
- Hawaii has 13.3% of the population.
- New York accounts for 11% of the total.
- New Jersey has a population of 10.9 percent.
- Oregon has a percentage of 10.75 percent.
- Minnesota has a 9.9% unemployment rate.
- Washington, D.C. 9.85 percent 8.95 percent
- Vermont
- 8.75 percentage point
- Iowa
- 8.53 percentage points
- Wisconsin
- 7.65 percentage point
California has the highest income tax rates in the country—its top rate is 12.3%. Still, it also imposes an extra tax on people with an income of
$1 million or more, bringing the total tax rate to 13.3%.
2 This "millionaire's tax" form is also enacted in New Jersey and New York. 34 Other states have a high tax rate, although not all have the same number of income bands that lead up to it.
Hawaii, for example, has an 11 percent top tax rate and 12 income groups. In contrast, Iowa has an 8,53 percent top tax rate and nine income brackets. Washington, D.C., of course, is not a state, but it does have its income tax rate.
States without a personal income tax
On the other hand, Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington state, and Wyoming have no income tax. New Hampshire is in the middle of the pack. It doesn't tax earned income but collects a flat 5% tax on interest and dividends.
Some states earn revenue differently since they do not collect income tax. Tennessee's combined state and local sales tax rate is one of the highest in the country. Although your paycheck will be protected, you will be charged at the cash register. Property taxes in New Hampshire and Texas are expensive compared to home values. In 2021, Pennsylvania imposed the highest gasoline tax.
States that have a flat tax rate
Many residents in the states that impose income taxes get a discount because the highest rates don't apply until higher income levels. However, this is not the case in the ten states with flat tax rates as of 2021. The table below shows the flat-tax states and their rates, from highest to lowest.
Rate of State Flat Tax in 2021
- North Carolina is a state in the United States.
- 5.25 percent in Massachusetts and 5% in Kentucky
- New Hampshire has a 5% population.
- 5% of the total (interest and dividend income only)
- Illinois
- Utah has a 4.95 percent unemployment rate.
- Colorado
- 4.55 percent of the population of Michigan
- 4.25 percentage point
- Indiana
- Pennsylvania is 3.23 percent.
- 3.07 percentage points.
A State-by-State Analysis of Income Tax Rates in Comparison
The remaining states and Washington, D.C. levy a "progressive" income tax based on tax bands on all income. The bigger your income, the more significant the proportion of your earnings you'll pay in income tax. California's top rate, for example, is 13.3 percent, but you'll only pay it if your income exceeds $1 million.
For the tax year 2021, the rates and income thresholds for single filers, including those states that do not levy an income tax and those that levy a flat rate, are as follows:
Lowest and Highest Income Brackets in State Taxes
Alabama
between 2% and 5%
Between $500 and $3,001
Alaska has a 0% unemployment rate.
None
Arizona
From 2.59 percent to 8%
$27,272 and $250,000 respectively
Arkansas
2% to 5.9% of the population
between $4,000 and $79,300
California
1%–13.3%
$1 million and $8,932
Colorado
All incomes are subject to a flat rate of 4.55 percent.
Connecticut
From 3% to 6.99 percent
The range is between $10,000 and $500,000.
Delaware
$2,000 and $60,001, ranging from 0% to 6.6 percent
Florida
zero percent
None
Georgia
From 1% to 5.75 percent
750 dollars and 7,001 dollars
Hawaii
From 1.4 percent to 11%
$2,400 and $200,000 are the two most common amounts.
1.125 percent to 6.925 percent $1,568 and $11,760 in Idaho
Illinois
All incomes are subject to a flat rate of 4.95 percent.
Indiana
All incomes are subject to a flat rate of 3.23 percent.
Iowa
From 0.33 to 8.53 percent
$75,420 and $1,676
Kansas
$15,000 and $30,000 3.1 percent to 5.7 percent
Kentucky
All revenues are subject to a 5% flat rate.
Louisiana
between 2% to 6%
$12,500 and $50,001 are the two amounts.
Maine
From 5.8% to 7.15 percent
$53,150 and $22,450
Maryland
$1,000 and $250,000 are 2% to 5.75 percent of the total.
