State Income Tax Rates 2026: All 50 States Compared

State Income Tax Rates 2026: All 50 States Compared

Federal income taxes get the most attention, but state income taxes can add 0-13% to your tax burden. Understanding how your state compares — and how neighboring states handle income taxation — is important context for financial planning, relocation decisions, and retirement planning.

States with No Income Tax

Nine states currently have no broad-based state income tax:

1. Alaska
2. Florida
3. Nevada
4. New Hampshire (taxes only interest and dividend income; fully phased out as of 2025)
5. South Dakota
6. Tennessee (phased out investment income tax, fully eliminated)
7. Texas
8. Washington (7% tax on long-term capital gains over $250,000, but no broad income tax)
9. Wyoming

These states generate revenue through property taxes, sales taxes, and other means. Living in a no-income-tax state can save high earners tens of thousands of dollars annually, which drives population growth and business relocation in states like Florida and Texas.

Flat Income Tax States

Several states have a single flat rate applied to all taxable income:

High-Tax States: Top Marginal Rates

These states have the highest top marginal rates:

Low-Tax States: Top Marginal Rates Under 4%

States with Special Treatment of Retirement Income

Several states exempt all or part of retirement income from state taxes:

Exempt all retirement income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming (no income tax), plus Illinois, Iowa, Mississippi, Pennsylvania (full exemption for retirement income)

Exempt Social Security: 37 states do not tax Social Security benefits at the state level.

Partial exemptions: Many states provide partial deductions for pension, IRA, and 401(k) withdrawals up to certain limits.

State Taxes on Capital Gains

Most states tax capital gains as ordinary income — there is no preferential long-term rate at the state level (California being the most prominent example). A few states offer partial deductions:

• Arizona: 25% deduction on long-term capital gains
• North Dakota: 40% deduction on long-term capital gains from federal sources

Total Tax Burden: The Full Picture

Looking at income tax rates alone gives an incomplete picture. Total tax burden includes:

• Sales tax: Tennessee (9.55% combined), Louisiana (9.55%), Arkansas (9.46%) have the highest combined rates
• Property tax: New Jersey, Illinois, and New Hampshire have the highest effective property tax rates
• Estate and inheritance taxes: 17 states plus DC levy estate taxes; 6 states levy inheritance taxes

For holistic state tax comparison, the Tax Foundation publishes an annual State Business Tax Climate Index that ranks all 50 states across all tax categories.