For many U.S. taxpayers the difference between living in a high-tax state and a no-tax state can exceed $20,000-$50,000 per year — more than the cost of moving once or twice. State income tax is one of the few major taxes that taxpayers can legally minimize by choice of domicile, and the 2017 SALT cap made the federal deduction for state taxes essentially worthless for many high-earners, magnifying the state-rate difference. This guide presents the 2026 state-by-state matrix, covers flat vs progressive rate structures, local income taxes, capital gains treatment, retirement income exemptions, and worked examples for various taxpayer profiles.
| State | Top Rate | Structure | Top Bracket Start |
|---|---|---|---|
| Alabama | 5.0% | Progressive (3 brackets) | $3,000 single |
| Alaska | 0% | No income tax | N/A |
| Arizona | 2.5% | Flat (2023+) | All income |
| Arkansas | 4.4% | Progressive (declining) | $22,400 |
| California | 13.3% (14.4% with MHST) | Progressive (9 brackets) | $1M; $1M MHST |
| Colorado | 4.4% | Flat | All income |
| Connecticut | 6.99% | Progressive (7 brackets) | $500K single |
| Delaware | 6.6% | Progressive (6 brackets) | $60,000 |
| Florida | 0% | No income tax | N/A |
| Georgia | 5.49% | Flat (2024+, phasing to 4.99% by 2029) | All income |
| Hawaii | 11% | Progressive (12 brackets) | $200K single |
| Idaho | 5.8% | Flat | All income |
| Illinois | 4.95% | Flat | All income |
| Indiana | 3.0% state + 0.5-3% county | Flat | All income |
| Iowa | 3.8% | Flat (2025+, was 6.0% in 2023) | All income |
| Kansas | 5.7% | Progressive (3 brackets) | $30,000 |
| Kentucky | 4.0% | Flat | All income |
| Louisiana | 4.25% | Progressive (3 brackets); converting to flat 3% in 2025 | $50,000 |
| Maine | 7.15% | Progressive (3 brackets) | $58,050 |
| Maryland | 5.75% + 2.25-3.20% county | Progressive + local | $250K |
| Massachusetts | 5% + 4% surtax over $1M | Flat + Millionaire's tax | $1M for surtax |
| Michigan | 4.25% | Flat | All income |
| Minnesota | 9.85% | Progressive (4 brackets) | $183K single |
| Mississippi | 4.4% | Flat (2024+) | All income |
| Missouri | 4.7% | Progressive (declining) | $8,968 |
| Montana | 5.9% | Progressive (2 brackets) | $20,500 |
| Nebraska | 5.84% | Progressive (4 brackets, declining) | $32K single |
| Nevada | 0% | No income tax | N/A |
| New Hampshire | 0% (interest/dividend repealed 2025) | No wage income tax | N/A |
| New Jersey | 10.75% | Progressive (7 brackets) | $1M |
| New Mexico | 5.9% | Progressive (5 brackets) | $210K single |
| New York | 10.9% + NYC 3.876% | Progressive (9 brackets) + city | $25M (NY); $50K (NYC) |
| North Carolina | 4.5% | Flat (declining annually to 3.99% by 2025) | All income |
| North Dakota | 2.5% | Progressive (3 brackets) | $220K single |
| Ohio | 3.5% | Progressive (declining) | $92K single |
| Oklahoma | 4.75% | Progressive (declining) | $7,200 |
| Oregon | 9.9% | Progressive (4 brackets) | $125K single |
| Pennsylvania | 3.07% state + 0.5-3.9% local | Flat + local | All income |
| Rhode Island | 5.99% | Progressive (3 brackets) | $176K |
| South Carolina | 6.2% | Progressive (3 brackets, declining) | $17K single |
| South Dakota | 0% | No income tax | N/A |
| Tennessee | 0% | No income tax | N/A |
| Texas | 0% | No income tax | N/A |
| Utah | 4.55% | Flat | All income |
| Vermont | 8.75% | Progressive (4 brackets) | $229K single |
| Virginia | 5.75% | Progressive (4 brackets) | $17K single |
| Washington | 0% (7% cap gains over $250K) | No wage income tax | N/A |
| West Virginia | 4.82% | Progressive (5 brackets, declining) | $60K single |
| Wisconsin | 7.65% | Progressive (4 brackets) | $295K single |
| Wyoming | 0% | No income tax | N/A |
| DC | 10.75% | Progressive (8 brackets) | $1M |
| Jurisdiction | Tax Rate | Notes |
|---|---|---|
| New York City | 3.078-3.876% | 4 brackets; applies to residents only |
| Yonkers, NY | 16.75% of NY state tax | Surcharge on residents |
| Philadelphia | 3.75% resident; 3.44% non-resident | Wage tax |
| Detroit | 2.4% resident; 1.2% non-resident | |
| Cleveland, Columbus, Cincinnati | 2.5% | Several Ohio cities at 2-3% |
| St. Louis, Kansas City (MO) | 1% | Earnings tax |
| Maryland counties | 2.25-3.20% | Surcharge on resident state tax |
| PA municipalities | 0.5-3.9% | Earned income tax |
| Various Ohio school districts | 0-2% | School district income tax |
Facts: Single, $200,000 W-2, standard deduction.
