US State Income Tax Guides
Federal tax is the same wherever you live. State tax is not — rates run from nothing at all to over 13%, and the rules for part-year and multi-state filing differ in every one. These are the states our clients file in most.
States with no income tax
Nine states levy no broad-based individual income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. There is no annual state return in any of them and nothing withheld from your pay for the state.
Two carry caveats worth knowing. New Hampshire repealed its tax on interest and dividends, so it now taxes no individual income at all. Washington does not tax wages but does tax large long-term capital gains, which matters a great deal if your compensation arrives as equity.
The revenue still has to come from somewhere. Texas leans on property tax, Washington on sales tax and a gross receipts tax on business, Tennessee and Nevada on sales tax. Whether you come out ahead depends much more on whether you own property than on the income tax line itself.
If you moved, or work across a state line
This is where most state tax errors happen, and it is the situation a large share of our clients are in. Three patterns cover almost all of it.
- You moved during the year. A part-year resident return in each state, splitting income by when you received it. Bonuses, severance and equity vesting that straddle the move are the hard part, and both states may claim the same payment.
- You live in one state, work in another. A non-resident return where you work, a resident return where you live, and a credit at home for the tax paid away. The credit is capped at your home state's own rate on that income, so a higher work-state rate is not fully recovered.
- Reciprocity applies. Some pairs of states agree that wages are taxed only where you live, removing the non-resident return entirely. Virginia with DC and Maryland, and Illinois with Iowa, Kentucky, Michigan and Wisconsin, are the arrangements our clients hit most.
Remote work has made this considerably messier. Working from a different state than your employer can create a filing obligation where you sit, and a handful of states take an aggressive view of income sourced to an employer's location. If you changed where you physically work without changing employer, it is worth checking rather than assuming nothing happened.
State residency is not federal residency
Each state writes its own definition of residency, and none of them are the federal substantial presence test. This surprises visa holders constantly: you can be a non-resident alien for federal purposes, filing Form 1040-NR, while simultaneously being a full-year resident of the state you live in and filing a full resident state return.
The two determinations are made separately and can point in opposite directions. If you are unsure of your federal status, start with the substantial presence test calculator, then treat the state question as its own exercise.
Where these figures come from
Rates and thresholds on these pages are as of , from the compilation below, which is built from state statutes, forms and instructions. Each state page also links its own revenue department, which is the authority on your position. State legislatures change rates mid-year, so check before relying on a figure.
Reviewed by Teja K, CPA · last reviewed . General information, not tax advice for your situation.
State tax questions
Which states have no income tax?
Nine states levy no broad-based individual income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. New Hampshire repealed its interest and dividends tax, and Washington taxes only large long-term capital gains rather than wage income. All nine fund themselves through sales tax, property tax or industry-specific revenue instead, so a lower income tax bill does not always mean a lower total one.
Do I have to file a state return as well as my federal one?
In most states, yes, and it is a separate return with its own rules, forms and sometimes its own deadline. Forty-one states tax wage and salary income. Your state return usually starts from a federal figure but diverges from there, so it cannot simply be copied across — deductions, exemptions and the treatment of retirement and investment income all differ by state.
I moved states during the year. How many returns do I file?
Normally one federal return plus a part-year resident return in each state you lived in, and possibly a non-resident return in any state where you earned income without living there. Allocating income between the periods correctly is the whole difficulty, especially where a bonus, severance payment or equity vest straddles the move.
I live in one state and work in another. Am I taxed twice?
Generally not on the same income. The state where you work taxes the income earned there, and your resident state taxes you on everything while granting a credit for the tax paid elsewhere. Some pairs of states have reciprocity agreements that remove the non-resident filing entirely. The credit is capped at what your home state would have charged, so where the work state's rate is higher, the excess is not recovered.
Does moving to a no-income-tax state actually save money?
For wage earners it usually does, but by less than the headline rate suggests. Losing state income tax also removes it from your federal itemised deductions, and no-income-tax states recover the revenue elsewhere — Texas through property tax, Washington through sales tax and gross receipts. The saving is real for high earners who rent; it is much smaller for homeowners with substantial property.
Are state residency rules the same as the federal ones?
No, and this catches visa holders in particular. Each state sets its own definition, so you can be a non-resident alien for federal purposes and a full-year resident of a state at the same time. States such as New York apply a mechanical day-count test alongside a domicile test, while California decides it on where your closest connections are. The federal substantial presence test has no bearing on any of them.
Multi-state year? That is the one to hand over
Part-year returns, cross-border commuting and remote-work sourcing are where self-filing costs the most. Federal returns from $19.99, state returns from $29.99.