How States Tax Their Residents' Income (State Tax Rates 2025 Edition)

If you are thinking about moving or reevaluating your finances in 2025, it’s important you know how states tax income. 

Each state has its own rules for resident income tax. Where you live matters and can make a difference in how much you pay in annual income taxes.

Every U.S. state has a different approach to income tax. Some states take nothing while others take a large cut.

Understanding the differences in state income tax can help you make smarter decisions on relocating, retiring, and planning your annual budget.

State Income Taxes Matter More Than Ever in 2025

Families across the country are impacted by remote work, inflation, and overall rising costs. State income tax is a key factor in financial planning. 

Many people relocate to states with lower income tax to stretch their income further.

States With No Income Tax in 2025

As of 2025, nine states do not collect any personal income tax:

• Alaska
  
  
• Florida
  
  
• Nevada
  
  
• New Hampshire (on wages only)
  
  
• South Dakota
  
  
• Tennessee
  
  
• Texas
  
  
• Washington
  
  
• Wyoming
  
  

Quick Tip: These states often have higher sales taxes or property taxes to offset the difference. Look at the whole picture before packing your bags!

States With Flat Income Tax Rates in 2025

The following U.S. states tax all residents the same flat rate regardless of income level:

Quick Tip: Low-income households are more heavily impacted by flat tax rates, but they are easier to calculate overall.

States With Progressive Tax Systems in 2025

The majority of U.S. states have a progressive tax system. This means your rate increases as your income increases. These include:

• California – Up to 13.3% (highest in the nation)
  
  
• New York – Up to 10.9%
  
  
• Oregon – Up to 9.9%
  
  
• Minnesota – Up to 9.85%
  
  
• New Jersey – Up to 10.75%
  
  
• Hawaii – Up to 11%
  
  

Quick Tip: High-income households are more heavily impacted by progressive taxes, but these states often fund expansive services such as healthcare, education, and public safety. 

Planning to Move? Compare State Tax Burdens Carefully

When evaluating where to live in the United States, consider the total tax burden, including:

• Income taxes
  
  
• Property taxes
  
  
• Sales taxes
  
  
• Gas and vehicle taxes
  
  
• Local tax surcharges
  
  

Quick Tip: A state with no income tax might collect higher property or sales tax.

Tips for Relocating from Tax Attorneys of America

If you're considering moving to a new state in 2025, ask yourself:

• Will the cost-of-living be offset by lower tax rates?
  
  
• Are there any state-specific tax credits or deductions I may qualify for?
  
  
• If you are self-employed, will your remote work status or business structure be affected?
  
  

Tax Attorneys of America helps families plan for major life changes like relocation and retirement. Experts can help you analyze the full tax impact of your move, not just income tax.

Need help crunching the numbers? Schedule a free consultation.

States Considering Changes to Income Tax Policy in 2025

Several states across the country are considering tax overhauls or reductions to their residential income tax systems:

• California and New York are debating surcharges on high-income earners.
• Arkansas, Georgia, and Iowa are implementing rate cuts.
• Arizona’s new flat tax began in 2023 and will be re-evaluated in 2025.
  
  

Conclusion: State Income Taxes Are Only Part of the Large Picture

Knowing your state's residence income tax is essential, whether you're moving, managing your budget, or staying put. Weight your options carefully, and if you are ever in doubt, schedule a free meeting with a tax expert whose job is to inform you.