Best and Worst U.S. States for Personal Income Tax in 2025

State income tax rates vary greatly across America, shaping how much of your salary you get to keep. Some no income tax states—like Texas or Florida—offer a 0% rate, making them attractive if your goal is to minimize taxes. Meanwhile, places such as California and New York impose top rates above 10%, placing them at the top of many “worst states for personal tax” lists. This article presents US state tax rankings for 2025, grouping states by their highest tax bracket:

• 0% income tax
• 1–3% (extremely low tax states)
• 4–6% (moderate)
• 7%+ (high tax states)

We highlight which states fully eliminated income taxes, which ones recently adopted low personal income tax systems, and which ones push rates into the double digits—often labeled “states with high tax burdens.” If you’re weighing a move, planning retirement, or just curious about tax friendly states, this guide offers a clear overview of where each stands in 2025.

Which States Have No Income Tax in 2025?

Some states opt out of taxing personal income entirely. As of 2025, eight states remain at a 0% rate, and New Hampshire effectively joins their ranks by phasing out its tax on interest and dividends:

• Alaska – Funds services partly through oil revenues.
• Florida – Prohibited from enacting a state income tax under its constitution.
• Nevada – Relies heavily on sales taxes and tourism (casinos) for revenue.
• South Dakota – Foregoes income tax, aided by other revenue channels and a small population.
• Tennessee – Officially ended its tax on interest/dividends by 2021.
• Texas – Banned state income tax in its constitution; compensates with higher property and sales taxes.
• Washington – No wage tax, although a 7% capital gains tax applies over a certain threshold.
• Wyoming – Like Alaska, it depends on mineral and energy taxes.
• New Hampshire – As of January 1, 2025, it no longer taxes interest or dividends. Now no personal income tax at all.

These no income tax states often end up on the “best states for personal tax” lists. If you earn a salary in Texas, Florida, or Alaska, for instance, you pay 0% in state income tax. Keep in mind that states without income taxes may offset that revenue shortfall with higher property or sales taxes.

States With Very Low Income Tax Rates (1–3%)

A handful of tax friendly states impose minimal rates of around 1–3%. Though not at 0%, they come close to that territory and compete for residents who want low tax states without giving up state services entirely.

• Arizona – Flat 2.5% rate for all earners, one of the lowest flat taxes in the country.
• North Dakota – Top bracket around 2.5% in 2025, down from higher rates a few years ago. Even high earners rarely exceed 2.5%.
• Indiana – Currently at 3.0% flat, dropping from 3.15%. Further cuts may bring it under 3% soon.
• Louisiana – Recently collapsed brackets into a 3.0% flat tax, a sharp reduction from its previous 4.25% top rate.
• Pennsylvania – Maintains a 3.07% flat rate, unchanged for decades. (Local wage taxes may apply in some cities.)

These states are nearly as appealing as no income tax states in certain scenarios. A family earning $60,000 in Arizona pays about $1,500 in state tax—significantly below what they’d pay in a high tax state. Many of these “1–3% group” states moved toward flat, simplified systems during a wave of reforms in the early 2020s.

States With Moderate Income Tax Rates (4–6%)

The bulk of the nation falls into a moderate category, roughly 4–6% at the top bracket. Some of these states have flat taxes in that zone; others use graduated rates that top out around 5 or 6%. Here’s how they break down:

Flat-Tax States (4–6%)

• Kentucky (4.0%) – Recently cut its flat rate from 5% to 4%. More reductions may follow.
• North Carolina (4.25%) – On a steady glide path down from over 5% a few years ago, aiming for sub-4% soon.
• Colorado (4.4%) – Shifts slightly each year due to revenue triggers, but stays around 4.4%.
• Michigan (4.25%) – Temporarily dipped to 4.05% in 2023; otherwise holds steady at 4.25%.
• Illinois (4.95%) – Voters rejected a progressive tax proposal, so it remains a flat 4.95%.
• Utah (4.55%) – Trimmed from 4.65% in 2024.
• Georgia (5.39%) – Transitioning to a flat tax, stepping down gradually from higher rates.
• Mississippi (4.4%) – Consolidating brackets over $10k of income; slated to move under 4% soon.
• Iowa (3.8% in 2025) – Aiming for under 4% by 2026, having dropped from a top rate above 8%. Although Iowa’s 3.8% is lower than 4%, it sometimes ends up compared with moderate states due to bracket transition phases.

Progressive-Tax States (4–6% Top Rates)

• Missouri (Top ~4.7%) – Gradually cutting its highest bracket via automatic triggers.
• Oklahoma (Top ~4.75%) – Several brackets up to 4.75%.
• Kansas (Top ~5.58%) – Merged brackets recently; the top bracket starts at $15k income.
• Nebraska (Top ~5.20%) – Has trimmed rates aggressively, en route to ~4% in a few years.
• New Mexico (Top 5.90%) – Multiple brackets; 5.9% applies only to higher incomes.
• South Carolina (~6.2–6.5%) – Transitioning from 7% down to around 6%.
• Virginia (5.75%) – Hits its top rate at a low income threshold ($17k), so most filers pay 5.75% on much of their earnings.
• Delaware (6.60%) – Lacks a sales tax, leans more on income tax with a top rate near 6.6%.
• Montana (6.75%) – Essentially two brackets: 4.7% for lower incomes, 6.75% for higher earners.
• Idaho (~5.695%) – Moves toward a single rate in practice.
• Ohio (Top 3.99%) – Multiple brackets but a lower top rate, making it fairly competitive.
• Alabama (5%) – Technically has brackets up to 5%, though the top bracket hits almost all income over $3k.
• Arkansas (4.4%) – Dramatically cut from nearly 6% down to the mid‑4% range recently.
• Massachusetts (5% on most income; 9% on income above $1M) – Usually known for its flat 5% tax, but added a 4% surtax on seven‑figure incomes. This effectively places millionaires near 9%.

