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State Income Tax Rates Explained

Brian Nelson
·11 min read
kupicoo / Getty Images
kupicoo / Getty Images

The federal government income tax collected by the IRS applies to all Americans regardless of where you live, but the rules for state income tax rates and how you pay taxes can be vastly different from those of the IRS depending on your state’s income tax structure. State income tax systems fall into three broad categories: fixed or flat income taxes, progressive income taxes, and no income taxes.

Be Prepared: All the New Numbers You Need To Know for Planning Ahead on Taxes

Fixed rates or flat rates, as the name implies, have a single tax bracket regardless of how much you make. Progressive income tax, the most commonly used system, refers to tax rates that increase incrementally for people with more taxable income. Some states, like Alaska and Florida, have high sales tax or property taxes to compensate for the fact that they are among the few states with no income tax.

Here’s what you need to know about state income tax rates, including states with no income tax.

States With Flat Tax Rates

With flat tax rates, you pay the same tax rate no matter how much income you have. Many states have moved away from flat-tax structures because critics claim that they unfairly burden low- and middle-class taxpayers. Illinois, however, which imposes a 4.95% fixed tax, has a flat tax because when the tax was first implemented, it was unclear whether a progressive income tax was constitutional under the state constitution, and the law hasn’t been changed since then.

Here are the states that impose a flat tax rate on their citizens:

State

Single Filer Rates

Married Jointly Rates

Colorado

4.63%

4.63%

Illinois

4.95%

4.95%

Indiana

3.23%

3.23%

Kentucky

5.00%

5.00%

Massachusetts

5,00%

5.00%

Michigan

4.25%

4.25%

New Hampshire

0% on W-2 income, 5.00% on dividends and interest

0% on W-2 income, 5.00% on dividends and interest

North Carolina

5.25%

5.25%

Pennsylvania

3.07%

3.07%

Tennessee

1.00% (0% for tax year 2021)

1.00% (0% for tax year 2021)

Utah

4.95%

4.95%

Source: State tax websites

States With Progressive Tax Rates

With progressive tax rates, most states have separate tax brackets that depend on how much you earn. The idea is that people in higher income brackets can afford to pay more taxes. More brackets can lead to more complexity.

Some states have just a few brackets, like Alabama or Rhode Island, which have just three each. California and Missouri both tip the scales with 10 different tax rates. And sometimes a state’s tax brackets are as easy as 1, 2, 3, like Montana, where the first five tax brackets are 1 percent, 2 percent, 3 percent, 4 percent and 5 percent.

In other states, tax bracketing looks like budgeting to the penny. Take Arizona, for example, which has tax brackets at an exacting 2.59 percent, 2.88 percent, 3.36 percent, 4.24 percent and 4.54 percent.

Here are the standard tax brackets for the states with progressive income tax rates:

