Low personal income tax rates can be misleading a lack of available tax deductions, for example, can raise the effective rate you pay.

In addition, New Hampshire limits its tax to interest and dividend income, not income from wages.Īmong the states that tax income, Pennsylvania's 3.07% flat tax ranks the Keystone State as the 10th lowest in the nation for 2021. Only eight states have no personal income tax: 10 states with the lowest personal income tax rates The top 10 highest income tax states (or legal jurisdictions) for 2021 are:Įach of these states has a personal income tax floor, deductions, exemptions, credits, and varying definitions of taxable income that determine what a citizen actually pays. The additional tax on income earned above $1 million is the state's 1% mental health services tax. Then, you have to pay 13.3% as the top rate. 10 states with the highest personal income tax ratesĪ comparison of 2020 tax rates compiled by the Tax Foundation ranks California as the top taxer with a 12.3% rate, unless you make more than $1 million. Weighing the tax landscape against your financial picture could help you stretch your dollars further.

As a result, identifying the states with the lowest taxes might be a smart financial move to make.Ĭurrently, 41 states and the District of Columbia levy a personal income tax.

Often, the biggest tax ticket citizens face after paying the Internal Revenue Service is the one their state presents. Where you live can help or hinder your ability to make ends meet.Ī myriad of taxes - such as property, license, state and local sales, inheritance, estate, and excise taxes - can eat away at your income. 'Location, location, location' is a focus that applies to more than just housing. The states with the lowest total sales taxes are Alaska 1.76%, Oregon 0%, Delaware 0%, Montana 0%, and New Hampshire 0%.The states with the highest total sales taxes include Tennessee 9.55%, Louisiana 9.52%, Arkansas 9.51%, Washington 9.23%, and Alabama 9.22%.Eight states have no personal income tax, including Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.The states with the highest income tax for 2021 include California 13.3%, Hawaii 11%, New Jersey 10.75%, Oregon 9.9%, and Minnesota 9.85%.

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