Because many states in this category are phasing in rate reductions, individuals might see incremental changes each year. According to various state legislatures, 28 states have cut their state income tax rates since 2021. For instance, West Virginia used to be in the 6.5% range but dropped to around 5.1%, with possible further cuts on deck. Massachusetts stands out for imposing a second layer of tax—4%—on incomes above $1 million, sending those specific earners’ marginal rate to 9%. Connecticut (6.99% top) hovers just below 7%, so it’s borderline between moderate and high.

What Are the Worst States for Personal Tax in America? (7%+)

The states with high tax states status typically exceed 7% at their top bracket. Some climb well into double digits. These are often labeled the “worst states for personal tax” if you’re focusing on rate alone:

• California – Tops out at 13.3% for high earners (plus a 1% surcharge on incomes over $1 million, effectively ~14%).
• Hawaii – Recently adjusted brackets but kept an 11% rate on income over $325k.
• New York – Has brackets reaching 10.9% on ultra‑high earners above $25 million.
• New Jersey – 10.75% top bracket for incomes over $5 million.
• Oregon – 9.9% for incomes over ~$125k (though no state sales tax).
• Minnesota – 9.85% top rate starts at around $193k for singles. May add extra surcharges on certain capital gains.
• Vermont – 8.75% top rate at around $225k; known for limited bracket width and a “marriage penalty.”
• Wisconsin – 7.65% top bracket, no major cuts for top earners yet.
• Maine – 7.15% top bracket, which kicks in at a relatively modest $58k.

These “states with high tax burdens” generally rely more on progressive systems. For instance, California and New York have multiple brackets that climb steeply as income goes up, and local governments (like New York City) can tack on their own income taxes. Whether these states truly count as the “worst” may depend on the range of public services they provide, but strictly by state income tax rates, they rank among the highest.

How Do State Tax Rates Compare Across the US?

Looking at these US state tax rankings, a clear regional trend emerges:

• No/Low: The South, parts of the Midwest, and states with mineral or tourism revenue (Alaska, Wyoming, Florida, Nevada) often have no or very low personal income tax.
• Moderate: A large share of states across the interior, including places like Missouri, Iowa, North Carolina, and Colorado, hover in the 4–6% range—many trending downward.
• High: Coastal states like California and New York, plus parts of the Northeast (New Jersey, Vermont) and the Pacific Northwest (Oregon, Hawaii), top the charts above 7–10%.

According to policy groups, high-tax locales sometimes see residents move to tax friendly states such as Texas, Florida, or Tennessee. States with moderate structures often try to keep rates appealing enough to attract businesses and remote workers. Meanwhile, extremely high rates tend to appear in areas with significant public services or higher living costs.

What Factors Contribute to a State’s Overall Tax Burden?

While this article focuses on state income tax rates, a state’s total tax burden has other facets:

1. Sales Tax – States with zero income tax often lean more heavily on sales taxes (e.g., Nevada).
2. Property Tax – Places like Texas and New Hampshire offset low or zero income tax with higher property taxes.
3. Local Taxes – Cities or counties can impose their own levies (e.g., New York City).
4. Special Surcharges – Some states add extra taxes on investment gains or millionaires’ incomes (California, Massachusetts).
5. Revenue Sources – Certain states can rely on energy (Alaska, Wyoming) or tourism (Florida, Nevada) to fill budget gaps, allowing them to skip income taxes.

For a full picture of “states with low personal income tax” versus “states with high tax burdens,” consider all these angles. One state’s advantage in income tax might be offset by a steeper property or sales tax. On the other hand, a high income tax state might provide robust services that some residents value.

What Are the Best States for Personal Tax in the US?

If you’re trying to minimize or avoid state income levies entirely, the “best” states (strictly rate-focused) are:

1. No Income Tax States – Texas, Florida, Tennessee, etc.
2. Very Low Tax (1–3%) – Arizona, North Dakota, Indiana, Louisiana, Pennsylvania.

Each of these states ranks highly in US state tax rankings among people who want a lighter tax load on wages and salaries. They may still impose other taxes, so weigh the full picture before making decisions.

Conclusion: Choosing the Right Balance

State income tax rates in 2025 range from zero in places like Wyoming and Florida to more than 10% in California and New York, with many states in between. A single cross-border move could boost your take-home pay by thousands of dollars each year—or reduce it—depending on where you end up.

Whether a place qualifies as “tax friendly states” depends on personal circumstances. Retirees often care about income exemptions for pensions or Social Security, families might look at property taxes affecting homeownership, and high earners might focus on top marginal brackets. Some states (e.g., Washington) spare wage income but tax large capital gains, so the answer depends on how you earn your money.

Overall, 2025 continues the trend of rate reductions among moderate states, with many flat-tax reforms or bracket cuts underway. A smaller handful of states maintain (or raised) top brackets near or above 10%. While low tax states appear to expand, a few states with progressive systems are choosing to keep rates high—often citing the need for public projects and social programs.

In the end, your best move depends on how different taxes (income, sales, property) stack up with the services you value. Keep an eye on legislative updates and triggers that may push rates lower or higher in the future. If you prize minimal state income tax rates, consider heading to the no income tax states or those with rates in the 1–3% range. If you prefer well-funded public services, you might accept the high tax states. Just be sure to weigh all factors, because choosing the right location is about much more than a single bracket number.

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