State Income Tax Comparison: 9 No-Tax States vs California's 13.3%
Last updated · State Comparison
State income tax varies more than any other tax in the US — from 0 percent in nine states to 13.3 percent at the top in California, with NYC adding nearly 4 percent on top. The same gross salary can produce a take-home difference of $15,000 or more between two states, which makes state of residence one of the most important financial decisions you can make. This guide ranks every state by income tax burden, explains the patterns (no-tax, flat, progressive), and shows which cities add local income tax on top.
The 9 no-income-tax states
Nine US states impose no broad-based income tax on wages:
- Alaska — also pays a Permanent Fund Dividend ($1,000-$3,000/year per resident from oil revenue)
- Florida — funded by tourism and high property taxes (~0.9%)
- Nevada — funded by gaming and tourism
- New Hampshire — wage income tax-free; phased out the interest/dividends tax through 2026
- South Dakota
- Tennessee — also no investment income tax (Hall Tax repealed 2021)
- Texas — funded primarily by property tax (~1.7% effective)
- Washington — has a 7% capital gains tax on gains above $250K (passed 2021), but no wage tax
- Wyoming
The catch: no-income-tax states fund services through property tax, sales tax, or other revenue. Tennessee has the highest combined sales tax rate in the US (9.55%). Texas and New Hampshire have property taxes near 2% effective, among the highest in the nation. Total tax burden in no-income-tax states is not necessarily lower for everyone.
Flat-tax states (one rate for all incomes)
Eleven states use a flat income tax rate that applies the same percentage to every dollar of income:
- Pennsylvania: 3.07% (lowest in the country)
- Indiana: 3.05%
- Michigan: 4.25%
- Colorado: 4.4%
- Arizona: 2.5% (recently lowered, one of the lowest)
- Utah: 4.55%
- North Carolina: 4.5%
- Kentucky: 4.0%
- Illinois: 4.95%
- Massachusetts: 5% (with 4% surcharge above $1M, the "millionaire's tax")
- Mississippi: 4.7% (transitioning to flat rate by 2026)
Flat tax structures are simpler to administer and generally favor high earners (no escalating brackets). The Massachusetts millionaire's tax surcharge (4% above $1M) is a notable hybrid — flat 5% on the first $1M, then 9% above that.
Progressive states (higher rates on higher income)
The remaining 30 states have progressive income tax with multiple brackets. The highest top marginal rates:
- California: 13.3% on income above $1M (1% Mental Health Services Tax stacked on top of the 12.3% top regular bracket)
- Hawaii: 11% on income above $200K (single)
- New Jersey: 10.75% on income above $1M
- Oregon: 9.9% on income above $125K (single)
- New York: 10.9% on income above $25M; 6.85% to 10.9% in the upper brackets
- Minnesota: 9.85% on income above $193K
- Maryland: 5.75% top rate, plus county income tax
- Iowa: 5.7% (transitioning toward flat rate)
For middle earners in these states, the marginal rate is typically 4–7 percent, much lower than the headline top rate. California's effective rate on $100K is about 6.5%, not 13.3%.
Cities with local income tax
Most US cities do not have local income tax. The major exceptions where you should add 1–4 percent on top of state tax:
- New York City: 3.078% to 3.876% progressive (residents). Top rate kicks in around $50,000 single / $90,000 married.
- Yonkers, NY: 16.75% of NY state liability (effectively about 1.6% extra)
- Philadelphia, PA: 3.79% on residents; 3.44% on non-resident commuters. Among the highest local rates in the country.
- Pittsburgh, PA: 3% combined city + Wage Tax
- Cleveland, Cincinnati, Columbus, OH: 2.5%
- Detroit, MI: 2.4% residents, 1.2% non-residents
- Baltimore and Maryland counties: 2.25% to 3.2%
- Birmingham, AL: 1% occupational tax
- San Francisco: No personal income tax (despite the city's high cost of living)
NYC residents face one of the highest combined burdens in the country: NY state (up to 10.9%) + NYC (up to 3.876%) = up to 14.78% on top brackets. Add California (also up to 13.3%) and you have the two highest-tax states for high earners.
A practical comparison: $150,000 single in 5 states
Approximate state income tax owed on $150,000 gross, single filer, standard deduction:
- Texas: $0 (no income tax)
- Pennsylvania: $4,605 (3.07% flat)
- Massachusetts: $7,500 (5% flat)
- New York (state only): $7,894 (progressive)
- New York City: $7,894 + $4,889 NYC = $12,783
- California: $9,832 (progressive) + $0 SDI on first $153,164 then 1.1% above
The TX-vs-NYC gap is $12,783 in state+local income tax alone. Over a 30-year career at the same income, that's $383,000 — enough to pay off a mortgage early or fund 5+ years of additional retirement savings.
How to choose where to live for tax reasons
Three rules:
- Tax savings only matter if everything else is equal. Moving from NYC to Tampa for the tax break makes sense if your career, family, and lifestyle are unaffected. If the move costs you a $30K career-trajectory hit, the tax savings are eroded.
- Property tax often offsets income tax savings. Texas's property tax is about 1.7% effective. On a $400K home, that's $6,800/year — a meaningful chunk of the income tax savings.
- State residency rules matter for high earners. Establishing tax residency in a no-tax state requires real, documented presence — domicile, voter registration, driver's license, primary residence, time spent in the state. Half-residency tricks fail audits, especially in NY and CA which actively pursue residency disputes.
Use our US country page for current state-by-state take-home pay calculations.
Frequently Asked Questions
Which US states have no income tax?+
Nine states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Workers in these states pay only federal income tax + FICA. Most fund their state through higher property tax or sales tax.
Which state has the highest income tax?+
California, with a top marginal rate of 13.3% on income above $1 million (12.3% top regular bracket + 1% Mental Health Services Tax). Hawaii and New Jersey are second and third at around 10-11% top rates.
Does NYC have a separate city income tax?+
Yes. New York City levies a progressive personal income tax of 3.078% to 3.876% on residents, on top of New York State income tax. Combined, NYC residents face one of the highest income tax burdens in the country.
How does Pennsylvania flat tax compare to California progressive tax?+
For low to mid earners, PA (3.07% flat) is much cheaper. For high earners, the gap widens further because California has 8 progressive brackets reaching 13.3%, while PA stays at 3.07% on every dollar.
Can I avoid state income tax by working remote from a no-tax state?+
Sometimes, but it depends on the rules of the state where your employer is based. New York famously taxes nonresident employees of NY-based companies under the "convenience of the employer" rule. California, Massachusetts, and other states have similar rules. Always check both your residence state and your employer's state.
Why does California have 13.3% but Texas has 0%?+
Different revenue models. California funds state government heavily through income tax. Texas funds through property tax (~1.7% effective, among the highest in the country) and sales tax. Total tax burden is more similar than the income tax difference suggests.