State Income Tax Rates

Disclaimer: Tax rules and rates may change at both the federal and state levels. This article is for informational purposes only and should not be treated as tax advice. Readers should consult a qualified tax advisor for the most current rules and guidance based on their specific situation.

All U.S. taxpayers must pay federal income taxes. However, the U.S. also imposes state income tax rates, and typically, they are different in each location. Some states have no income taxes, and others set their own tax rates.

Most states that impose additional taxation on income collect money from individual taxpayers and businesses. There are 44 states in the U.S. that require businesses to pay income taxes.

Like federal taxes, businesses and taxpayers must follow strict schedules and avoid missing deadlines. Local governments impose penalties on taxpayers who fail to pay by the deadline. Moreover, if authorities believe a taxpayer purposely skipped paying taxes, they will penalize this taxpayer. In some cases, taxpayers even end up in jail.

Keep reading our article to learn more about the topic. You will find a table of all state income tax rates that includes how much a taxpayer must pay according to their income, filing status, and number of dependents.

Understanding State Income Tax Rates

State income tax rate is a level of direct tax that state tax agencies collect on the earnings taxpayers earn in or from the state. This means all income earned anywhere. Similar to the federal system, it is self-assessed, so taxpayers must prepare and file returns by themselves.

Taxation laws vary from state to state. Even due dates are different, especially when it comes to businesses. Typically, individuals must file their income return by April 15, when they also file federal taxes.

Some states don’t have additional taxation systems, so taxpayers only have to file federal returns. The list of states without additional tax rates can be accessed further in the article.

Key facts:

• Local laws and rates vary significantly depending on jurisdiction.
• In the U.S., there are 41 states that charge individual income tax. Alaska, Florida, Nevada, South Dakota, New Hampshire, Texas, Tennessee, Washington, and Wyoming do not charge any state income tax.
• Taxpayers may be required to file a return form for every location where they earn income (except for states with no additional taxation systems).

How Do State Income Tax Rates Work?

Typically, the U.S. states have different approaches to collecting taxes on citizens’ earnings. These approaches can be divided into three big categories:

• Flat tax. The state collects payments at the same rate, no matter the income size.
• No tax. Only nine states so far impose no additional tax rates.
• Progressive system. The approach works just like the federal system. States have different brackets for income depending on income size.

Typically, people live and work in the same location. But in some cases, a person may live in one state but work in another (or in a few locations). In that case, the person has to file return forms to all locations where they earn money.

States with a Flat Income Tax

Fifteen states in the U.S. have a flat state income tax rate:

• Arizona – 2.5%
• Colorado – 4.4%
• Georgia – 5.19%
• Idaho – 5.3%
• Illinois – 4.95%
• Indiana – 2.95%
• Kentucky – 3.5%
• Michigan – 4.25%
• Iowa – 3.8%
• Louisiana – 3.0%
• North Carolina – 3.99%
• Pennsylvania – 3.07%
• Utah – 4.50%
• Mississippi – 4.0% (on income over $10,000)
• Ohio – 2.75% on nonbusiness income over $26,050

As mentioned, a flat system means that no matter how much a person earns, they pay the same percentage.

States without Income Tax

Currently, there are nine states without an additional taxation system:

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington (WA does tax capital gains above a threshold at 7%)
• Wyoming
• New Hampshire

While these states don’t impose income taxes, they collect revenue through other channels, including sales, property, and excise taxes.

States with Progressive Tax Rate Systems

Most states in the U.S. and the District of Columbia impose taxes on personal income by using a progressive structure similar to the federal individual income tax system. This means individual taxpayers may pay higher rates as their taxable income increases. Corporate income tax should be discussed separately, as the federal corporate tax rate is currently a flat rate, while state-level corporate tax rules may vary.

Note: State income tax rates are usually lower than federal ones. Typically, several brackets range from 1% to 10%. It’s also worth mentioning that some states take 0% out of the first several thousand dollars of income.

The highest tax rates range from 13%-14%. Typically, states impose high rates on property, sales, utility, and fuel taxes.

Take a look at our “A Summary Of All States’ Tax Rates In U.S. For Individuals” section of the article to learn more about all taxation mechanisms, including progressive and flat systems.

States with the Highest State Income Tax Rates

Typically, it depends on how much a taxpayer or business earns. If taxpayers earn money in a state without an additional taxation system, they don’t have to pay. If taxation is flat, they pay the same percentage regardless of their earnings.

