State income tax is levied on a taxpayer’s income if they earned it in the state or if they live in the state. Like federal income tax, state income tax is self-assessed, meaning taxpayers are required to file their returns.

Many states conform to federal tax rules, so state tax day typically coincides with federal tax day, which is usually April 15th. However, tax laws, rates, procedures, forms, and filing deadlines vary widely from state to state.

Which States Have State Income Taxes?

42 states impose a state income tax. As of 2025, the eight states with no income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. 

Of the 42 states that tax income, 14 follow a flat-rate tax system (also called a single-rate structure), which means one rate applies to all taxable income. This is the flat rate for those states:

Arizona (2.5%), Colorado (4.4%), Georgia (5.49%), Idaho (5.8%), Illinois (4.95%), Indiana (3.05%), Iowa (3.8%), Kentucky (4.0%), Louisiana (3%), Michigan (4.25%), Mississippi (4.7%), North Carolina (4.5%), Pennsylvania (3.07%), and Utah (4.65%). 

Meanwhile, 27 of the 42 states follow a progressive tax system similar to the federal income tax system, with the number of brackets varying from two (in Arkansas, Kansas, Massachusetts, Montana, North Dakota, and Ohio) to 12 (in Hawaii).

What If I Work And Live In Different States?

Most taxpayers live and work in the same state, allowing them to file a resident state income tax return. However, taxpayers who earn income in one or more states other than where they live will be required to file a state tax return for every tax-levying state in which they earn income. 

Tax returns in a state where you do not have a domicile should be filed as a nonresident or a part-year resident. 

Some states, such as Illinois and Iowa, have entered into reciprocal agreements not to tax the same income. If this is the case, you can complete the exemption form for that state and submit it to your employer. However, if no agreement is in place, your income will be taxed multiple times.

State Income Tax vs Federal Income Tax

Federal and state income taxes are similar, as they both apply a percentage rate to taxable income. However, there are some key differences, including:

  • Who it is imposed by: Federal income tax is imposed by the government’s Internal Revenue Service (IRS), not the specific state government.
  • How taxes are applied: The federal income tax system strictly follows a progressive tax system, meaning that higher income levels are taxed at a higher percentage. Some states do use a progressive tax system, while others follow a flat-rate tax method.
  • The type of income that is taxable: Federal income taxes are levied on all forms of a taxpayer’s taxable income, such as wages and capital gains.
  • Deductions: Under the federal tax system, taxpayers can claim a standard deduction or itemize their deductions.
  • Where the money goes: Federal income tax allows the federal government to pay its bills, while state taxes pay for specific state bills.

Local Tax

In some municipalities, such as Washington, D.C., local governments impose their own taxes on local taxpayers. 

Local taxes can be imposed on income, properties, sales, and more. This money funds local public services, from education and support to garbage collection and park maintenance.