California:
Texas:
Annual savings by moving from CA to TX: ~$15,750 — entirely the state tax.
Facts: Single, $100K wages + $1M long-term capital gain. Compare CA, NY, FL, WA.
| State | State LTCG Treatment | State Tax on Gain |
|---|---|---|
| California | Ordinary income at 13.3% | $132,000 |
| New York | Ordinary income at 10.9% (+ NYC 3.876% if resident) | $108,000 ($147K NYC resident) |
| Florida | 0% | $0 |
| Washington | 7% on amount over $250K | ($1M − $250K) × 7% = $52,500 |
Federal LTCG: $200,000 (20% top rate) + $38,000 NIIT = $238,000.
Total federal+state on the gain:
| State | Retirement Income Treatment |
|---|---|
| Florida | No income tax — all retirement income tax-free |
| Nevada, TX, WA, WY, AK, SD, TN | No income tax |
| Illinois | No tax on 401(k), IRA, pension, Social Security |
| Mississippi | Full exemption for retirement income |
| Pennsylvania | No tax on retirement income from prior employment after age 59-1/2 |
| Iowa (2023+) | Phased to zero on retirement income for 55+ |
| Hawaii | Employer pension exempt; 401(k)/IRA taxable |
While most states do not have an estate or inheritance tax, 12 states + DC do:
The 2017 SALT cap limits federal Schedule A deduction for state and local taxes (income + property combined) to $10,000. About 30 states now offer "PTE elections" — pass-through entity-level tax options that bypass the SALT cap by paying tax at the entity level (deductible federally) and providing a state-level offset to the owner. This effectively restores federal deductibility for state taxes paid on business income. Available in CA, NY, NJ, IL, CT, MA, OH, MD, GA, and others. Self-employed (Schedule C) generally cannot benefit; only LLC/S-corp/partnership owners.
To establish domicile in a new state for tax purposes:
High-tax states (CA, NY, NJ) audit aggressively when wealthy residents claim to have moved. Statutory residency rules can trap people who maintain even a vacation home in the prior state.
Nine states have no broad-based individual income tax in 2026: Alaska, Florida, Nevada, New Hampshire (phasing out interest/dividend tax 2025), South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire's tax on interest and dividends was fully eliminated effective January 1, 2025. Washington taxes capital gains above $250,000 at 7% (constitutional challenge resolved 2023).
California has the highest top marginal rate at 13.3% (above $1 million) plus a 1% Mental Health Services Tax for taxable income over $1 million (effective 14.4%). Hawaii (11%), New York (10.9% above $25 million for NY state + 3.876% NYC), New Jersey (10.75% above $1M), and Oregon (9.9%) follow.
As of 2026, 14 states use flat or near-flat income tax rates: Arizona (2.5%), Colorado (4.4%), Georgia (5.49%), Idaho (5.8%), Illinois (4.95%), Indiana (3.0%), Iowa (3.8%), Kentucky (4.0%), Massachusetts (5.0%, plus 4% surcharge over $1M), Michigan (4.25%), Mississippi (4.4%), New Hampshire (interest/dividends only — phased out), North Carolina (4.5%), Pennsylvania (3.07%), and Utah (4.65%).
Several cities impose local income taxes in addition to state tax: New York City (3.078-3.876%), Philadelphia (3.75% resident), several Ohio cities (0.5-3%), Pennsylvania municipalities (0.5-3.9%), Maryland counties (2.25-3.20%), Detroit (2.4% resident), and Kansas City and St. Louis (1%). Local taxes can substantially raise effective rates beyond state level.
Most states tax capital gains as ordinary income at the same rate as wages. Washington imposes a 7% tax on long-term capital gains above $250,000 (with exclusions). Eight states give preferential treatment: AR, MT, NM, ND, VT, WI, and some lower-rate options in CT, MA, SC. Federal tax on long-term gains is 0/15/20% plus 3.8% NIIT for high earners.
Several states give retirement-income preferences: Illinois (no tax on 401(k)/IRA/pension distributions), Pennsylvania (no tax on retirement income from prior employment after retirement age), Mississippi (full exemption), Hawaii (employer pension exempt), Iowa (phased to zero on retirement income 2023+). Many other states exempt Social Security and/or partially exempt pension/401(k) up to a cap.
The federal State And Local Tax (SALT) deduction was capped at $10,000 ($5,000 MFS) per year by the Tax Cuts and Jobs Act of 2017. This affects taxpayers itemizing on Schedule A; in high-tax states, the cap effectively eliminated the federal deductibility of most state income tax for high earners. The SALT cap is scheduled to sunset December 31, 2025, but congressional action could extend or modify it.
Residency-based: your state of legal residence (domicile) taxes ALL your income, regardless of source. Source-based: states tax income earned within their borders by non-residents (wages from work performed there, real estate gain on property located there). Multistate workers can owe tax to multiple states; the resident state typically grants a credit for tax paid to other states to avoid double taxation.