But states with progressive tax rates often impose higher payments. In 2026, the highest one is in California, but it only depends on the income size. If a taxpayer makes $1 million or more, they pay 13.30%.

Living and Working in Different States

As mentioned, some taxpayers may live in one state but work in another one, or even in several locations. For example, actors, singers, and lawyers often work in different locations. They earn wages or salaries in different states, so how do they pay taxes on their income?

Suppose a taxpayer is living in Nevada but works in Montana, Utah, Arizona, California. This taxpayer is required to pay in all of these locations according to their rules.

In Utah, they must pay a flat 4.50%. Arizona also uses a flat individual income tax rate of 2.5%, while Montana and California apply income-based brackets, so it is critical to check the taxpayer’s taxable income and filing status.

Note: the tax home is the general area of the taxpayer’s main place of domicile. If the taxpayer mainly works in Nevada, their tax home would be Nevada. The IRS claims that to determine the main place of business, a person must determine the length of time they spend in the location and the degree of business activity occurring in that location.

State Income Tax Rates and Businesses

Some states collect income taxes on corporations, partnerships, and trusts or estates. Typically, they impose lower corporate taxes and special exemptions to create a better environment for businesses, thus attracting companies to locate in these jurisdictions and pay a portion of their profits.

States generally can impose income tax on businesses with sufficient connection to the state, called nexus. Nexus is typically established through physical presence, economic activity above a threshold (post-Wayfair), property, or payroll in the state. Federal law (P.L. 86-272) limits a state’s ability to tax certain out-of-state sellers whose only in-state activity is soliciting orders for tangible personal property.

Even if having this connection, businesses must pay in those jurisdictions where they are located or registered. More about corporate state income tax rates is below in the table.

State Corporate Taxes and Brackets

Take a look at the state corporate taxes table to figure out how much a business should pay in taxes. For example, if a business owner operates a company in Illinois and earns any income, the business must pay 9.5%.

But if a business operates in Alaska, the situation is different depending on the income. If a business earns $90,000, the owner must pay 4.00% of the income to Alaska. But if the company makes an income on sales or services higher than $124,000, it should pay 6.00%.

Some states have one bracket, while others have several brackets. The overall payment size depends on the earnings.

Penalties for Tax Evasion

All U.S. taxpayers understand that not filing income returns to the IRS will lead to harsh penalties. But what about state taxes? The key takeaway here is that local fines can be as severe as those imposed by the IRS.

Moreover, if the state tax agencies believe you didn’t file taxes on purpose, you may be accused of a fraudulent scheme, which will inevitably lead to a prosecution for a crime. In this case, a taxpayer may even end up in jail.

Typically, state departments of revenue accuse most taxpayers of missing the deadline or not filing forms properly. As a result, they penalize taxpayers, set interest fees, and impose other fees in addition to the amount of tax due.

Note: the state charges your account monthly, so the interest increases, just as your fine. The longer a taxpayer waits to file income returns and pay what they owe, the more they’ll have to pay.

Some jurisdictions may also seize taxpayers’ property, freeze their assets, garnish wages, and intercept a federal tax reimbursement if too much time passes and a taxpayer still hasn’t filed taxes.

So, how do you avoid penalties for missing the deadline for filing taxes improperly? The best way is to hire a professional accountant!

It’s a perfect solution whether you are an individual taxpayer or own a business. Consider working with an accounting company that offers the services of professional CPAs who take care of calculating and even filing taxes on their client’s behalf.

A Summary of All States’ Tax Rates on U.S. for Individuals

If you are interested in checking and comparing tax rates across all states, check the table below. It summarizes all brackets for 2026.

This is the finalized tax rates table with all filing statuses. Take a look at your state to have a better understanding of how much you must pay depending on different factors.

Final Thoughts

Currently, most U.S. states have additional taxation systems. It’s critical to understand the rules of the state where you live and work. When taxpayers are trying to avoid paying federal taxes, the IRS will eventually intervene. But this is also the case with local authorities.

Not filing and paying taxes properly in a state where you live and work may lead to harsh penalties and even prison if accused and convicted of tax evasion. Both individual taxpayers and businesses are at risk. That’s why it’s recommended to ask for professional help. A certified accountant can help you with tax rates so you won’t get into trouble!