December 15, 2025
Written by Catherine Hiles
Certified Financial Education Instructor®
Certified Financial Education Instructor®
Catherine Hiles, CFEI®, originally hails from the U.K. and currently resides in Ohio, where she writes about finance, parenting, pets, home improvement, and more. In her spare time, Catherine enjoys running, reading, and hanging out with her husband, two young children, and energetic dog.
If you overpay your state income taxes, you'll receive a refund after filing your tax return.
You might receive a refund if you fill out your tax forms incorrectly, intentionally over-withhold, or fail to update your withholdings after a major life event
Nine states don't have an income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
When you consider the taxes you pay, it might feel like everyone has a hand in the pot – federal, state, and local authorities all collect taxes.
The federal government taxes your earnings, and most states (and some localities) have additional income taxes.
But, unlike the one-size-fits-all federal tax, state income tax policies vary widely. Every state has different rates, rules, and tax deductions, so it's tough to know how much you should pay through estimated payments or withholdings from your paychecks.
Fortunately, if you overpay your state income taxes, states will refund that overpayment, offering a state tax refund. Other states spare you the hassle entirely by forgoing income tax altogether.
Free Online Tax Filing: File 100% for free, max out your tax refund guaranteed1, and get your federal tax refund up to 5 days early2 when you direct deposit it with Chime.
If you've ever filed a tax return and received money back, you've experienced the joy of a tax refund. But what exactly is a state tax refund, and why do you get it?
A state tax refund is money returned to you by your state's tax authority. This happens when, over the year, you pay more in state income taxes – whether through paycheck withholdings, estimated payments, or other credits – than you ultimately owe. The state sends the extra money you paid back to you after you file your tax return.
A refund doesn't mean you make money from the state; it just means you get back what was rightfully yours.
Getting a refund check might feel like a victory, but it's actually the result of specific circumstances or decisions throughout the year. You may receive a refund due to how you manage your tax withholdings or estimated payments. Here are some common reasons why you might find yourself with a state tax refund:
Mistakes on your state withholding form. Each state that has a state income tax has a withholding form that helps employers know how much tax to withhold. If you fill it out incorrectly, you might pay more than necessary.
Intentional over-withholding. Maybe you prefer to withhold more throughout the year or pay extra in quarterly estimated payments to ensure you'll receive a larger refund amount when you file your tax return.
Not updating your withholding after a life change. Big changes like getting married, having a child, changing jobs, or buying a home can change your tax obligations. Forgetting to adjust your withholding can lead to overpayment.
Refundable tax credits. Some tax credits are "refundable," meaning you can receive a refund if they reduce your tax bill to zero.
If the state owes you a refund, it's tough to know when it will arrive. Usually, electronically filing your tax return and getting your requested refund via direct deposit is the fastest way to get your refund.
Your state's Department of Revenue may have a "Where's my refund?" tool available on its website. Search for your state's website to find out how to check your state refund status.
Not all states even charge a state income tax. A few skip income taxes entirely, although it's worth noting that they often rely on other revenue sources, like sales and property taxes, to balance the budget. Let's take a look at these no-income-tax states and how they collect taxes.
Alaska doesn't have a state income tax. Only 15 of the 19 boroughs (Alaska's version of counties) levy a property tax, and sales tax rates throughout the state range from 1% to 7%.3 The state's revenue mainly comes from oil and natural resource industries, which means residents get to keep more of their income.
Florida has a general state sales tax rate of 6%, but many counties can add a discretionary sales surtax to that rate.4 Its tourism-driven economy means tourists pitch in a lot of its sales and excise tax collections. Therefore, Florida does not have an income tax.5
Nevada is another state that relies heavily on tourism and hospitality to forgo individual income taxes.6 It has a base sales tax rate of 6.85%, although cities and counties within the state can add additional taxes to that rate.7
New Hampshire doesn't tax W-2 income. Until recently, the state did tax income from dividends and interest, but that was repealed for the 2025 tax year.8 The state also doesn't have a sales tax.9
South Dakota has no income tax and a base sales and use tax rate of 4.2%.10,11 Municipalities may add an additional 2% to the statewide rate.11 The state supports its economy primarily through property and sales taxes.
Tennessee has no income tax. The general state tax rate is 7%, though this can vary by county or city.12,13
Texas has a state tax burden of 6.25%, though local jurisdictions can impose an additional 2% for a total of 8.25%.14 Without an income tax, the state relies on a blend of property and sales taxes.
Washington doesn't have a state income tax for individuals or corporations.15 However, the state imposes a 7% capital gains tax on high earners.16
Wyoming has no state income tax and instead relies on mineral income.17 The state imposes a 4% sales tax, and residents pay an average combined state and local tax rate of 5.44%.18
Unless you live in one of the states without a state income tax, it can be tough to figure out how much you should ask your employer to withhold from your paycheck or send in for quarterly estimated payments.
Some states have a flat tax rate, while others have a progressive tax system with different tax brackets for different income levels. Plus, state-specific tax deductions and tax credits can reduce the amount you owe.
Familiarize yourself with your state's tax laws or consult a tax professional who can help you plan for your state tax burden.
But remember, even if you pay too much, the state will return any overpayment or, if you prefer, apply your overpayment to next year's tax bill.
Whether you're in a high-tax state and looking forward to a hefty refund or a no-income-tax haven where you keep a bit more each paycheck, knowing where your state stands can make a real difference in your tax planning throughout the year.
If you're ready to file your tax return, check out our guide on how to file taxes for the first time.
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