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2014 State Income Tax Rates

Unlike the federal government, which has a series of tax brackets that apply to all U.S. taxpayers, state-level income tax rates are not standardized.  In fact, several states do not even have an income tax but rely on other sources of funds to provide essential services to their residents.

Sources and Uses of Government Funding

If a state collects income taxes, the money is used to pay for state-run programs, which often help the less fortunate, or provide essential services such as police and fire protection.  The money is also used to offset the cost of higher education.  In fact, half the funds needed to run a local high school might come from state-level income taxes, while the other half is collected through property taxes.

Additional Resources

If property taxes are low, the state income tax rate is low, and sales tax is reasonable, then something has to suffer.  In this example, it's probably the quality of the educational system.

State Income Tax Tables

The tables below provide insights into why some locations are popular as retirement communities.  For example, Florida is popular with senior citizens and retirees not only because of the climate, but also because there is no state income tax.  On the other hand, despite the fact that Nevada does not collect an income tax, they've a large gambling industry that pays licensing fees.  The table can be misleading at times, especially if there is a dominant industry.

Tax Facts

Just to demonstrate how varied these rates can be, below are some interesting facts about state income tax.

  • There are currently seven states that do not collect any income taxes:  Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
  • There are two states that only collect taxes on dividends and interest income:  New Hampshire and Tennessee.
  • California has the highest incremental state tax rate:  12.3%.
  • Eight states have only one income tax bracket, charging its residents the same rate on all income, which is called a flat rate:  Colorado (4.63%), Illinois (5.0%), Indiana (3.4%), Massachusetts (5.20%), Michigan (4.25%), North Carolina (5.8%), Pennsylvania (3.07%) and Utah (5.0%).
  • Hawaii has the largest number of tax brackets (12), ranging from 1.4 to 11.0%.

State Income Tax Tables

Unlike federal income tax rates, the range of income, and the tax rates will vary from state to state.  The below table provides the tax rate, number of brackets and income range that applies to each state:

Individual State Income Tax Rates 2014

State Tax Rate Brackets Income Range
Alabama 2.0 - 5.0% 3 $500 - 3,000
Alaska None    
Arizona 2.59 - 4.54% 5 $10,000 - 150,001
Arkansas 1.0 - 7.0% 6 $4,199 - 34,600
California 1.0 – 12.3% 9 $7,582 - 508,500
Colorado 4.63% 1 Flat Rate
Connecticut 3.0 - 6.7% 6 $10,000 - 250,000
Delaware 2.2 - 6.75% 6 $5,000 - 60,001
Florida None    
Georgia 1.0 - 6.0% 6 $750 - 7,001
Hawaii 1.4 - 11.0% 12 $2,400 - 200,001
Idaho 1.6 - 7.4% 7 $1,409 - 10,568
Illinois 5.0% 1 Flat Rate
Indiana 3.4% 1 Flat Rate
Iowa 0.36 -8.98% 9 $1,515 - 68,175
Kansas 2.7 – 4.8% 2 $15,000 - 30,000
Kentucky 2.0 - 6.0% 6 $3,000 - 75,001
Louisiana 2.0 - 6.0% 3 $12,500 - 50,001
Maine 0.0 – 7.95% 3 $5,200 - 20,900
Maryland 2.0 - 5.75% 8 $1,000 - 250,000
Massachusetts 5.20% 1 Flat Rate
Michigan 4.25% 1 Flat Rate
Minnesota 5.35 - 7.85% 3 $24,270 – 152,541
Mississippi 3.0 - 5.0% 3 $5,000 - 10,001
Missouri 1.5 - 6.0% 10 $1,000 - 9,001
Montana 1.0 - 6.9% 7 $2,700 - 16,400
Nebraska 2.46 - 6.84% 4 $3,000 - 29,000
Nevada None    
New Hampshire 5.0%   Dividend and Interest Income Only
New Jersey 1.4 - 8.97% 6 $20,000 - 500,000
New Mexico 1.7 - 4.9% 4 $5,500 - 16,001
New York 4.0 - 8.82% 8 $8,200 - 1,029,250
North Carolina 5.8% 1 Flat Rate
North Dakota 1.22 - 3.22% 5 $36,900 – 405,100
Ohio 0.534 - 5.392% 9 $5,000 - 200,000
Oklahoma 0.5 - 5.25% 7 $1,000 - 8,701
Oregon 5.0 - 9.9% 4 $3,250 - 125,000
Pennsylvania 3.07% 1 Flat Rate
Rhode Island 3.75- 5.99 3 $59,600 - 135,500
South Carolina 0.0 - 7.0% 6 $2,850 - 14,400
South Dakota None    
Tennessee 6.0%   Dividend and Interest Income Only
Texas None    
Utah 5.0% 1 Flat Rate
Vermont 3.55 - 8.95% 5 $36,900 – 405,100
Virginia 2.0 - 5.75% 4 $3,000 - 17,001
Washington None    
West Virginia 3.0 - 6.5% 5 $10,000 - 60,000
Wisconsin 4.4 - 7.65% 5 $10,000 - 225,000
Wyoming None    
District of Columbia 4.0 - 8.95% 4 $10,000 - 350,000

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