Paycheck Taxes by State

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire's tax on interest and dividends finished phasing out at the end of 2024, and Washington taxes only large capital gains, not wages.

Sixteen: Arizona (2.5%), Ohio (2.75%), Indiana (2.95%), Louisiana (3%), Pennsylvania (3.07%), Kentucky (3.5%), Iowa (3.8%), Mississippi (4%), North Carolina (3.99%), Michigan (4.25%), Colorado (4.4%), Utah (4.55%), Georgia (4.99%), Illinois (4.95%), Massachusetts (5%), and Idaho (5.3%).

Any of the nine no-tax states — on wages they are tied, since only federal tax and FICA apply. Among states that do tax wages, Arizona's 2.5% flat rate with a federal-sized deduction, Ohio's 0% bracket on the first $26,050, and Louisiana's 3% rate with a $12,500 deduction produce the lowest effective rates at typical salaries.

Generally where you work, credited against tax where you live; most neighboring states have reciprocity agreements that simplify this for commuters. Remote workers are usually taxed by their state of residence, but multi-state situations can be complex — check both states' rules or ask a tax professional.