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State income tax · checked October 14, 2026
Does your state tax tips and overtime?
For 2026, tips escape state income tax in 21 of the 51 (50 states and D.C.) and overtime in 18. Everywhere else the state taxes them, or gives a smaller break of its own. The federal deductions for tips and overtime only cut federal income tax; each state decides whether to follow.
No wage income tax (9)
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
Follow both for 2026 (9)
Arizona, District of Columbia, Idaho, Indiana, Iowa, Michigan, Montana, North Dakota, Oregon
Tips only for 2026 (3)
Colorado, Hawaii, New York. Overtime stays taxable.
Own smaller break (2)
Alabama (up to $1,000 of overtime) and Georgia (up to $1,750 of cash tips and $1,750 of overtime), 2026–2028.
The other 28 tax tips and overtime in full on 2026 returns.
Every state, 2025 and 2026 returns
| State | Tips 2025 | Overtime 2025 | Tips 2026 | Overtime 2026 |
|---|---|---|---|---|
| Alabama | Taxed | Own smaller break | Taxed | Own smaller break |
| Alaska | No wage tax | No wage tax | No wage tax | No wage tax |
| Arizona | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) |
| Arkansas | Taxed | Taxed | Taxed | Taxed |
| California | Taxed | Taxed | Taxed | Taxed |
| Colorado | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) | Taxed |
| Connecticut | Taxed | Taxed | Taxed | Taxed |
| Delaware | Taxed | Taxed | Taxed | Taxed |
| District of Columbia | Taxed | Taxed | Not taxed (follows federal) | Not taxed (follows federal) |
| Florida | No wage tax | No wage tax | No wage tax | No wage tax |
| Georgia | Taxed | Taxed | Own smaller break | Own smaller break |
| Hawaii | Taxed | Taxed | Not taxed (follows federal) | Taxed |
| Idaho | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) |
| Illinois | Taxed | Taxed | Taxed | Taxed |
| Indiana | Taxed | Taxed | Not taxed (follows federal) | Not taxed (follows federal) |
| Iowa | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) |
| Kansas | Taxed | Taxed | Taxed | Taxed |
| Kentucky | Taxed | Taxed | Taxed | Taxed |
| Louisiana | Taxed | Taxed | Taxed | Taxed |
| Maine | Taxed | Taxed | Taxed | Taxed |
| Maryland | Taxed | Taxed | Taxed | Taxed |
| Massachusetts | Taxed | Taxed | Taxed | Taxed |
| Michigan | Taxed | Taxed | Not taxed (follows federal) | Not taxed (follows federal) |
| Minnesota | Taxed | Taxed | Taxed | Taxed |
| Mississippi | Taxed | Taxed | Taxed | Taxed |
| Missouri | Taxed | Taxed | Taxed | Taxed |
| Montana | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) |
| Nebraska | Taxed | Taxed | Taxed | Taxed |
| Nevada | No wage tax | No wage tax | No wage tax | No wage tax |
| New Hampshire | No wage tax | No wage tax | No wage tax | No wage tax |
| New Jersey | Taxed | Taxed | Taxed | Taxed |
| New Mexico | Taxed | Taxed | Taxed | Taxed |
| New York | Taxed | Taxed | Not taxed (follows federal) | Taxed |
| North Carolina | Taxed | Taxed | Taxed | Taxed |
| North Dakota | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) |
| Ohio | Taxed | Taxed | Taxed | Taxed |
| Oklahoma | Taxed | Taxed | Taxed | Taxed |
| Oregon | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) | Not taxed (follows federal) |
| Pennsylvania | Taxed | Taxed | Taxed | Taxed |
| Rhode Island | Taxed | Taxed | Taxed | Taxed |
| South Carolina | Taxed | Taxed | Taxed | Taxed |
| South Dakota | No wage tax | No wage tax | No wage tax | No wage tax |
| Tennessee | No wage tax | No wage tax | No wage tax | No wage tax |
| Texas | No wage tax | No wage tax | No wage tax | No wage tax |
| Utah | Taxed | Taxed | Taxed | Taxed |
| Vermont | Taxed | Taxed | Taxed | Taxed |
| Virginia | Taxed | Taxed | Taxed | Taxed |
| Washington | No wage tax | No wage tax | No wage tax | No wage tax |
| West Virginia | Taxed | Taxed | Taxed | Taxed |
| Wisconsin | Taxed | Taxed | Taxed | Taxed |
| Wyoming | No wage tax | No wage tax | No wage tax | No wage tax |
“Not taxed (follows federal)” means the state lets you subtract the amount you deducted on federal Schedule 1-A, at the federal limits. Alabama’s 2025 overtime entry is its own older rule for overtime earned January 1 through June 30, 2025. Local income taxes (cities, counties, school districts) are not covered here. Each state page links the official source.
Why most states still tax them
The federal deductions sit on Schedule 1-A and reduce taxable income, not adjusted gross income. Most state returns start from federal AGI, so the deductions don’t reach them unless the legislature passes a matching subtraction, as Michigan, Indiana, New York, and Georgia did. A handful of states (Colorado, Iowa, Montana, North Dakota, Oregon) start from federal taxable income, so the deductions flow through unless the state adds them back, which Colorado now does for overtime.
These rules are still moving. Several states have bills pending, and 2026 state forms aren’t all out. We recheck the official sources and update this table when a state changes.
Questions
Does no tax on tips apply to state taxes?
Not automatically. The federal tips and overtime deductions only lower federal income tax. As of October 14, 2026, 9 states have no wage income tax, 12 more (including D.C.) let you subtract the federal tips deduction on 2026 returns, 2 have their own smaller break, and the other 28 tax tips and overtime in full.
Which states don't tax overtime in 2026?
The 9 states with no wage income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming), plus Arizona, District of Columbia, Idaho, Indiana, Iowa, Michigan, Montana, North Dakota, Oregon, which follow the federal overtime deduction for 2026. Alabama and Georgia have their own capped overtime breaks ($1,000 and $1,750).
Which states followed the federal deductions on 2025 returns?
Arizona, Colorado, Idaho, Iowa, Montana, North Dakota, Oregon allowed both on 2025 returns. Michigan, Indiana, New York (tips), Hawaii (tips), and D.C. start with 2026.
Why doesn't my state follow the federal deduction?
The deductions are taken after adjusted gross income, on Schedule 1-A. Most states start their return from federal AGI, so the deductions never reach them unless the legislature adds a matching subtraction. A few states start from federal taxable income, so the deductions flow through unless the state adds them back.
Is my tip or overtime still subject to payroll tax?
Yes, everywhere. Neither the federal deductions nor any state rule changes social security and Medicare tax on tips or overtime.