US State Income Tax in 2026: Which States Tax You and Which Don't
Federal tax is only half the story. Where you live in the United States can add anywhere from zero to more than 13% on top of your federal bill. Nine states levy no broad individual income tax at all, while California's top rate of 13.3% is the highest in the nation. If you are choosing where to settle, state tax deserves a seat at the table.
The nine states with no income tax
For tax year 2026, these states levy no broad-based individual income tax, according to the Tax Foundation:
- Alaska
- Florida
- Nevada
- New Hampshire (its old tax on interest and dividends was fully repealed as of 2025)
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Two footnotes worth knowing. Washington has no wage income tax but does levy a 7% excise tax on long-term capital gains above a high threshold (about $262,000 for 2026). And "no income tax" does not mean "no taxes" — Texas and Florida, for example, make up the difference with higher property and sales taxes.
The highest-tax states
At the other end of the spectrum, the states with the highest top marginal rates for 2026 are:
| State | Top rate | Kicks in above (approx.) |
|---|---|---|
| California | 13.3% | $1,000,000 (includes 1% surcharge) |
| Hawaii | 11.0% | high six figures |
| New York | 10.9% | $25,000,000 |
| New Jersey | 10.75% | $1,000,000 |
| Washington, D.C. | 10.75% | $1,000,000 |
| Oregon | 9.9% | $125,000 single |
| Minnesota | 9.85% | ~$200,000 |
Note that top rates apply only to income above very high thresholds in most states — a middle-income earner in New York pays nowhere near 10.9%. What matters for most newcomers is the effective rate at their own income level, not the headline top rate.
Flat-tax states: simple and in the middle
A growing group of states uses a single flat rate on all taxable income. Examples for 2026 include Arizona (2.5%), Colorado (4.4%), Illinois (4.95%), North Carolina (4.25%), Pennsylvania (3.07%), and Utah (4.8%). Flat systems are simpler to estimate: multiply your state-taxable income by one number.
Why this matters when you move
States tax you based on residency, and each state defines residency its own way — generally, living there more than half the year or maintaining your permanent home there makes you a resident. A few practical points for newcomers:
- Moving mid-year usually means two part-year returns. If you land in New Jersey in March and move to Texas in October, expect to file part-year returns in New Jersey (and possibly nothing in Texas).
- Remote work can create multi-state filing. If you live in one state but your employer is in another, you may owe tax in both, with a credit in your home state for tax paid elsewhere. Rules vary widely.
- Total tax burden is not just income tax. Compare property tax, sales tax, and fees too. Texas has no income tax but some of the highest property taxes in the country; Oregon has no sales tax but high income tax.
Worked example: $150,000 salary, California vs. Texas. Federal tax is identical in both states. In Texas, state income tax is $0. In California, a single filer at this income level lands in the 9.3%–10.3% state brackets on much of their income; a rough state bill is on the order of $9,000–$11,000 (before the standard deduction and credits California allows). Same job, same pay — roughly a $10,000 annual difference from the state line alone.
Worked example: $80,000 salary, New York City vs. Florida. Florida: $0 state tax. New York State plus New York City tax combined can take roughly 6–7% at this income level for a city resident — around $5,000 — before accounting for the city's own brackets and credits.
How states decide you are a resident
Each state writes its own residency test, but most use some mix of domicile (your permanent home) and a day count — often 183 days. Two traps catch newcomers:
The domicile trap. Some states, notably New York, treat you as a resident if you maintain a permanent place of abode there and spend more than 183 days in the state — even if you also have a home elsewhere. Keeping an apartment in Manhattan while "living" in Florida invites an audit.
The sticky-state problem. A few states (California is the famous one) make it hard to leave for tax purposes. Moving to Texas but keeping a California driver's license, voter registration, and doctor can lead California to argue you never really left. When you move, cut ties deliberately: new license, new registration, new doctors, updated address everywhere.
If you genuinely split time between two states, keep a calendar. In a dispute, contemporaneous records of where you slept each night beat memory.
The SALT cap: why state tax stings a bit less than it looks
Since 2018, the federal deduction for state and local taxes (SALT) has been capped at $10,000 per return ($5,000 if married filing separately). That means only the first $10,000 of your combined state income tax, property tax, and sales tax is deductible against federal income — and only if you itemize, which fewer than 10% of filers do.
2025 legislation raised the cap substantially for 2025 through 2029 (to $40,000, with phaseouts at higher incomes), so itemizers in high-tax states get more relief than they did under the old $10,000 limit. But if you take the standard deduction — as most newcomers do — the SALT cap is irrelevant to you: your state tax is simply an extra cost on top of federal tax, with no federal offset.
Worked example: $200,000 earner in New Jersey. State income tax might run roughly $9,000–$11,000. Under the old $10,000 SALT cap, an itemizer could deduct at most $10,000 of combined state and property tax. Under the higher 2026 cap, considerably more is deductible for itemizers — but a newcomer taking the $16,100 standard deduction gets no federal benefit from state taxes either way.
Frequently asked questions
I just arrived in the US. Which state do I file in?
The state where you live. If you moved during the year, you generally file part-year returns in each state where you were a resident, reporting the income earned while living there.
Do I still owe state tax if I work remotely for an out-of-state company?
Usually you owe tax where you live and work, not where your employer sits — but a handful of states have special "convenience of the employer" rules that can tax remote workers. Check both states' rules.
Is it worth moving just for lower taxes?
Run the full numbers first. A no-income-tax state with high property taxes and insurance costs can be more expensive overall than a moderate-tax state, depending on whether you rent or buy and how much you spend.
What about local income taxes?
Some cities and counties levy their own income tax on top of the state's — New York City (up to 3.876%), for example, plus many Ohio and Pennsylvania municipalities. Always check the city level too.
Do states follow the federal standard deduction?
Not necessarily. Each state sets its own deduction and exemption amounts, and some states don't allow itemized deductions at all. Your state-taxable income is computed separately from your federal number.
Sources
- Tax Foundation, State individual income tax rates and brackets, 2026: https://taxfoundation.org/data/all/state/state-income-tax-rates-2026/
- Charles Schwab, Which state taxes matter to you (2026 top rates, no-tax states): https://www.schwab.com/learn/story/taxation-nation-which-state-taxes-matter-to-you
- Tax Foundation, 2026 state tax competitiveness index (rate details): https://taxfoundation.org/research/all/state/2026-state-tax-competitiveness-index/
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