How does state income tax work, and which states have no income tax?

Most states levy their own income tax on top of federal, and the structure varies widely. Some states have flat rates, others are progressive with brackets, and a handful have none at all. Nine states currently impose no broad income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Living in a no-income-tax state can save thousands, but those states often recoup revenue through higher property or sales taxes, so look at the total burden, not just the income line. Also note Washington taxes some high capital gains. Your state tax is usually filed alongside your federal return and starts from your federal numbers. If you're weighing a move for taxes, compare the whole cost of living, not just the headline rate, and remember you owe tax where you live and often where you earn.