According to the Tax Foundation's 2026 State Individual Income Tax Rates and Brackets review, 41 states currently levy a broad-based individual income tax, while nine states charge none at all. Of the taxing states, roughly 15 now use a single flat rate, and the rest use graduated brackets where the rate climbs as income rises. That mix has shifted noticeably over the past six years — before 2019, only about a quarter of income-tax states used a flat rate. Now it's closer to 40%.
Before diving into the state-by-state breakdown, it helps to understand what's actually changed for 2026 and why the "top marginal rate" you see quoted online isn't the whole story.
How State Income Tax Brackets Actually Work
A lot of confusion around state taxes comes from one simple misunderstanding: people assume their entire income gets taxed at their top bracket rate. It doesn't.
In a graduated (progressive) system, each portion of your income is taxed at the rate for that specific bracket, not your whole paycheck at your highest rate. Take a hypothetical example: if a state has a 4% rate up to $20,000 and a 6% rate above that, someone earning $50,000 pays 4% on the first $20,000 and 6% only on the remaining $30,000 — not 6% across the board.
This distinction matters enormously when you're comparing states. California's top marginal rate is 13.3%, which sounds alarming, but that rate only applies to income far above $1 million. A California resident earning $150,000 has an effective tax rate closer to 7–8%, not 13.3%, because most of their income sits in lower brackets. If you want to see this play out with your own numbers rather than a hypothetical, our income tax calculator breaks down marginal versus effective rates so you're not left guessing.
Flat-tax states skip this layering entirely — every dollar above a state's exemption threshold gets taxed at the same single rate, which is why states like Ohio and Colorado feel simpler to calculate but don't necessarily mean lower total tax for every income bracket.
The 9 States With No Individual Income Tax in 2026
Before looking at the states that do tax income, it's worth noting the nine that don't: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Washington is a partial exception — it charges no tax on wages but does apply a 7% capital gains tax to gains above roughly $262,000 for high earners.
If this is the bucket you're most interested in, we've covered the details, trade-offs, and property/sales tax comparisons for each of these states separately in our guide on states with no income tax.
Which States Have Flat Tax Rates in 2026
Flat-rate states apply one percentage to nearly all taxable income, regardless of how much someone earns. As of 2026, roughly 16 states fall into this category, and the list keeps growing:
| State | 2026 Flat Rate |
|---|---|
| Arizona | 2.5% |
| Colorado | 4.4% |
| Georgia | 5.09% |
| Idaho | 5.3% |
| Illinois | 4.95% |
| Indiana | 2.95% |
| Iowa | 3.8% |
| Kentucky | 3.5% |
| Louisiana | 3% |
| Michigan | 4.25% |
| Mississippi | 4.0% |
| North Carolina | 3.99% |
| Ohio | 2.75% (above $26,050) |
| Pennsylvania | 3.07% |
| Utah | 4.5% |
A few of these deserve extra context because 2026 marks a real turning point for them.
Ohio's Move to a Flat Tax
Ohio is the newest state to join the flat-tax club. Starting January 1, 2026, Ohio applies a flat 2.75% rate to non-business income above $26,050, with income at or below that threshold remaining untaxed entirely. This replaces Ohio's previous multi-bracket system and follows a rate reduction from 3.5% to 3.125% that took effect in 2025 as a transition step.
The practical impact is biggest for higher earners. Someone with $100,000 in taxable income who previously paid Ohio's top bracket rate of 3.5% on income above $100,000 now pays a flat 2.75% on nearly all of their income above the exemption threshold — a meaningful reduction that state lawmakers pitched as making Ohio more competitive with neighboring states.
North Carolina's Continued Rate Cuts
North Carolina's flat rate dropped from 4.25% to 3.99% for 2026, marking what state officials describe as the final scheduled step in a multi-year phase-down plan that began years earlier when the rate sat above 5%. If you're comparing take-home pay across state lines, our federal vs. state income tax guide explains how these state-level cuts interact with your federal withholding and filing.
Georgia's Phased Reduction
Georgia trimmed its flat rate to 5.09% for 2026, down from 5.19% in 2025, continuing a legislated annual reduction of 0.10 percentage points that's scheduled to continue until the rate reaches 4.99%. Some Georgia lawmakers have floated eliminating the income tax entirely, though that remains a longer-term policy discussion rather than current law.
Which States Have Graduated (Progressive) Tax Brackets in 2026
The remaining income-tax states — roughly 26, plus the District of Columbia — use graduated brackets, where your rate increases as your income climbs through defined thresholds. This group includes some of the highest-population states in the country: California, New York, New Jersey, Virginia, and Minnesota among them.
Graduated systems tend to have more brackets and more complexity, but they're also designed so lower earners pay a smaller share of their income in state tax compared to a flat system. Critics of flat taxes point out exactly this — that a single rate applied uniformly tends to benefit higher-income households more, since a flat percentage takes a proportionally larger bite out of a lower earner's budget than a wealthy filer's.
