State Income Tax — Definition and What It Means for Your Income
A tax levied by individual states on income earned by residents, varying widely by state.
State income tax is a tax imposed by individual U.S. states on the income of residents (and sometimes non-residents who earn income in that state). Rates and structures vary enormously — 9 states have no income tax, while California's top rate reaches 13.3%.
Why it matters
State income tax can mean a difference of thousands of dollars per year in take-home pay for the exact same salary, depending solely on which state you live in.
Example
A $90,000 salary in Texas (no income tax) results in significantly higher take-home pay than the same salary in California, where the effective state tax rate at this income level is approximately 5-6%.
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State Income Tax — FAQ
Which states have no income tax?
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming have no state income tax on wages.