These States Have The Highest And Lowest Personal Income Taxes
Like most people, you probably pay taxes to your state government each year. Of course, some taxpayers fork out more money than others, and one of the biggest factors that affects this is their state’s personal income tax rate.
Want to know how your state’s tax rate compares to that of other states? Here are the states with the highest personal income taxes, followed by the states with the lowest personal income taxes.
The 10 States With the Highest Personal Income Taxes
It’s important to note that state income taxes may vary, depending on whether the state has no tax, a flat tax, or a progressive tax on personal income.
These states have the highest personal income tax brackets:
1. California: 13.30% (Progressive income tax)
2. Iowa: 8.98% (Progressive income tax)
3. Vermont: 8.95% (Progressive income tax)
4. New York: 8.82% (Progressive income tax)
5. Hawaii: 8.25% (Progressive income tax)
6. Idaho: 7.40% (Progressive income tax)
7. Maine: 7.15% (Progressive income tax)
8. South Carolina: 7.00% (Progressive income tax)
9. Connecticut: 6.99% (Progressive income tax)
10. Nebraska: 6.84% (Progressive income tax)
The 10 States With the Lowest Personal Income Taxes
These states that have the lowest maximum income tax brackets:
1. Alaska: 0.0% (No income tax)
2. Florida: 0.0% (No income tax)
3. New Hampshire: 0.0% (Only taxes interest and dividend income)
4. Nevada: 0.0% (No income tax)
5. South Dakota: 0.0% (No income tax)
6. Tennessee: 0.0% (Only taxes interest and dividend income)
7. Texas: 0.0% (No income tax)
8. Washington: 0.0% (Only taxes capital gains income)
9. Wyoming: 0.0% (No income tax)
10. Pennsylvania: 3.07% (Flat tax)
Which State Has No Income Tax?
In total, there are six states that have no income tax:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Wyoming
Additionally, there are three states that do not tax conventional wages but do tax income earned from capital gains, dividends, or interest:
- New Hampshire (interest and dividends)
- Tennessee (interest and dividends)
- Washington (capital gains income)
Which States Do Not Tax Social Security?
It’s worth nothing that most states do not tax social security. The only states that tax social security are Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
What Is the Highest U.S. Personal Tax Rate?
Currently, California is the state with the highest marginal state tax rate at a whopping 13.3%. At the federal level, 37% is the highest personal income tax rate — reserved for those who earn more than $539,900 per year.
What Is the Most Tax-Friendly State to Retire In?
If retirement is on the horizon, make sure you look beyond traditional wages and take social security tax, property, tax and sales tax rates into account.
With all factors considered, Alabama, Alaska, Florida, Georgia, Illinois, Mississippi, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington, and Wyoming are among the best states for retirees.