U.S. State Income Tax Rates & Withholding Directory

1. The Three State Income Tax Frameworks

While federal income tax is administered uniformly by the Internal Revenue Service (IRS), each state holds sovereign constitutional authority over its individual tax code. Across the 50 states and Washington D.C., there are three distinct individual income tax systems:

• Zero Income Tax States (9 States): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming charge 0% individual state income tax on ordinary earned wages and 1099 independent contractor earnings.
• Flat Rate Tax States (14 States): States such as Arizona (2.50%), Illinois (4.95%), Pennsylvania (3.07%), Georgia (4.99%), and Colorado (4.40%) assess a uniform percentage across all income brackets.
• Graduated Progressive Tax States (28 Jurisdictions): States like California (1.00%–13.30%), New York (4.00%–10.90%), New Jersey (1.40%–10.75%), and Washington D.C. (4.00%–10.75%) utilize marginal bracket systems where higher earnings are taxed at progressively higher rates.

2. Multi-State Withholding & 1099 Independent Contractor Rules

When an independent contractor or remote employee resides in one state but provides services for clients or employers in another, tax liability generally follows physical presence. You are taxed primarily in your resident state, but you may be required to file a non-resident return if statutory economic or physical nexus thresholds are met in the destination state.

Several neighboring states maintain Reciprocity Agreements (such as DC/Maryland/Virginia or Illinois/Iowa) that allow cross-border workers to be taxed exclusively in their state of legal residency.