Updated June 2026
Graduated Income Tax States in 2026
27 states and Washington DC use graduated income tax brackets in 2026. Higher income is taxed at higher rates. California has 10 brackets with a top rate of 13.3%. Hawaii has 12 brackets. Alabama has just 3. The number of brackets and their thresholds matter as much as the top rate.
All Graduated-Rate States (2026)
| State | Brackets | Top Rate | Top Rate Applies Above | Notes |
|---|---|---|---|---|
| Alabama | 3 | 5.0% | $3,000+ | Three brackets (2%, 4%, 5%) |
| Arkansas | 5 | 3.7% | $26,400+ | Top rate cut to 3.7% for 2026 (Act 2, May 2026) |
| California | 10 | 13.3% | $1,000,000+ | Highest top rate; most complex bracket structure |
| Connecticut | 7 | 6.99% | $500,000+ | |
| Delaware | 7 | 6.6% | $60,000+ | |
| Hawaii | 12 | 11.0% | $200,000+ | Most brackets of any state |
| Idaho | 2 | 5.3% | $4,811+ | Effectively flat: 0% below $4,811, then 5.3% (HB 40, 2025) |
| Kansas | 2 | 5.58% | $23,000+ | Two brackets since 2024 (5.2% under $23k, 5.58% above) |
| Louisiana | 1 | 3.0% | All income | Repealed graduated brackets in 2025; now a flat 3% (Act 11, 2024 special session) |
| Maine | 4 | 7.15% | $58,900+ | |
| Maryland | 10 | 6.5% | $1,000,000+ | New 6.25% ($500k+) and 6.5% ($1M+) brackets for 2026; plus county income tax (2.25-3.2%) |
| Minnesota | 4 | 9.85% | $193,240+ | |
| Missouri | 8 | 4.7% | $9,436+ | Top rate cut to 4.7% (from 4.8%) under the SB 3 trigger schedule |
| Montana | 2 | 5.65% | $47,500+ | Top rate cut to 5.65% for 2026 (from 5.9%) |
| Nebraska | 4 | 4.55% | $38,580+ | Top rate cut to 4.55% for 2026; 3.99% scheduled 2027 (LB 754) |
| New Jersey | 7 | 10.75% | $1,000,000+ | Top rate applies only above $1M |
| New Mexico | 5 | 5.9% | $210,000+ | |
| New York | 9 | 10.9% | $25,000,000+ | Plus NYC city tax up to 3.876% |
| Ohio | 2 | 2.75% | $26,050+ | Income below $26,050 exempt; flat 2.75% above (HB 96, 2026); plus municipal tax 1-3% |
| Oklahoma | 4 | 4.5% | $7,200+ | Collapsed 6 brackets to 4 and cut top rate to 4.5% for 2026 (HB 2764) |
| Oregon | 4 | 9.9% | $125,000+ | High effective rate at $250K |
| Rhode Island | 3 | 5.99% | $176,050+ | |
| South Carolina | 2 | 5.21% | $30,000+ | Restructured for 2026 (H.4216): 1.99% under $30k, 5.21% above |
| Vermont | 4 | 8.75% | $229,500+ | Also taxes Social Security |
| Virginia | 4 | 5.75% | $17,000+ | |
| Washington DC | 7 | 10.75% | $1,000,000+ | Taxes DC residents like a state |
| West Virginia | 5 | 4.58% | $60,000+ | Top rate cut to 4.58% for 2026 (SB 392, 5% across-the-board cut) |
| Wisconsin | 4 | 7.65% | $280,950+ |
How Graduated Brackets Work
In a graduated tax system, you do not pay your top bracket's rate on all income. You pay each rate only on income within that bracket. For a single filer earning $100,000 in California, the calculation looks like this:
$10,756 x 1.0% = $108
$14,743 x 2.0% = $295
$14,746 x 4.0% = $590
$15,621 x 6.0% = $937
$14,740 x 8.0% = $1,179
$29,394 x 9.3% = $2,734
Total: ~$5,843 on $100,000 income (effective rate: 5.8%)
Frequently Asked Questions
How many states have graduated income tax in 2026?
27 states and Washington DC use graduated (progressive) income tax brackets in 2026. This means different portions of income are taxed at different rates, with higher income taxed at higher rates. The remaining states either have no income tax (9 states) or a flat rate (14 states).
What is a graduated or progressive income tax?
A graduated (also called progressive) income tax applies increasing rates to increasing income levels. For example, in California, the first $10,756 of taxable income is taxed at 1%, the next $14,743 at 2%, and so on up to 13.3% on income above $1,000,000. Only the income within each bracket is taxed at that bracket's rate, not total income.
Why do some states have more brackets than others?
The number of brackets is a policy choice. More brackets allow finer targeting of different income levels; fewer brackets are simpler to administer. Hawaii has 12 brackets because legislators chose to create more granular rate increases. Alabama has 3 brackets because it went with simplicity. There is no inherent advantage to either approach.
Are graduated state income taxes the same as the federal system?
Conceptually yes, but the specifics differ widely. Federal brackets, rates, standard deductions, and exemptions are different from any state's system. Most states start from federal adjusted gross income (AGI) and then apply state-specific modifications, deductions, and rates. You calculate federal and state income taxes separately.