State

Single Filer Rates

Married Jointly Rates

Alabama

2.00% = $0-$500

2.00% = $0-$1,000

4.00% = $501-$3,000

4.00% = $1,000-5,999

5.00% > $3,000

5.00% > $6,000

Arizona

2.59%-3.34% = $0-$53,000

2.59%-3.34% = $0-$106,000

4.17% = $53,001 – $159,000

4.17% = $106,001 – $318,000

4.50% > $159,000

4.50% > $318,000

Arkansas

0.00%-3.40% = $0-$22,200

0.00%-3.40% = $0-$22,200

0.75% – 6.00% = $22,200 – $79,300

0.75% – 6.00% = $22,200 – $79,300

2.00% – 6.60% > $79,300

2.00% – 6.60% > $79,300

California

1.00%-4.00% = $0-$33,421

1.00%-4.00% = $0-$66,842

6.00%-10.30% = $33,421-$359,407

8.00%-10.30% = $66,842-$718,814

11.30%-12.30% > $359,407

11.30%-13.30% > $718,814

Connecticut

3.00%-5.50% = $0-$100,000

3.00%-5.50% = $0-$200,000

6.00%-6.90% = $100,000- 500,000

6.00%-6.90% = $200,000- 1,000,000

6.99% > $500,000

6.99% > $1,000,000

Delaware

0%-4.80% = $2,000-$19,999

2.20%-4.80% = $2,000-$19,999

5.20%-5.55% = $20,000-$59,999

5.20%-5.55% = $20,000-$59,999

6.60% > $60,000

6.60% >$60,000

District of Columbia

4.00%-6.50% = $0-$60,000

4.00%-6.50% = $0-$60,000

8.50% =$60,001-$350,000

8.50% =$60,001-$350,000

8.75%-8.95% = $350,001-$999,999

8.75%-8.95% = $350,001-$999,999

8.95% > $1,000,000

8.95% > $1,000,000

Georgia

1.00%-3.00% = $0-$3,750

1.00%-3.00% = $0-$5,000

4.00%-5.00% = $3,751-$7,000

4.00%-5.00% = $5,001-$10,000

5.75% > $7,000

5.75% > $10,000

Hawaii

1.40%-6.40% = $0-$14,400

1.40%-6.40% = $0-$28,800

6.80%-7.90% = $14,401-$48,000

6.80%-7.90% = $28,800-$96,000

8.25%-10.00% = $48,001-$200,000

8.25%-10.00% = $96,000-$400,000

11.00% > $200,000

11.00% > $400,000

Idaho

1.125%-4.625% = $0-$6,162

1.125%-4.625% = $0-$12,324

5.625%-6.625% = $6,163-$11,554

5.625%-6.625% = $12,325-$23,108

6.925% > $11,554

6.925% > $11,554

Iowa

0.33%-6.25% = $0-$50,280

0.33%-6.25% = $0-$50,280

6.48%-7.44% = $50,280-$75,420

6.48%-7.44% = $50,280-$75,420

8.53% > $75,420

8.98% > $75,420

Kansas

3.10% = $0-$15,000

3.10% = $0-$30,000

5.25% = $15,001-$30,000

5.25% = $30,001-$60,000

5.70% > $60,000

5.70% > $60,000

Louisiana

2.00% = $0-$12,500

2.00% = $0-$25,000

4.00% = $12,501 – $50,000

4.00% = $25,001-$100,000

6.00% > $50,000

6.00% > $100,000

Maine

5.80% = $0-$22,200

5.80% = $0-$44,450

6.75% = $22,201-$52,600

6.75% = $44,451-$105,200

7.15% > $52,600

7.15% > $105,200

Maryland

2.00%-4.75% = $0-$100,000

2.00%-4.75% = $0-$150,000

5.00%-5.50% = $100,001-$250,000

5.00%-5.50% = $150,001-$300,000

5.75% > $250,000

5.75% > $300,000

Minnesota

5.35% = $0-$26,960

5.35% = $0-$39,410

6.80%-7.85% = $26,961-$164,400

6.80%-7.85% = $39,411-$273,470

9.85% > $164,400

7.85%-9.85% > $273,470

Mississippi

3.00% = $3,000-$5,000

3.00% = $3,000-$5,000

4.00% = $5,001-$10,000

4.00% = $5,001-$10,000

5.00% > $10,000

5.00% > $10,000

Missouri

1.50%-3.00% = $0-$4,212

1.50%-3.00% = $0-$4,212

3.50%-5.00% = $4,213-$8,424

3.50%-5.00% = $4,213-$8,424

5.40% > $8,424

5.40% > $8,424

Montana

1.00%-3.00% = $0-$8,200

1.00%-3.00% = $0-$8,200

4.00%-6.00% = $8,201-$18,400

4.00%-6.00% = $8,201-$18,400

6.90% > $18,400

6.90% > $18,400

Nebraska

2.46% = $0-$3,290

2.46% = $0-$6,570

3.51% = $3,291-$19,700

3.51% = $6,571-$39,410

5.01% = $19,701-$31,750

5.01%-6.84% = $39,411-$63,500

6.84% > $31,750

6.84% > $63,500

New Jersey

1.40% = $0-$20,000

1.40% = $0-$20,000

1.75%-5.525% = $20,001-$75,000

1.75%-5.525% = $20,001-$80,000

6.37%-8.97% > $75,001-$5,000,000

6.37%-8.97% > $80,001-$5,000,000

10.75% > $5,000,000

10.75% > $5,000,000

New Mexico