Massachusetts
All revenues are subject to a 5% flat rate.
Michigan
All incomes are subject to a flat rate of 4.25 percent.
Minnesota
5.35 percent to 9.85 percent $27,230 and $166,041 respectively
Mississippi
3–5% of the population
$5,000 and $10,000, respectively
Missouri
$1,088 and $8,704 (1.5 percent to 5.4 percent)
Montana
$3,100 and $18,800, respectively, ranging from 1% to 6.9%
Nebraska
$3,340 and $32,210 (from 2.46 percent to 6.84 percent)
Nevada
zero percent
None
New Hampshire is a state in the United States.
5% of total
Interest and dividend income are taxed at a flat rate.
New Jersey is a state in the United States.
From 1.4 to 10.75 percent
between $20,000 and $1,000,000
New Mexico is located in the United States.
From 1.7 percent to 5.9%
$210,000 and $5,500
New York is a city in the United States.
From 4% to 10.9 percent
Between $8,500 and $25 million is much money.
North Carolina is a state in the United States.
5.25 percentage point
All incomes are subject to the flat rate.
North Dakota is a state in North America.
$40,525 and $445,000 (1.1 percent to 2.9 percent)
Ohio
From 0% to 4.797 percent
$22,150 and $221,300 respectively
Oklahoma
$1,000 and $7,200 (0.5 percent to 5%).
Oregon
$4,650 and $125,000 at 4.75 percent to 9.9 percent
Pennsylvania
All incomes are subject to a flat rate of 3.07 percent.
Rhode Island is a state in the United States.
$66,200 and $150,550, respectively, 3.75 percent and 5.99 percent
South Carolina is a state in the United States.
$3,110 and $15,560, respectively.
South Dakota is located in the United States.
zero percent
Tennessee has none.
Texas has a 0% unemployment rate, whereas Utah has a 0% unemployment rate.
4.95 percentage point
All incomes are subject to the flat rate.
Vermont
3.35 % to 8.75 % $40,350 to $204,000
$3,000 and $17,001 in Virginia, ranging from 2% to 5.75 percent
0 percent None in Washington
Washington, D.C. is the capital of the United States.
From 4% to 8.95 percent
$10,000 and $1,000,000
West Virginia is a state in the U.S.
$10,000 and $60,000 are 3% to 6.5 percent of the total.
Wisconsin
$12,120 and $266,930, respectively, 3.54 percent and 7.65 percent
Wyoming has a 0% unemployment rate.
None
Changes in State Taxes in 2021
As legislation is created or repealed, tax laws might alter at any time. For the tax year 2021, the following rules took effect.
Arizona: A 3.5 percent individual income tax surcharge was enacted for taxpayers with a marginal income of more than $250,000 (single filers) or $500,000 (married filers) (joint filers).
Arkansas: The top rate fell from 6.6 percent to 5.9%.
Colorado: The state's flat individual and corporate income tax rates were permanently reduced from 4.63 percent to 4.55 percent.
Tennessee: The Hall Tax was abolished entirely.
New Mexico: With the installation of a new bracket, the highest marginal individual income tax rate was permanently raised from 4.9 percent to 5.9 percent.
1
New York: With the enactment of the 2021–2022 budget in April 2021, New York's top tax rate changed. The initial rate of 8.82 percent was raised to three graduated rates of 9.65%, 10.3 percent, and 10.9 percent. All these rates apply to earnings of more than $2 million, with the highest rate of 10.90 percent applied to earnings of more than $25 million. These tariffs are set to revert to pre-2021 levels in 2028.
Commonly Asked Questions (FAQs)
What is the purpose of state income tax revenue?
State budgets determine how tax revenue is used. The budgeting process varies per state, but it generally follows the federal procedure of reaching a spending agreement between the legislative and executive branches.
Where do you pay your income tax if you work out of state?
It's a given that you'll have to submit income taxes in the state where you live. Workers in several states can only file taxes in the state where they live, regardless of where they work. If your job requires you to travel across state borders, you may or may not be required to file taxes in another state. See a tax specialist to learn how state laws apply to your situation.
