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State Tax Rates

State Tax Rates

State Income Tax Rates Across the U.S.

The perennial topic of taxes is one woven into the fabric of American life. While federal income tax consistently garners the lion's share of attention, understanding state income tax rates is equally crucial. These rates, which vary widely across the nation, have substantial implications for the hard-earned cash in taxpayers' pockets, directly impacting both personal finance and cost of living. State taxes help fund crucial public expenditures, such as infrastructure, education, healthcare, and social services, patching up any gaps left by federal funding. 

Key findings from the data include:

  • The highest income tax rate bracket is seen in California, with the highest earners taxed at a rate of 13.3%. The Golden State is closely followed by New York with a top rate of 10.9% and Oregon at 9.9%.
  • Seven states levy no state income tax at all, namely: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Tennessee also does not tax regular wage income, though it does tax interest and dividend income.
  • Minnesota deserves mention for its comprehensive tax rate range, spanning from a lower limit of 5.4% to an upper limit of 9.9%.
  • Despite having a flat rate of 7%, Washington has one of the higher income tax rates in the country, showcasing how even states with a flat tax rate system can end up having a high tax rate.
  • On the other end of the spectrum, Oklahoma boasts the lowest income tax rate in the country at 0.3%.

States with the Most Taxes

Leading the pack is California, boasting the highest income tax rate bracket of 13.3%, although its lower limit is only at 1.0%. This means if you are in the highest income bracket in the Golden State, the tax bite is substantial. 

Close on its heels is New York, with a tax rate ranging from 4.0% to 10.9%. The state's relatively high upper limit places it firmly in the second spot, making the Empire State a contender in taxing its residents. 

Similarly, Oregon, with a tax rate range from 4.8% to 9.9%, comes in third in the list due to its high upper limit. This Pacific Northwest state, known for its lush forests and mountainous terrain, is also recognized for its noteworthy commitment to state taxes.

Securing a high position on this list is Minnesota, largely due to offering a comprehensive tax rate range, stretching from 5.4% to a substantial 9.9%. Important to note are the states of Massachusetts, Washington, Maine, and Hawaii with the top limits of 9.0%, 7.0%, 7.2%, and 11.0%, respectively. 

Bringing up the rear of the top ten states with the most taxes, we find Vermont and New Jersey, holding top tax rates at 8.8% and 10.8% respectively.

10 States with the highest taxes: 

  1. California - 1.0% to 13.3% 
  2. New York - 4.0% to 10.9% 
  3. Oregon - 4.8% to 9.9% 
  4. Minnesota - 5.4% to 9.9% 
  5. Massachusetts - 5.0% to 9.0% 
  6. Washington - 7.0% (flat rate)
  7. Maine - 5.8% to 7.2% 
  8. Hawaii - 1.4% to 11.0% 
  9. Vermont - 3.4% to 8.8% 
  10. New Jersey - 1.4% to 10.8%

States with the Least Taxes

At one end of the spectrum are several states where residents earn an incomparable perk: they owe no state income tax. Seven states follow this policy: South Dakota, Tennessee, Texas, Wyoming, South Carolina, Nevada, and Alaska. These states rely on other forms of tax revenues, such as sales taxes, property taxes or taxes on natural resources, to fund public services. For instance, Alaska acquires substantial revenue from its rich resources of petroleum.

Coming up at the eighth position is Florida with no state income tax, a benefit that has drawn new residents and facilitated its growth over the century. North Dakota ranks ninth in states with the least income tax, applying a reasonably low range of rates between 1.1% to 2.9%. And finally, the tenth spot of states with the lowest taxes is held by Oklahoma, whose income tax rate ranges from 0.3% to 4.8%. 

States with the Least Taxes:

  1. South Dakota - 0%
  2. Tennessee - 0%
  3. Texas - 0%
  4. Wyoming - 0%
  5. South Carolina - 0%
  6. Nevada - 0%
  7. Alaska - 0%
  8. Florida - 0%
  9. North Dakota - 1.1% - 2.9%
  10. Oklahoma - 0.3% - 4.8%

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