Income Tax Elimination

Forty-two states and D.C. have individual income taxes.

Eight states have no income tax (AK, FL, NV, NH, SD, TN, TX, WY). Forty-one states tax wages and income (also known as earned income), and WA taxes capital gains income (Yushkov & Loughead 2025). Fourteen states have a flat tax across all income, including WA which only taxes capital gains. The remaining 27 states and D.C. have graduated income tax brackets. These range from two brackets in AR, KS, MA, MT, ND, and OH to 12 brackets in HI.

Tax bracket ranges are set by states and can vary considerably. At one end, MA has a “millionaire’s tax” bracket, where individual income over $1,083,000 is taxed at 9%, while all other income is taxed at 5%. MO has seven tax brackets, ranging from no taxes up to $1,300 of income, to 4.7% for income above $9,200.

Individual income taxes account for 63% of MO General Revenue.

General Revenue (GR) is the portion of MO budget that is collected by the state. This includes corporate income taxes, sales and use taxes, and other tax and fee revenue (e.g. foreign insurance tax) (MO Senate 2025). Currently, GR accounts for 30% of the MO budget, with federal dollars accounting for 45%, and the remaining 24% from other sources such as gaming, transportation funds, Medicaid Federal Reimbursement Allowance funding, lottery funding, etc. (MO Senate 2023, MO Senate 2025). Individual income taxes make up 63% of GR, with sales and use taxes comprising 24%. Individual income taxes account for 19% of the total MO budget (MO Senate 2025). For more information about the history of taxes, rates, and GR in MO, see the Science Note History of MO Taxes.

Personal income taxes make up a higher portion of MO’s general revenue than other states (Figure 1, Federal Reserve Bank of St. Louis 2022, MO Senate 2023).

States without income taxes have higher property, sales, and use taxes, and fewer services.

To make up for the lack of income tax revenue, states use other taxes. In states with no income taxes, sales, state property, and other taxes make up larger portions of the state budget (Figure 1). (Yushkov 2025). More information about MO property taxes can be found in the Science Notes Property Taxes and Home Values and Property Tax Assessment Limits.

Other states use state and local sales taxes to fund services. For example, TN has the second highest combined state and local sales tax rate, at 9.56% (Walczak 2025). For local sales tax, states dictate a cap on the highest rate a municipality can set. In states with no income taxes, such as NV, TX and TN, average local tax rates are closer to the state cap (91%, 98%, and 93% respectively) as the responsibility for funding and administering services falls to localities.

Additionally, states like FL spend less per resident ($2,750) than states like NY ($5,840), AZ ($3,405), and WA ($4,328) (US Census 2020 FL, NY, WA, Bruckner 2024). In comparison to these states, MO has the highest portion of its general revenue from income taxes but has the smallest state budget and spends the least per state resident ($2,015) (MO Senate 2023, US Census 2020 MO).

States without income taxes typically provide fewer services, primarily infrastructure maintenance and improvements as well as healthcare assistance and access (Bruckner 2024). Infrastructure spending for improvements (69%) and maintenance (87%), typically falls to states, with minimal federal funding (CBO 2025). Of the five states with the highest consumer costs for healthcare, three do not levy income taxes (Horton et al 2025). All five states with the lowest out of pocket healthcare costs for consumers levy income taxes. States with no income tax spend less per student on education, but this does not correlate with education performance (Hanson 2025, Nation’s Report Card 2025). In 2021, MO had the lowest per capita expenditures on elementary, secondary, and higher education, public welfare programs, and highways of the Great Lakes and Plains states (Tax Policy Center 2023). In the same period and among the same group of states, MO had the highest spending on health and hospitals.

Figure 1. Sources of State Revenue. Revenue sources for states with and without income taxes, of similar sizes (WA and AZ, NY and FL) compared to MO. Population and budget sizes are also shown. Adapted from Bruckner 2024. Data from US Census 2020 for AZ, FL, MO, NY, and WA, Federal Reserve Bank of St. Louis 2022, and MO Senate 2022.

References

Alabama Department of Revenue (2025) Individual Income Tax. https://www.revenue.alabama.gov/tax-types/individual-income-tax/

Alaska Office of the State Assessor (2025) Alaska Tax Facts. https://www.commerce.alaska.gov/web/dcra/officeofthestateassessor/alaskataxfacts.aspx

Arizona Department of Revenue (2025) Individual Income Tax Information. https://azdor.gov/individuals

Arkansas Department of Finance & Administration (2025) Individual Income Tax. https://www.dfa.arkansas.gov/office/taxes/income-tax-administration/individual-income-tax/

Bruckner C (2024) How do 9 states get by with no income tax? A tax expert explains the trade-offs they choose. The Conversation. https://theconversation.com/how-do-9-states-get-by-with-no-income-tax-a-tax-expert-explains-the-trade-offs-they-choose-230181

Colorado Department of Revenue (2025) Individual Income Tax Guide. https://tax.colorado.gov/individual-income-tax-guide

Commonwealth of Pennsylvania Department of Revenue (2025) Personal Income Tax. https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax.html

