Which states have no income tax for self-employed individuals?

Nine US states have no state income tax on earned income, meaning self-employed individuals pay no state income tax on their Schedule C net profit: **No income tax states (2025):** Alaska, Florida, Nevada, New Hampshire (taxes only dividend/interest income), South Dakota, Tennessee (taxes only dividend/interest), Texas, Wyoming, Washington (no personal income tax; has a capital gains tax). All other 41 states plus DC impose state income tax on self-employment income. State tax rates vary significantly: - Flat rate states: Illinois (4.95%), Michigan (4.25%), Pennsylvania (3.07%) - Graduated rate states: California (1–13.3%), New York (4–10.9%), Oregon (4.75–9.9%) **California self-employed note:** California is particularly significant — it charges up to 13.3% state income tax, does not conform to federal bonus depreciation rules, and has its own estimated tax requirements (CA Form 540-ES). **Additional state self-employed obligations:** Many states also charge their own version of a self-employment or gross receipts tax (e.g. New Hampshire Business Profits Tax, Washington B&O Tax).

  • 9 states with no personal income tax: AK, FL, NV, NH, SD, TN, TX, WY, WA
  • 41 states + DC impose state income tax — rates from 3% to 13.3%
  • California tops at 13.3% + conformity differences (no federal bonus depreciation)
  • State estimated taxes may also be required — separate from federal 1040-ES
  • Some no-income-tax states have other business taxes (WA B&O Tax)

Related Questions

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