California's Top Marginal Rate
California retains the highest top marginal individual income tax rate in the country in 2026. Multiple brackets apply below that threshold, and — as covered above — the effective rate most Californians actually pay is significantly lower than the headline number suggests. We break this down further, bracket by bracket, in our California income tax rate 2026 guide.
New York's Graduated Structure
New York uses one of the more complex graduated systems, with multiple brackets that scale up through several income tiers before reaching its top marginal rate for the highest earners. New York City residents also face a separate local income tax layered on top of the state rate, which is a detail people moving to or within New York often miss. Our New York state income tax calculator accounts for both layers.
South Carolina's New Two-Bracket System
South Carolina made one of the more significant structural changes for 2026. The state moved from its previous top rate of 6.2% down to a new two-rate system: 1.99% and 5.21% for 2026, according to reporting from TurboTax's tax policy coverage and confirmed under the state's Act 110 legislation. After 2026, the top rate is scheduled to decrease further if the state hits certain annual revenue projections — and South Carolina lawmakers have signaled that full elimination of the personal income tax is a long-term goal if those triggers keep firing.
This is a good example of why "current" state tax information goes stale fast. Older articles referencing South Carolina's 6.4% or 6.5% brackets are describing a system that no longer applies for 2026 filings.
Major 2026 State Tax Changes at a Glance
Eight states cut individual income tax rates effective January 1, 2026: Indiana, Kentucky, Mississippi, Montana, Nebraska, North Carolina, Ohio, and Oklahoma. Here's the condensed version of what changed:
- Indiana — flat rate dropped from 3.0% to 2.95%, with another cut to 2.9% planned for 2027
- Kentucky — flat rate reduced from 4.0% to 3.5%, tied to a statutory revenue-trigger formula
- Mississippi — completed its multi-year phase-down to a flat 4.0% rate
- Montana — top marginal rate cut from 5.9% to 5.65%, with a further drop to 5.4% scheduled for 2027; the state also expanded its Earned Income Tax Credit from 10% to 20% of the federal credit
- Nebraska — top marginal rate reduced to 4.55% as part of a phase-down under Legislative Bill 754, targeting 3.99% by 2027
- North Carolina — flat rate fell to 3.99%
- Ohio — transitioned to a flat 2.75% rate, becoming the newest flat-tax state
- Oklahoma — top rate cut from 4.75% to 4.5%, and its six brackets were consolidated down to three
Beyond rate changes, a few states adjusted how specific income types get taxed. Arizona and Michigan both updated rules around how veterans' pensions and Social Security income are taxed at the state level in 2026, and Alabama expanded filing and withholding thresholds specifically for non-resident workers.
If you're weighing whether to itemize or take the standard deduction given these changes, our standard vs. itemized deduction guide walks through how state-level deduction rules interact with your federal return.
State Income Tax vs. Federal Income Tax: What's the Difference?
It's easy to conflate these two systems, but they operate completely independently, with different brackets, different rules, and different agencies enforcing them.
Federal income tax applies uniformly across all 50 states and is governed by the IRS. For 2026, there are still seven federal individual income tax brackets, and the One Big Beautiful Bill Act (OBBBA), passed in July 2025, made most of the Tax Cuts and Jobs Act's individual provisions permanent rather than letting them expire at the end of 2025 as originally scheduled.
State income tax varies enormously — from zero in nine states, to a flat 2.75% in Ohio, up to a top marginal rate of 13.3% in California. States set their own brackets, standard deductions, exemptions, and rules around what counts as taxable income, and those rules don't have to match federal definitions exactly.
One area where the two systems intersect directly is the federal deduction for state and local taxes, commonly called the SALT deduction. The IRS's 2026 guidance includes updated SALT deduction limitations tied to modified adjusted gross income thresholds — but it's a separate calculation from your state's own tax rate, and a high state income tax rate doesn't automatically translate into a bigger federal SALT deduction. If you're trying to estimate your full tax picture across both systems, running the numbers through our salary tax calculator is faster than trying to reconcile two separate rate tables by hand.
How State Standard Deductions and Exemptions Affect Your Bill
Your state's tax bracket rate is only half the equation — the standard deduction and personal exemption amounts determine how much of your income gets taxed in the first place.
These vary widely and don't always track with the state's tax rate. A state with a moderate flat rate but a generous standard deduction can end up cheaper for a middle-income filer than a state with a lower headline rate but minimal deductions. For example, some states index their standard deduction to inflation annually, while others hold it flat for years at a time, which quietly increases the effective tax burden as wages rise with inflation but the deduction doesn't — a phenomenon commonly called "bracket creep."
A few states also use less conventional deduction structures. New Mexico, for instance, offers a flat $4,000 deduction per dependent in place of a suspended personal exemption, while some states phase out their standard deduction entirely once income crosses a certain threshold, effectively creating a second, invisible tax bracket for high earners. This is exactly the kind of detail that a simple "top rate" comparison misses, and why checking your specific state's Department of Revenue guidance matters before assuming you know your bracket.