Congressional Budget Office (CBO) (2025) Public Spending on Transportation and Water Infrastructure, 1956 to 2023. https://www.cbo.gov/system/files/2025-02/60874-InfrastructureSpending.pdf

Florida Department of Revenue (2025) General Tax. https://floridarevenue.com/taxes/Pages/default.aspx

Georgia Department of Revenue (2025) Forms related to Individual Income Tax. https://dor.georgia.gov/documents/forms/type/individual-income-tax

Hanson M (2025) U.S. Public Education Spending Statistics. Education Data Initiative. https://educationdata.org/public-education-spending-statistics

Horton C, Smith KA, Louis P (2025) The Most (And Least) Expensive States for Healthcare in 2024. Forbes. https://www.forbes.com/advisor/health-insurance/most-and-least-expensive-states-for-health-care-ranked/

Idaho State Tax Commission (2025) Individual Income Tax Basics. https://tax.idaho.gov/taxes/income-tax/individual-income/online-guide/

Illinois Revenue (2025) Income Taxes. https://tax.illinois.gov/research/taxinformation/income.html

Indiana Department of Revenue (2025) Current Year Individual Tax Forms. https://www.in.gov/dor/tax-forms/individual/current/

Iowa Department of Revenue (2025) Individual taxes. https://revenue.iowa.gov/taxes/file-my-taxes/individual-taxes

Kansas Department of Revenue (2025) Personal Tax Express. https://www.ksrevenue.gov/personal.html

Kentucky Department of Revenue (2025) Individual Income Tax. https://revenue.ky.gov/Individual/Individual-Income-Tax/Pages/default.aspx

Massachusetts Department of Revenue (2025) Personal Income Tax for Residents. https://www.mass.gov/guides/personal-income-tax-for-residents

Michigan (2025) Individual Income Tax. https://www.michigan.gov/taxes/iit

Mississippi Department of Revenue (2025) Individual Income Tax. https://www.dor.ms.gov/individual

Missouri Department of Revenue (2025) Individual Income Tax. https://dor.mo.gov/taxation/individual/tax-types/income/

Montana Department of Revenue (2025) Individual Income Tax. https://mtrevenue.gov/taxes/individual-income-tax/

MO Senate (2023) Annual Fiscal Report (Redbook). Missouri Senate Appropriations Committee. https://www.senate.mo.gov/22info/2022redbook.pdf

MO Senate (2025) Annual Fiscal Report (Redbook). Missouri Senate Appropriations Committee. https://www.senate.mo.gov/24info/2024redbook.pdf

(The) Nation’s Report Card (2025) Data Tools: State Profiles. State Performance Compared to the Nation. https://www.nationsreportcard.gov/profiles/stateprofile?sfj=NP&chort=1&sub=MAT&sj=&st=MN&year=2024R3

New Hampshire Department of Revenue Administration (2025) Taxes at a Glance. https://www.revenue.nh.gov/taxes-glance

North Carolina Department of Revenue (2025) Tax Rate Schedules. https://www.ncdor.gov/taxes-forms/individual-income-tax/tax-rate-schedules

North Dakota Office of State Tax Commissioner (2025) Individual Income Tax. https://www.tax.nd.gov/individual

Ohio Department of Taxation (2025) Individual Income Tax. https://tax.ohio.gov/individual/filing-season-central

State of Hawaii Department of Taxation (2025) Individual Income Tax. https://hitax.hawaii.gov/_/#1

State of Nevada Department of Taxation (2025) Tax Information for Nevada. https://tax.nv.gov/about-nevada-department-of-taxation/income-tax-in-nevada/

South Dakota Department of Revenue (2025) Individual Forms. https://sddor.seamlessdocs.com/sc/individual-forms/

Tax Foundation (2025) Taxes in Texas. https://taxfoundation.org/location/texas/

Tax Policy Center (2023) State and Local Expenditures, Per Capita 2004-2021. https://taxpolicycenter.org/statistics/state-and-local-general-expenditures-capita

Tennessee Department of Revenue (2025) Taxes. https://www.tn.gov/revenue/taxes.html

Utah State Tax Commission (2025) Utah Income Taxes. https://incometax.utah.gov/

Walczak J (2025) 2025 Sales Tax Rates by State. Combined State & Average Local Sales Tax Rates, January 2025. https://taxfoundation.org/data/all/state/sales-tax-rates/

Walczak J (2025) State and Local Sales Tax Rates, 2025. Tax Foundation. https://taxfoundation.org/data/all/state/sales-tax-rates/

Washington State Department of Revenue (2025) Income tax. https://dor.wa.gov/taxes-rates/income-tax

Wyoming Department of Revenue (2025) Divisions. https://revenue.wyo.gov/

Yushkov A (2024) State Individual Income Tax Rates and Brackets, 2024. Tax Foundation. https://taxfoundation.org/data/all/state/state-income-tax-rates-2024/

Yushkov A (2025) Property Taxes by State and County, 2025. Tax Foundation. https://taxfoundation.org/data/all/state/property-taxes-by-state-county/

Yushkov A, Lounghead K (2025) State Individual Income Tax Rates and Brackets, 2025. Tax Foundation. https://taxfoundation.org/data/all/state/state-income-tax-rates/