States With the Lowest Payroll Tax Burden (2026)
Payroll taxes affect both employers and employees. While federal FICA taxes are uniform, state income tax withholding varies dramatically — from 0% in nine states to over 13% in California. This guide ranks states by their top marginal rate impact on payroll.
- Alaska ranks #1 with the lowest top marginal rate at 0.00%.
- California ranks last at 13.30% — the highest among all states.
- The top 5 states are Alaska, Florida, Nevada, New Hampshire, South Dakota.
- The ranking basis, source limitations, and calculation method are documented in the Methodology section below.
Top 3 States
All 50 States Ranked
Lowest to highest by top marginal rate
| # | State | Top Marginal Rate | Tax Type | Median Income | Calculator |
|---|---|---|---|---|---|
| 1 | Alaska | 0.00% | none | $95,665 | Payroll Tax Calculator |
| 2 | Florida | 0.00% | none | $77,735 | Payroll Tax Calculator |
| 3 | Nevada | 0.00% | none | $81,134 | Payroll Tax Calculator |
| 4 | New Hampshire | 0.00% | none | $99,782 | Payroll Tax Calculator |
| 5 | South Dakota | 0.00% | none | $76,881 | Payroll Tax Calculator |
| 6 | Tennessee | 0.00% | none | $71,997 | Payroll Tax Calculator |
| 7 | Texas | 0.00% | none | $79,721 | Payroll Tax Calculator |
| 8 | Washington | 0.00% | none | $99,389 | Payroll Tax Calculator |
| 9 | Wyoming | 0.00% | none | $75,532 | Payroll Tax Calculator |
| 10 | Arizona | 2.50% | flat | $81,486 | Payroll Tax Calculator |
| 11 | North Dakota | 2.50% | progressive | $77,871 | Payroll Tax Calculator |
| 12 | Ohio | 2.75% | progressive | $72,212 | Payroll Tax Calculator |
| 13 | Indiana | 2.95% | flat | $71,959 | Payroll Tax Calculator |
| 14 | Louisiana | 3.00% | flat | $60,986 | Payroll Tax Calculator |
| 15 | Pennsylvania | 3.07% | flat | $77,545 | Payroll Tax Calculator |
| 16 | Kentucky | 3.50% | flat | $64,526 | Payroll Tax Calculator |
| 17 | Iowa | 3.80% | flat | $75,501 | Payroll Tax Calculator |
| 18 | Arkansas | 3.90% | progressive | $62,106 | Payroll Tax Calculator |
| 19 | North Carolina | 3.99% | flat | $73,958 | Payroll Tax Calculator |
| 20 | Mississippi | 4.00% | progressive | $59,127 | Payroll Tax Calculator |
| 21 | Michigan | 4.25% | flat | $72,389 | Payroll Tax Calculator |
| 22 | Colorado | 4.40% | flat | $97,113 | Payroll Tax Calculator |
| 23 | Oklahoma | 4.50% | progressive | $66,148 | Payroll Tax Calculator |
| 24 | Utah | 4.50% | flat | $96,658 | Payroll Tax Calculator |
| 25 | Nebraska | 4.55% | progressive | $76,376 | Payroll Tax Calculator |
| 26 | West Virginia | 4.58% | progressive | $60,798 | Payroll Tax Calculator |
| 27 | Missouri | 4.70% | progressive | $71,589 | Payroll Tax Calculator |
| 28 | Illinois | 4.95% | flat | $83,211 | Payroll Tax Calculator |
| 29 | Georgia | 4.99% | flat | $79,991 | Payroll Tax Calculator |
| 30 | Alabama | 5.00% | progressive | $66,659 | Payroll Tax Calculator |
| 31 | South Carolina | 5.21% | progressive | $72,350 | Payroll Tax Calculator |
| 32 | Idaho | 5.30% | progressive | $81,166 | Payroll Tax Calculator |
| 33 | Kansas | 5.58% | progressive | $75,514 | Payroll Tax Calculator |
| 34 | Montana | 5.65% | progressive | $75,340 | Payroll Tax Calculator |
| 35 | Virginia | 5.75% | progressive | $92,090 | Payroll Tax Calculator |
| 36 | New Mexico | 5.90% | progressive | $67,816 | Payroll Tax Calculator |
| 37 | Rhode Island | 5.99% | progressive | $83,504 | Payroll Tax Calculator |
| 38 | Maryland | 6.50% | progressive | $102,905 | Payroll Tax Calculator |
| 39 | Delaware | 6.60% | progressive | $87,534 | Payroll Tax Calculator |
| 40 | Connecticut | 6.99% | progressive | $96,049 | Payroll Tax Calculator |
| 41 | Maine | 7.15% | progressive | $76,442 | Payroll Tax Calculator |
| 42 | Wisconsin | 7.65% | progressive | $77,488 | Payroll Tax Calculator |
| 43 | Vermont | 8.75% | progressive | $82,730 | Payroll Tax Calculator |
| 44 | Massachusetts | 9.00% | progressive | $104,828 | Payroll Tax Calculator |
| 45 | Minnesota | 9.85% | progressive | $87,117 | Payroll Tax Calculator |
| 46 | Oregon | 9.90% | progressive | $85,220 | Payroll Tax Calculator |
| 47 | New Jersey | 10.75% | progressive | $104,294 | Payroll Tax Calculator |
| 48 | New York | 10.90% | progressive | $85,820 | Payroll Tax Calculator |
| 49 | Hawaii | 11.00% | progressive | $100,745 | Payroll Tax Calculator |
| 50 | California | 13.30% | progressive | $100,149 | Payroll Tax Calculator |
Methodology
How we collected and ranked the data
States are ranked by top marginal income tax rate (ascending), which represents the maximum state-level payroll withholding burden. States with no income tax rank highest since they have zero state withholding. Federal payroll taxes (Social Security 6.2%, Medicare 1.45%) apply uniformly. Data from Tax Foundation and state revenue departments, updated 2026.
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View all 107 state comparisonsFrequently Asked Questions
Which states have no payroll income tax withholding?
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming have no state income tax, meaning zero state payroll withholding. Employers in these states save on payroll processing complexity.
Do all states have the same FICA taxes?
Yes. Federal FICA taxes (6.2% Social Security + 1.45% Medicare for both employer and employee) are the same in all states. The difference comes from state income tax withholding and any state-specific payroll taxes like disability insurance.
Which states have additional payroll taxes beyond income tax?
California, Hawaii, New Jersey, New York, and Rhode Island require State Disability Insurance (SDI) payroll deductions. Oregon and Washington have paid family leave payroll taxes. These add 0.5-1.2% to the payroll burden.