Every state handles payroll taxes differently. This comprehensive guide covers income tax rates, SUI, SDI, and special deductions for all 50 states.
By ExpertPaystubs Editorial Team. Published 2026-02-15
Federal taxes get all the attention, but state payroll taxes can be just as complex — and they vary wildly across the country. Some states charge over 13% on high earners. Others charge nothing at all.
This guide covers every state's payroll tax situation for 2026.
States With No Income Tax (The Big 9)
These states do not tax earned wages:
| State | Sales Tax Instead? | Notes |
|---|---|---|
| Alaska | No | Also no sales tax — funded by oil revenue |
| Florida | Yes (6%) | No tax on wages, dividends, or interest |
| Nevada | Yes (6.85%) | Commerce tax on businesses over $4M revenue |
| New Hampshire | No | Taxes dividends & interest only (phasing out by 2027) |
| South Dakota | Yes (4.2%) | No individual income tax |
| Tennessee | Yes (7%) | Eliminated Hall Tax on investment income in 2021 |
| Texas | Yes (6.25%) | No personal income tax; franchise tax on businesses |
| Washington | Yes (6.5%) | 7% capital gains tax on gains over $262,000 |
| Wyoming | Yes (4%) | No individual income tax |
Flat Tax States
These states charge the same rate regardless of income:
| State | Rate (2026) |
|---|---|
| Colorado | 4.40% |
| Illinois | 4.95% |
| Indiana | 3.05% |
| Kentucky | 4.00% |
| Massachusetts | 5.00% (+ 4% surtax above $1M) |
| Michigan | 4.25% |
| North Carolina | 4.50% |
| Pennsylvania | 3.07% |
| Utah | 4.65% |
Progressive Tax States (Top Rates)
States with graduated brackets charge higher rates on higher income:
| State | Top Rate | Kicks In At |
|---|---|---|
| California | 13.30% | $1,000,000+ |
| Hawaii | 11.00% | $200,000+ |
| New Jersey | 10.75% | $1,000,000+ |
| Oregon | 9.90% | $125,000+ |
| Minnesota | 9.85% | $193,240+ |
| New York | 10.90% | $25,000,000+ |
| Vermont | 8.75% | $229,550+ |
| Iowa | 5.70% | $84,675+ |
| Wisconsin | 7.65% | $315,310+ |
| Maine | 7.15% | $58,050+ |
Special State Payroll Taxes
Beyond income tax, several states impose additional payroll taxes:
State Disability Insurance (SDI)
- California: 1.1% of wages (no cap in 2026)
- New Jersey: 0.06% employee + employer contribution
- New York: $0.60/week employee contribution
- Rhode Island: 1.1% up to $87,000
- Hawaii: 0.5% of wages up to weekly max
Paid Family Leave (PFL)
- California: Included in SDI rate
- New Jersey: 0.09% of wages
- New York: 0.373% of wages (up to cap)
- Massachusetts: 0.344% of wages
- Connecticut: 0.5% of wages
- Washington: 0.58% of wages (split employer/employee)
- Oregon: 1% of wages (split 60/40 employee/employer)
- Colorado: 0.9% of wages (split 50/50)
State Unemployment Insurance (SUI)
Employers pay SUI in all states. Rates vary based on:
- Industry
- Company's claims history
- State's UI trust fund balance
Typical range: 0.5% to 7.0% of the first $7,000-$56,500 in wages per employee.
Local Taxes to Watch
Some cities and counties impose their own payroll taxes:
| Location | Rate | Type |
|---|---|---|
| New York City | 3.078% - 3.876% | Resident income tax |
| Yonkers | 16.75% surcharge | On NY state tax |
| Philadelphia | 3.75% | Wage tax (residents) |
| Detroit | 2.4% | City income tax |
| San Francisco | 0.38% | Payroll expense tax |
| Portland, OR | 1% | Metro supportive housing |
| Montgomery County, MD | 3.2% | County income tax |
How ExpertPaystubs Handles All This
Our 50-state tax engine automatically calculates:
- Federal income tax (2026 Publication 15-T)
- State income tax (all brackets and rates)
- FICA (Social Security + Medicare)
- State-specific deductions (SDI, PFL, SUI where applicable)
No manual research needed — just enter your state and we handle the math.