1.70% = $0-$5,500

1.70% = $0-$8,000

3.20% = $5,501-$11,000

3.20% = $8,001-$16,000

4.70% = $11,001-$16,000

4.70% = $16,001-$24,000

4.90% > $16,000

4.90% > $24,000

New York

4.00%-6.49% = $0-$215,400

4.00%-6.49% = $0-$161,550

6.85% = $215,401-$1,077,550

6.85% = $161,551-$2,155,350

8.82% > $1,077,550

8.82% > $2,155,350

North Dakota

1.10% = $0-$39,450

1.10% = $0-$65,900

2.04%-2.27% = $>37,950-$199,250

2.04%-2.27% = $63,400-$242,550

2.64% = $199,250-$433,200

2.64% = $242,551-$433,200

2.90% > $433,200

2.90% > $433,200

Ohio

2.85%-3.802% = $21,751-$86,900

2.85%-3.802% = $21,751-$86,900

3.802%-4.413% = $86,901-$217,400

3.802%-4.413% = $86,901-$217,400

4.797% > $217,400

4.797% > $217,400

Oklahoma

0.50%-1.00% = $0-$2,500

0.50%-1.00% = $0-$5,000

2.00%-4.00% = $2,501-$7,200

2.00%-4.00% = $5,001-$12,200

5.00% > $7,200

5.00% > $12,200

Oregon

5.00% = $0-$3,550

5.00% = $0-$7,100

7.00%-9.00% = $3,551-$125,000

7.00%-9.00% = $7,101-$250,000

9.90% > $125,000

9.90% > $250,000

Rhode Island

3.75% = $0-$65,250

3.75% = $0-$65,250

4.75% = $65,251-$148,350

4.75% = $65,251-$148,350

5.99% > $148,350

5.99% > $148,350

South Carolina

0.00%-3.00% = $0-$6,150

0.00%-3.00% = $0-$6,150

4.00%-5.00% = $6,151-$12,310

4.00%-5.00% = $6,151-$12,310

6.00% = $12,311-$15,400

6.00% = $12,311-$15,400

7.00% > $15,400

7.00% > $15,400

Vermont

3.35% = $0-$39,600

3.35% = $0-$66,150

6.60%-7.60% = $39,601-$191,650

6.60%-7.60% = $66,151-$243,750

8.75 > $191,650

8.75 > $243,750

Virginia

2.00%-3.00% = $0-$5,000

2.00%-3.00% = $0-$5,000

5.00% = $5,001-$17,000

5.00% = $5,001-$17,000

5.75% > $17,000

5.75% > $17,000

West Virginia

3.00%-4.00% = $0-$25,000

3.00%-4.00% = $0-$25,000

4.50%-6.00% = $25,001-$60,000

4.50%-6.00% = $25,001-$60,000

6.50% > $60,000

6.50% > $60,000

Wisconsin

4.00%-5.21% = $0-$23,930

4.00%-5.21% = $0-$31,910

6.27% = $23,931-$263,480

6.27% = $31,911-$351,310

7.65% > $263,480

7.65% > $351,310

Source: Tax Foundation, Individual State Tax Authorities

States With No Income Tax

Out of the 50 U.S. states, only eight have no personal income tax for tax year 2020. Beginning in tax year 2021, however, Tennessee is slated to be the ninth when its hall tax is repealed — a move which will leave New Hampshire as the only state that charges a tax on interest and dividends.

Find Out: Sales Tax by State — Here’s How Much You’re Really Paying

Just because a state doesn’t charge income tax doesn’t mean citizens are off the hook from taxes. In fact, some of the taxes imposed by no-income-tax states might add up to be much higher than the same taxes imposed in other states. Or the state might charge taxes on items that aren’t taxed in other states.

Here are the current states that do not have an income tax:

  • Alaska

  • Florida

  • Nevada

  • New Hampshire

  • South Dakota

  • Tennessee (beginning tax year 2021)

  • Texas

  • Washington

  • Wyoming

Note that New Hampshire and Tennessee do levy taxes on dividend and interest income.

Before you pack your bags and to move to another state, it’s helpful to know its tax structure. Although a state might not impose an income tax, that doesn’t mean you won’t have to account for taxes in other ways. And the tax laws of some states might not be as friendly toward high earners, business owners or retirees.

More From GOBankingRates

John Csiszar contributed to the reporting for this article.

Last updated: Jan. 12, 2021

This article originally appeared on GOBankingRates.com: State Income Tax Rates Explained