Best and Worst US States for Taxes: An H-1B Take-Home Guide
The same salary nets wildly different take-home pay depending on your state. Here's how state income tax shifts your paycheck — and the no-tax states tech workers love.
Arjun Mehta
Updated May 18, 2026 · 8 min read
Two H-1B engineers can earn the identical $160,000 salary and take home thousands of dollars apart — purely because of which state they live in. Federal tax is the same everywhere, but state income tax ranges from 0% to over 13%, quietly reshaping your real pay. For mobile tech workers choosing between offers in Austin, San Francisco, Seattle, or New York, understanding the state tax map is one of the highest-leverage financial decisions you'll make. Here's how it works.
In a nutshell
Federal tax is uniform; state income tax is not — it ranges from 0% (Texas, Washington, Florida, Nevada, and others) to 13.3% in California. On a tech salary, the state you choose can swing your take-home by thousands of dollars a year. But weigh the full cost of living — no-income-tax states often offset with higher property or sales taxes, and big tech hubs carry high housing costs.
Key takeaways
- Federal income tax is the same in every state; only state tax varies.
- Nine states have no state income tax: TX, WA, FL, NV, TN, SD, WY, AK, NH.
- California tops out at 13.3%; New York City adds a city tax on top of state tax.
- A no-income-tax state can save a high earner $10,000+ per year versus California.
- Cost of living matters more than the tax rate alone — high-tax hubs often pay more.
- Your tax home is where you're domiciled — remote work doesn't automatically change it.
Why state tax is the hidden variable in your offer
When you compare job offers, the headline salary hides a big difference: state income tax. Federal brackets apply identically nationwide, but each state sets its own rules. Move from a 0% state to a 13.3% state and a chunk of every paycheck simply disappears into state coffers. Over a multi-year stay, that difference funds a down payment.
The no-income-tax states
Nine states levy no state income tax at all:
- Texas, Washington, Florida, Nevada, Tennessee, South Dakota, Wyoming, Alaska, New Hampshire.
Several are major tech employers — Texas (Austin, Dallas) and Washington (Seattle) are the standouts for H-1B engineers. Earning a big-tech salary in a 0% state is the most tax-efficient combination available.
The high-tax states
| State | Top state income tax (approx.) | Tech hub |
|---|---|---|
| California | 13.3% | SF Bay Area, LA |
| New York | ~10.9% (+ NYC city tax) | New York City |
| New Jersey | ~10.75% | NYC metro |
| Oregon | ~9.9% | Portland |
| Texas | 0% | Austin, Dallas |
| Washington | 0% | Seattle |
California and New York combine the highest rates with the highest housing costs — though they also host the highest salaries, which can offset the bite.
A take-home illustration
On a $160,000 salary, the difference between a 0% state and California's marginal rates can mean $10,000+ more in your pocket annually in the no-tax state — money you could redirect into your 401(k), an IRA, or a home down payment.
But don't optimize for tax alone
A low tax rate is only one input. Consider the whole picture:
- Housing: the Bay Area and NYC are far costlier than Austin or Dallas — often dwarfing the tax difference.
- Other taxes: no-income-tax states frequently have higher property or sales taxes (Texas property taxes are notably high).
- Salaries: tech pay in high-tax hubs is often higher, partially compensating.
- Career: the density of opportunities in a hub can matter more than tax in the long run.
The right question isn't "lowest tax?" but "best net financial outcome and career trajectory?"
Remote work doesn't auto-change your tax state. You're taxed based on your domicile and where you physically work. Living in a no-tax state while your employer is elsewhere can create multi-state filing questions — and a few states aggressively tax remote workers tied to an in-state employer. Confirm your situation before assuming you've escaped state tax.
Frequently asked questions
Which states have no income tax for tech workers?
Texas, Washington, Florida, Nevada, Tennessee, South Dakota, Wyoming, Alaska, and New Hampshire. Texas and Washington are the major tech employers among them.
How much can I save by living in a no-tax state?
On a typical tech salary, $10,000 or more per year compared with California — though higher property/sales taxes and cost of living can offset part of that.
Does federal tax change by state?
No. Federal income tax is identical in every state. Only state (and sometimes city) income tax varies.
If I work remotely, am I taxed where I live?
Generally you're taxed based on your domicile and where you physically work, but some states tax remote workers tied to an in-state employer. Multi-state situations can require careful filing.
The bottom line
State income tax is the quiet multiplier on your salary — 0% in Texas or Washington, 13.3% in California — and it can swing your take-home by five figures a year. But the smartest choice weighs the full picture: housing, other taxes, salary levels, and career density, not the tax rate in isolation. Run the net numbers for each offer, mind the remote-work domicile rules, and let the savings flow into building wealth rather than just lowering a tax line.