How to Calculate Your State Income Tax for 2026
If you want to work through the math yourself rather than relying on a table, here's the general process most graduated-bracket states follow:
- Start with your federal adjusted gross income (AGI) as your baseline, then apply any state-specific additions or subtractions (some states tax municipal bond interest from other states, for example, while exempting their own).
- Subtract your state's standard deduction or itemized deductions, whichever applies, to arrive at taxable income.
- Apply your state's bracket schedule — remember, each bracket rate only applies to income within that bracket's range, not your full income.
- Add up the tax owed at each bracket level to get your total state tax liability before credits.
- Apply any state tax credits you qualify for, such as an earned income tax credit or child tax credit, which reduce your bill dollar-for-dollar rather than reducing taxable income.
For flat-tax states, this process is far simpler: subtract your standard deduction, then multiply the remainder by the single flat rate. Ohio's 2.75% rate above a $26,050 exemption threshold is a clean example of this simplified structure.
If you work across multiple states in a given year — say you moved mid-year or you're a remote employee whose employer is based in a different state — the calculation gets more complicated, since you may owe partial-year tax to two different states and need to claim a credit in one state for taxes paid to another to avoid double taxation. This is a common situation for W-2 employees who relocate, and our W-2 vs. 1099 tax calculation guide covers how employment classification adds another layer to that calculation.
Comparing State Income Tax Before You Relocate
A lower state income tax rate doesn't automatically mean lower total taxes, and this is the single most common mistake people make when comparing states before a move.
Take North Carolina and Ohio as a direct example. Ohio's 2026 flat structure produces a noticeably lower income tax bill than North Carolina's 3.99% flat rate at most income levels — on $100,000 of income, the gap runs into the thousands of dollars annually. But North Carolina has meaningfully lower average property tax rates than Ohio, which can offset a large part of that income tax advantage for homeowners, even if renters come out ahead either way.
The same logic applies nationally. States with no income tax, like Texas, often make up the difference through property tax, and states with high income tax, like California, sometimes offer relatively favorable property tax treatment for existing homeowners. Before treating a state's income tax bracket as the deciding factor in a move, it's worth checking:
- Property tax rates relative to home values in the area you're considering
- Sales tax rates, especially if you spend a large share of income on taxable goods
- Whether the state taxes retirement income, Social Security, or pension distributions differently
- Local income taxes, which some cities layer on top of state rates (New York City and several Ohio municipalities both do this)
Our states with the highest and lowest sales tax breakdown is a useful companion piece if you're doing this kind of full-picture comparison rather than looking at income tax in isolation.
Frequently Asked Questions
How many states have an individual income tax in 2026?
Forty-one states levy a broad-based individual income tax. Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — charge none.
Which states changed their income tax rates for 2026?
Eight states cut rates effective January 1, 2026: Indiana, Kentucky, Mississippi, Montana, Nebraska, North Carolina, Ohio, and Oklahoma. Ohio's change was the most structurally significant, since it converted the state from a multi-bracket system to a flat tax.
What's the highest state income tax rate in 2026?
California holds the highest top marginal rate in the country. However, that top rate only applies to income above roughly $1 million for single filers, so most Californians pay a much lower effective rate.
What's the lowest state income tax rate among taxing states?
Ohio's new flat 2.75% rate is among the lowest of any state that still levies an income tax, applying only to income above a $26,050 exemption threshold.
How is a flat tax different from a graduated tax?
A flat tax applies one single rate to all taxable income above an exemption threshold. A graduated tax applies increasing rates to successive portions of income, meaning higher earners pay a higher rate only on the income within each higher bracket, not their entire income.
Do state tax brackets change every year?
Many do, either through inflation indexing (which most states apply automatically) or through new legislation like the rate cuts taking effect in 2026. Some states don't index their brackets to inflation at all, which gradually pushes taxpayers into higher effective tax burdens as wages rise — a phenomenon known as bracket creep.
Does moving to another state during the year affect how I file?
Yes. If you move mid-year, you typically owe partial-year tax to both your old and new state of residence, and you may need to file part-year resident returns in each. Most states offer a credit for taxes paid to another state to prevent double taxation on the same income.
The Bottom Line
State income tax in 2026 is more dynamic than most people assume — eight states cut rates on January 1 alone, Ohio completed a full structural overhaul, and South Carolina rolled out a new bracket system that didn't exist a year earlier. The headline "top rate" you see in most comparisons tells you far less than it seems to, since your effective rate depends on your actual income level, filing status, deductions, and how your state's brackets are structured.
Before you file, budget for a move, or compare take-home pay across state lines, run your specific numbers rather than relying on a general rate table. Our U.S. State Income Tax Calculator lets you plug in your income and filing status to see an accurate estimate for your situation, and it's a faster way to compare two states side by side than manually working through each state's bracket schedule.
For the most current and legally authoritative figures on any individual state's rates, brackets, and rule changes, check that state's Department of Revenue or Department of Taxation directly, and cross-reference against the Tax Foundation's 2026 State Individual Income Tax Rates and Brackets dataset, which compiles this information from state statutes and instructions and updates it as legislative changes take effect throughout the year.