States With The Highest & Lowest Income Tax Rates
Did you know the top tax rate in California is 13.3%, Nevada has no state income tax and Oregon has no sales tax? Read on for more facts!
I'm not typically a huge fan of shorter articles, as I like to write a lot, but there's a ton of value in this one and zero fluff, because the value is in the corresponding numbers (tax percentages) and since it's tax season, what better way to kick it off than by writing a tax article?!
What Matters? Location.
Location plays a big role in how much you end up paying in taxes. There's no way around it. We have borders on states, and nice little corresponding income taxes within those borders. If you live within those borders you're subject to the laws of that state and with it, their taxes.
To help you make the most of your money, we've got a rundown of the states with the highest and lowest taxes, and a table with the highest tax rate from each state.
What Kind Of Taxes? You Ask.
The big 3.
- Income tax
- Sales tax
- Property tax
These 3 tax types can add up fast. 10% annually, 9% on purchases and 2% on your property can put a huge dent in your bank account.
Which States Have Personal Income Tax?
First off, 41 states and D.C. have a personal income tax. This means that only 8 states in America have NO tax, the rest do. Thankfully, not all of these taxes are high, and in some cases, are a mid-single-digit flat tax (Arizona is a great example of that)
California has the highest rate at 13.3% , while Hawaii (11%) and New Jersey (10.75%) aren't far behind. Quick note, New Jersey's highest tax rate is only applicable above $5,000,001 so unless you're making that or higher, you'll be taxed in the 8% range, which is lower than quite a few states.
On the flip side, eight states have no personal income tax at all, and they are,
- Alaska
- Florida
- Nevada
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
A lot of people from high-tax states such as California, New York flock to these no tax states to save some serious money. Florida, Nevada & Texas seem to be the most desirable relocation targets.
When it comes to property taxes, it's a local thing, not a state thing. The highest property taxes can be found in New Jersey, while the lowest can be found in Louisiana.
All but four states - Oregon, New Hampshire, Montana, and Delaware - rely on sales tax for revenue. That's right. In those 4 states you pay $0.00 in sales tax!
The states with the highest total sales taxes are Tennessee, Louisiana, and Arkansas, while the states with the lowest sales taxes are Alaska, Oregon, Delaware, and New Hampshire (because, no sales tax, obviously!).
The Tax Foundation's 2019 State and Local Tax Burden Rankings study found that Americans pay an average of 9.9% in state and local taxes, which if you ask me, as an Oregonian, is crazy. With 10% as an average, and including the 10%+ markup we saw after inflation hit, everything just got a lot more expensive.
The top five states with the highest state and local tax combinations are New York, Connecticut, New Jersey, Illinois, and California and Wisconsin, so if you live in one of these states and you care more about saving money than where you live, you might want to look into relocating to a lower tax state.
At least, that's what I would do.
| State | Highest State Income Tax Rate |
|---|---|
| Alabama | 5% |
| Alaska | No state income tax |
| Arizona | 4.5% |
| Arkansas | 6.9% |
| California | 13.3% |
| Colorado | 4.63% |
| Connecticut | 6.99% |
| Delaware | No state income tax |
| Florida | No state income tax |
| Georgia | 5.75% |
| Hawaii | 11% |
| Idaho | 7.4% |
| Illinois | 4.95% |
| Indiana | 3.23% |
| Iowa | 8.53% |
| Kansas | 5.7% |
| Kentucky | 5% |
| Louisiana | 6% |
| Maine | 7.15% |
| Maryland | 5.75% |
| Massachusetts | 5.1% |
| Michigan | 4.25% |
| Minnesota | 9.85% |
| Mississippi | 5% |
| Missouri | 5.4% |
| Montana | 6.9% |
| Nebraska | 6.84% |
| Nevada | No state income tax |
| New Hampshire | No state income tax (except for income from dividends and interest) |
| New Jersey | 10.75% |
| New Mexico | 4.9% |
| New York | 8.82% |
| North Carolina | 5.25% |
| North Dakota | 2.9% |
| Ohio | 4.797% |
| Oklahoma | 5% |
| Oregon | 9.9% |
| Pennsylvania | 3.07% |
| Rhode Island | 5.99% |
| South Carolina | 7% |
| South Dakota | No state income tax |
| Tennessee | No state income tax |
| Texas | No state income tax |
| Utah | 5% |
| Vermont | 8.75% |
| Virginia | 5.75% |
| Washington | No state income tax |
| West Virginia | 6.5% |
| Wisconsin | 7.65% |
| Wyoming | No state income tax |
