Maybe your choice of where to live is determined by dreams of beaches, mountains, and sun-filled days. But choosing where to live may also depend on practical things, such as access to work and housing, even taxes.
In fact, the tax rate of a particular state can have a major impact on your after-tax income and can contribute significantly to costs. Simply put, states with higher individual tax rates may reduce your income more dramatically than states with lower tax rates and states with no income taxes.
So it's no surprise that Sun Belt states with lower taxes were the biggest population gainers in 2024, while higher-tax states in the Northeast and on the West Coast saw slower population growth, according to the US Census Bureau. For example, high-income-tax California lost 466,000 people, while New York's gain of 296,000 residents hasn't made up for several years of population decline. Meanwhile, no-income-tax Florida gained more than 760,000, more than twice its 2023 increase, while Texas gained more than 787,000 residents, representing a 66% increase compared to 2023's gains.
Of course, state income taxes are not the only force driving people from one region to another. But if you are considering relocating, understanding how state income taxes can impact the money that ends up in your pocket—or portfolio—after taxes is key to making your hard-earned money go further.
What are the lowest income tax states?
At the top of the list are the 9 states with no state earned income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. That's not to say these are no-tax states. Many make up revenues with higher property taxes, sales tax, and other taxes and fees.
But particularly if you are a high-income earner, the tax savings of moving to a lower or no-income-tax state can add up. Imagine you have $250,000 in earned income as a single filer in Vermont. Fidelity has calculated your effective tax rate, or the percentage of your total income you pay toward taxes, as 32.78%. In other words, you would pay approximately $82,000 of your total income to federal income taxes, state income taxes, and FICA taxes (a federal payroll tax that funds Social Security and Medicare). Comparatively, if you were to move to New Hampshire, your effective tax rate would be 26.77%, which would result in annual tax savings of approximately $15,000.1
Additionally, a hypothetical single person earning $100,000 annually who moved from Oregon, which ranks in the top most expensive states for income for married and single filers, to a no-income-tax state such as Florida or Texas could save approximately $7,000 annually by changing states.2 On the other hand, someone living in Nevada earning the same amount of money might owe approximately $3,800 more per year simply by moving to nearby Utah, where state tax rates rank among the 20 most expensive for both single and married joint filers with $100,000 of annual income.3
10 highest and lowest state tax rates
Among the 41 states with a state income tax, marginal tax rates—or the percentage at which your last dollar of income is taxed—differ from effective tax rates. But you typically don’t pay the tax rate associated with your tax bracket on all your income. So if you want to know what you might pay, it's better to consider your effective combined state and federal tax rate, which is the amount of your pay that goes to income taxes once you've factored in deductions and credits.
In the graphics below we illustrate the range of those effective income tax rates for both singles and married couples with $100,000 in income. You may be surprised about some of the best and worst states, depending on your marital status.
.png "Map of the 50 US states showing Oregon has the highest tax burden for both single and joint filers. North Dakota has one of the lowest income tax rates for both types of filers; California has one of the highest rates for single tax filers.")
Source: Fidelity
Charts assume earned income of $100,000. All income is assumed to be ordinary income subject to income taxation. A FICA effective tax rate, federal income brackets, and state income tax brackets are used. We assume that state adjusted gross income (AGI) is the same as the federal AGI and that the only deduction that applies is federal standard deduction based on filing status. We assume further that the additional federal standard deduction for age is included, and no credits are claimed. All data is as of 2024. Tax law may have changed between 2024 and the publishing date of the article.
The combined FICA, effective state and federal income tax rates for a single filer earning $100,000 of income vary from a high of 28.06% in Oregon to a low of 21.06% for the 9 states with no state income tax. (The low among states that do levy an income tax is 21.77% for North Dakota). For a married couple filing jointly with the same income, the combined effective FICA state and federal income tax rates range from a high of 20.63% in Oregon to a low of 15.31% for those same 9 states, plus North Dakota.
- While the Northeast has a reputation for having the highest-tax states in the nation, it turns out that Oregon has the highest effective tax rates for both single and married joint filers in the US. Hawaii comes in a close second with a top rate of 27.20% for single filers, and 19.51% for married filers.
- Maine, Minnesota, Georgia, Virginia, Kansas, South Carolina, and Montana are also in the top 10 highest-tax states for income tax rates for both kinds of filers.
- While California ranked among the most expensive states for single filers earning $100,000, with an effective tax rate of 25.37%, it also ranked among the 15 best states for married filers at the same income level, with an effective tax rate of 16.78%.
- Ohio, New Jersey, and Arizona are among the states with the lowest effective tax rates for married filers.
- Oklahoma is nearly in the middle for all states for married couples filing jointly and single filers alike.
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Source: Fidelity
Charts assume income of $100,000. All income is assumed to be ordinary income subject to income taxation. A FICA effective tax rate, federal income brackets, and state income tax brackets are used. We assume that state adjusted gross income (AGI) is the same as the federal AGI and that the only deduction that applies is federal standard deduction based on filing status. We assume further that the additional federal standard deduction for age is included, and no credits are claimed. All data is as of 2024. Tax law may have changed between 2024 and the publishing date of the article.
So if you're looking to save money on taxes and your annual income is $100,000 or less, you might consider Florida and Texas despite their relatively high cost of living. But there's always North Dakota and Ohio which also have favorable tax rates. At the same income level, California could be a good choice if you're a married couple filing jointly, especially if the idea of paying some state income tax isn't a deal-breaker. And then there's always New Jersey, which ranks in the top 10 lowest-tax states for both single and joint filers for states with an income tax.
Remember everyone's tax situation is different, and it makes sense to consult with a financial or tax professional for advice.