You’ve probably heard the advice before. "Move to Florida or Texas and instantly give yourself a 5% raise." It sounds like a no-brainer. If you look at any list of states by income tax, those "no-tax" states look like a literal paradise for your bank account. But honestly, it’s rarely that simple. Taxes are a shell game. If the state doesn't get you on your paycheck, they’re probably coming for you at the cash register or through your property tax bill.
I’ve spent years digging into how state revenue works, and the 2026 landscape is weirder than ever. We're seeing a massive tug-of-war. Some states are slashing rates to lure in remote workers, while others are hiking taxes on high earners to keep their schools and roads from crumbling.
If you're planning a move or just trying to figure out why your take-home pay feels so light, you need the ground truth. Here is the actual, messy reality of the list of states by income tax right now.
The Zero-Tax Club: Is It Actually Free?
There are currently nine states that don't take a single cent out of your ordinary income. No paperwork, no brackets, no "marginal rates."
- Alaska
- Florida
- Nevada
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
- New Hampshire (which finally fully repealed its tax on interest and dividends as of last year)
Sounds great, right? It is, until you realize these states still need to pay for police, fire departments, and teachers. Take Texas. Sure, 0% income tax. But you’ll likely pay some of the highest property taxes in the country. In some parts of the Lone Star State, your property tax bill can feel like a second mortgage.
Then there’s Washington. They don't have a personal income tax, but they have a hefty 7% tax on long-term capital gains for high earners (over $250,000). So, if you’re selling a lot of stock or a business, the "no-tax" dream might have a very expensive footnote.
The Flat Tax Revolution
Lately, there’s been a huge trend toward "flat taxes." Basically, instead of having a "progressive" system where you pay more as you earn more, everyone pays the same percentage. It’s simple. It’s predictable. And for high earners, it’s usually a massive discount.
Georgia is a prime example. As of 2026, they’ve successfully whittled their rate down to 5.11% (continuing their march toward a goal of 4.99% by 2029). North Carolina is even more aggressive, sitting at a flat 3.99% this year.
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Other flat-tax states include:
- Arizona: 2.5%
- Colorado: 4.4%
- Illinois: 4.95%
- Indiana: 2.95%
- Michigan: 4.25%
- Pennsylvania: 3.07%
- Utah: 4.55%
If you live in Ohio, things got simpler this year too. They moved to a flat 2.75% on income over $26,050. If you make less than that? You pay nothing. It’s a hybrid approach that more states are starting to eye because it feels "fair" to the middle class while staying competitive.
The "Ouch" States: High Income, High Tax
On the other side of the list of states by income tax, you have the heavy hitters. These states usually offer incredible infrastructure, top-tier schools, and booming tech or finance hubs, but they make you pay for the privilege.
California still holds the crown for the highest top marginal rate at 13.3%. If you’re a millionaire in Malibu, you’re basically a business partner with the state. But keep in mind, for the average person making $60,000, California’s tax isn't actually that much higher than "cheap" states because their lower brackets are quite modest.
New York is another one. The top rate is 10.9%, but that only hits you if you’re clearing over $25 million. For most of us, it’s the combination of state tax and New York City’s local income tax that really hurts.
Hawaii (11%), New Jersey (10.75%), and Oregon (9.9%) round out the top of the list. Living in Oregon is a great example of the "Trade-Off Rule." They have one of the highest income taxes, but they have zero sales tax. You can walk into an Apple store in Portland and pay exactly what’s on the price tag. That’s a huge "shadow" savings that never shows up on an income tax chart.
How Brackets Can Trick You
When you look at a list of states by income tax, people usually focus on the "Top Rate." That’s a mistake.
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Let’s look at Iowa. For years, they had a top rate of nearly 9%. People fled. But they’ve been aggressively cutting, and for 2026, they’ve transitioned to a flat 3.8%. That is a massive shift in just a few years.
Then you have states like Oklahoma and Mississippi. They’ve both been slashing rates. Oklahoma just simplified down to three brackets with a top rate of 4.5%, while Mississippi is sitting at a flat 4% on everything above $10,000.
The point is: your "Effective Tax Rate" is what matters. If you make $75,000, you don't care that California has a 13.3% bracket because you aren't in it. You care about the 2%, 4%, and 6% you’re paying on the way up.
The 2026 Shift: The "One Big Beautiful Bill" Factor
The federal government passed the One Big Beautiful Bill Act (OBBBA) in 2025, which made several permanent changes to the tax code. How does this affect your state list?
Conformity.
States generally fall into two camps: those that automatically follow federal tax law ("rolling conformity") and those that pick and choose ("static" or "selective"). Because the OBBBA increased the federal standard deduction to $16,100 for singles and $32,200 for married couples in 2026, many states saw their own taxable income bases shift overnight.
If your state follows the federal "Adjusted Gross Income" (AGI), you might actually be paying less in state tax this year simply because the federal government redefined what "income" is.
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Beyond the Paycheck: The "Tax Burden" Reality
If you really want to know who is winning, you have to look at the Total Tax Burden. This is a metric used by groups like the Tax Foundation and WalletHub to measure the percentage of total personal income that goes to state and local taxes (income + property + sales).
Believe it or not, New York and Connecticut usually have the highest total burden (around 12-14%). But surprisingly, a state like Washington—despite having no income tax—often has a higher total tax burden than California for low-income families. Why? Because Washington relies heavily on sales tax, which hits people who spend every dollar they earn much harder than it hits the wealthy.
The "Best" States for Total Tax Burden (2026 Estimates):
- Alaska (Consistently the lowest because of oil revenue)
- Wyoming
- Florida
- Tennessee
- New Hampshire
Actionable Steps: How to Use This List
Don't just stare at the percentages. Use this data to actually save money or plan your next move.
- Check the "Reciprocal" Rules: If you live in one state but work in another (like the NJ/NY or PA/NJ situation), check if they have a reciprocal agreement. Some states allow you to only pay tax where you live, which can save you thousands if your home state has a lower rate.
- Remote Work "Nexus": If your company is in California but you’re working from a cabin in Wyoming, make sure your HR department has your address right. Most states tax you based on where your "feet are on the ground," but some (like New York) have a "convenience of the employer" rule that might try to tax you anyway.
- Maximize the New Senior Deductions: If you're 65 or older, the OBBBA added a new federal deduction of $6,000. Many states are mirroring this. Make sure you're not paying state tax on money the federal government has already declared "off-limits."
- Look at Sales Tax Exemptions: If you’re moving to a state with high sales tax but no income tax (like Tennessee), look for "Tax Holidays." Many of these states offer weekends where clothes, computers, and emergency supplies are tax-free to offset the daily cost of living.
At the end of the day, the list of states by income tax is just one piece of the puzzle. A 0% tax rate in a state with sky-high rent and expensive groceries might leave you poorer than an 8% tax rate in a state where houses are cheap and the schools are free. Run your own numbers based on your specific lifestyle.
Next Steps for You:
Compare your current state's top marginal rate against the national average of approximately 5%. If you’re paying significantly more, look into whether your state allows for "Local Tax" deductions or if they offer specific credits for property taxes that could lower your effective rate. Check your most recent pay stub to see exactly what percentage is disappearing—you might be surprised to find it doesn't match the "bracket" you thought you were in.