Quick Answer
California has the highest state income tax rate at 13.3% for income over $1 million, with an additional 1% Mental Health Services Tax on income over $1 million. The top marginal rate reaches 14.4% for the highest earners, making California's combined state tax burden the nation's highest.
Best Answer
Sarah Chen, CPA
Best for employees comparing state tax burdens or considering relocation
Which states have the highest income tax rates?
California tops the list with a maximum state income tax rate of 14.4% — that's 13.3% regular income tax plus a 1% Mental Health Services Tax on income over $1 million. For most earners, California's top rate is 13.3% on income over $1 million.
But here's what matters for your paycheck: you don't pay the top rate on all your income. California uses a progressive tax system, so you only pay the highest rate on income above each bracket threshold.
How California's tax brackets work in 2026
For a single filer in California earning $150,000:
Total California state tax: $12,293 (8.2% effective rate)
Notice how the effective rate (8.2%) is much lower than the marginal rate (12.3%) because lower brackets apply to most of your income.
Top 10 highest state income tax rates
What this means for your paycheck
If you're considering a move or job offer, don't just look at the top rate — consider:
Your actual bracket: Most people never reach the highest brackets. A $75,000 salary in California pays about 6-8% state tax, not 13.3%.
Total tax burden: Oregon has no sales tax, so high income tax might balance out. Texas has no income tax but higher property taxes.
Deductions available: Some high-tax states offer more generous deductions that can reduce your taxable income.
Key factors that affect your state tax bill
What you should do
Use our paycheck calculator to see exactly how state taxes affect your take-home pay in different locations. Enter your salary, filing status, and state to get precise calculations for any state you're considering.
Don't let high tax rates scare you away from high-opportunity areas — often the salary premium more than makes up for higher taxes.
Key takeaway: California has the highest state income tax rate at 14.4%, but your effective rate depends on your income level. Most earners pay 6-10% in high-tax states, not the advertised maximum rate.
*Sources: [Tax Foundation State Tax Data](https://taxfoundation.org), [California Franchise Tax Board](https://www.ftb.ca.gov)*
Key Takeaway: California has the highest rate at 14.4%, but your effective rate is much lower due to progressive brackets — most people in high-tax states pay 6-10% effective rates.
Top 10 highest state income tax rates for 2026
| State | Top Rate | Income Threshold (Single) | Additional Notes |
|---|---|---|---|
| California | 14.4% | $1,000,000+ | Includes 1% mental health tax |
| Hawaii | 11.0% | $200,000+ | No additional taxes |
| New Jersey | 10.75% | $5,000,000+ | Millionaire's tax |
| Oregon | 9.9% | $125,000+ | No sales tax |
| Minnesota | 9.85% | $183,700+ | Recent rate increase |
| New York | 8.82% | $25,000,000+ | Plus NYC tax if applicable |
| Vermont | 8.75% | $213,150+ | Green Mountain Care tax |
| Iowa | 8.53% | $78,435+ | Flat rate as of 2026 |
| Wisconsin | 7.65% | $304,170+ | No major recent changes |
| Maine | 7.15% | $58,050+ | Relatively low threshold |
More Perspectives
Sarah Chen, CPA
Best for remote workers who can choose their tax residence
State tax strategy for remote workers
As a remote worker, you have unique opportunities to optimize your state tax situation. The key is understanding tax residency versus where you physically work.
Your tax residence determines your state income tax, not where your employer is located. If you're a California resident working remotely for a New York company, you pay California taxes — not New York taxes.
High-tax states to consider avoiding
The states with the highest income tax rates that might prompt you to consider relocating:
Tax-friendly alternatives for remote workers
Zero income tax states: Texas, Florida, Nevada, Tennessee, Washington, Wyoming, Alaska, New Hampshire (wages only), South Dakota
Low-tax states with good remote work infrastructure: North Carolina (4.75%), Utah (4.85%), Colorado (4.4%)
Example: $120,000 remote worker comparison
Living in California:
Living in Texas:
Annual savings by moving to Texas: $8,400
What you need to know about changing tax residency
It's not as simple as just moving. High-tax states like California have strict residency rules:
California will audit you if you claim non-residency while earning significant income, so keep detailed records of where you spend each day.
Key takeaway: Remote workers can save $5,000-$15,000 annually by establishing tax residency in no-tax or low-tax states, but must carefully follow residency rules to avoid audits.
Key Takeaway: Remote workers can save thousands by choosing tax-friendly states, but must establish true residency through the 183-day rule and changing domicile factors.
Sarah Chen, CPA
Best for people who moved between states during the tax year
Filing taxes after moving from a high-tax state
If you moved during 2026, you'll likely need to file part-year resident returns in both your old and new states. This can get complicated when moving from high-tax states.
How part-year residency works
You pay each state taxes on income earned while residing there. If you moved from California to Texas in July:
Example: Moving from California to Florida mid-year
Salary: $100,000 annually ($50,000 earned in each state)
California portion (6 months):
Florida portion (6 months):
Total state tax savings: ~$2,800 compared to staying in California all year
Common mistakes when moving from high-tax states
Mistake 1: Not updating withholding
If you moved from a high-tax state to a low-tax state, you're probably having too much tax withheld. Update your W-4 immediately.
Mistake 2: Missing part-year filing deadlines
Both states may have different filing deadlines. California is strict about part-year returns.
Mistake 3: Double-taxation on same income
Make sure income is only taxed by one state. Most states have provisions preventing double-taxation, but you need to claim the credit.
Moving from high-tax states: Special considerations
Stock options and bonuses: California taxes these based on when services were performed, not when received. If you earned stock options while living in California but exercised them after moving to Texas, California may still want their cut.
Retirement account distributions: Generally taxed by your state of residence when distributed, not where contributed.
Deferred compensation: Complex rules — consult a CPA if you have significant deferred comp.
Key takeaway: Moving from high-tax states can save thousands annually, but requires filing part-year returns and updating withholding — the tax savings start immediately upon establishing residency in your new state.
Key Takeaway: Part-year residents pay each state taxes only on income earned while living there, creating immediate tax savings when moving from high-tax to low-tax states.
Sources
- Tax Foundation State Individual Income Tax Rates — Comprehensive state tax rate data and analysis
- IRS Publication 17 — Your Federal Income Tax guide including state tax considerations
Related Questions
Reviewed by Sarah Chen, CPA on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.