State income tax is an income tax in the United States that is levied by each individual state. Some states choose to impose no income tax. These states are Texas, Florida, Washington, Nevada, South Dakota, Alaska, and Wyoming. Additionally, Tennessee and New Hampshire limit their state income taxes to dividends and interest income only. As of 2005, the highest rate of state income tax is that of Montana, with a max rate of 11%. Of those states which enforce income tax, the lowest maximum rate is that of Illinois, which levies a flat tax of 3%. Most states have a progressive income tax, where the rate rises as an income gets larger. In California, for instance, the rate begins at 1% at $6,000 in income and rises to 9.3% over $39,000 in income.

State income taxes are on top of the federal income tax, which currently tops out at 35%. Therefore, the maximum total rate is 35% of income in the states of Texas, Florida, and Washington, but 46% of income in Montana and 44.3% in California. The highest overall rate is actually in New York, New York because in this location there is both a state income tax of up to 7.7% and a city income tax, up to 5.82%. The maximum rate in the city limits of New York City (as of 2005) is therefore 48.52% (approximately one-half of marginal income), or 1.39 times the 35.0% rate (approximately one-third of marginal income) inside "federal income tax only" cities such as Seattle, Houston, Dallas, and Miami.