All but seven states tax some form of individual income, and all but nine states tax wage income. In total, individual income tax accounted for 9.9% of total state and local revenue and 22.8% of total state and local tax revenue in 2020, the most recent full year available. Today, individual income tax makes up a much larger proportion of total tax revenue than it did several decades ago in 1977, when it accounted for less than 17% of total tax revenue. While both individual income tax as a share of total revenue and as a share of total tax revenue dipped from 2019 to 2020, individual income taxes continue to be a significant revenue source for most states.
Looking ahead, many of the temporary factors that helped push state rainy day funds to record highs are projected to subside. Another issue for certain locations is that increases in remote work opportunities have encouraged residents to leave high-tax states, especially those states with high income taxes. According to the Tax Foundation, states with double-digit income taxes (such as California, New Jersey, and New York) were among the states that lost the most residents in 2021. Meanwhile, states that forgo individual income taxes altogether (such as Florida, Texas, and Nevada) reported some of the largest population increases.
To find the states that collect the most individual income tax, researchers at HowtoHome.com analyzed data from the U.S. Census Bureau. The researchers ranked states according to each state’s individual income tax revenue as a share of total revenue. Researchers also calculated individual income tax revenue as a share of total tax revenue, total individual income tax revenue, total tax revenue, and total revenue.
Here are the states that collect the most individual income tax.