In the ever-evolving landscape of American fiscal policy, 2025 has arrived with a clear message: where you live significantly dictates how much of your wealth stays in your pocket. As states grapple with post-pandemic economic shifts and fluctuating federal support, a new “millionaire tax map” has emerged.2 While some states are doubling down on progressive taxation to fund social infrastructure, others are aggressively cutting rates to attract high-net-worth individuals. Understanding this geographic tax divide is essential for anyone navigating the complexities of high-level wealth management in the current year.
The High-Tax Titans: Where Millionaires Pay Most
For 2025, a handful of states continue to lead the nation with double-digit tax rates specifically targeting the wealthy. California remains the undisputed heavyweight, maintaining a top marginal rate of 13.3% for those earning over $1 million.3 When you factor in the additional 1% mental health services surcharge, the total bite for California’s top earners effectively reaches 14.3%.4 Close behind is New York, where the state rate of 10.9% can be further compounded by New York City’s local income taxes, potentially pushing the total liability above 14% for residents of the Big Apple.5
Surcharges and “Millionaire Taxes” on the Rise
Beyond standard brackets, several states have implemented specific “wealth surtaxes” that trigger once an individual’s income crosses the seven-figure mark.6 Massachusetts, formerly known for its flat-tax simplicity, now enforces a 4% surtax on annual income exceeding approximately $1.05 million, effectively bringing the rate for millionaires to 9%.7 Similarly, New Jersey maintains a robust 10.75% rate on income over $1 million.8 These measures are often marketed as “fair share” amendments, designed to redistribute wealth into public sectors like education and transportation.
2025 Comparison of Top State Income Tax Rates
| State | Top Marginal Rate | Threshold for Top Rate | Special Surcharges |
| California | 13.3% | Over $1,000,000 | +1% Mental Health Tax |
| New York | 10.9% | Over $25,000,000 | Local NYC taxes apply |
| New Jersey | 10.75% | Over $1,000,000 | N/A |
| Hawaii | 11.0% | Over $400,000 (Joint) | N/A |
| Massachusetts | 9.0% | Over $1,000,000 | Includes 4% surtax |
| Oregon | 9.9% | Over $250,000 (Joint) | No State Sales Tax |
| Minnesota | 9.85% | Over $321,450 (Joint) | N/A |
The Growing Divide: States Cutting Taxes
Conversely, 2025 has seen a significant movement toward tax reduction in the Midwest and South.10 States like Mississippi, Oklahoma, and Kansas have recently approved substantial tax cuts for their highest earners.11 In Mississippi, the drive to eventually eliminate personal income tax altogether has resulted in an average annual saving of over $130,000 for resident millionaires.12 These states are betting on “supply-side” economics, hoping that lower tax burdens will prevent “wealth flight” and encourage billionaires to relocate from high-tax jurisdictions like Illinois or New Jersey.
No-Tax Havens and the Migration of Wealth
The “Zero-Tax” states continue to be the primary beneficiaries of high-earner migration in 2025. Florida, Texas, Nevada, and Washington (which lacks an earned income tax but maintains a capital gains tax) remain the most attractive destinations for the ultra-wealthy. Florida, in particular, has seen its billionaire population more than double over the last decade.13 The lack of a state-level income tax, combined with favorable weather and business-friendly regulations, has created a “Sunbelt Surge” that shows no signs of slowing down as we move through the middle of the decade.
Why Location Matters More Than Ever
The disparity between a 14.3% tax in California and 0% in Florida represents a massive delta for someone earning $5 million annually. In 2025, this gap is being used by tax planners not just for income protection, but for estate and legacy planning. High-tax states argue that their rates provide superior public services and innovation hubs, while low-tax states emphasize personal liberty and capital growth. This “laboratory of the states” experiment is at its peak in 2025, forcing millionaires to choose between the cultural and economic draws of the coasts or the fiscal advantages of the South and Interior.
Future Outlook and Legislative Trends
Looking ahead to 2026, the battle over millionaire taxes is likely to intensify. Washington state’s leadership has recently signaled interest in a formal millionaire tax to fund school infrastructure, potentially ending its “no-income-tax” status for the ultra-wealthy.14 Meanwhile, Maryland is adjusting its code to ensure the top 1% carries more of the state’s fiscal burden. As political polarization increases, the geographic map of American wealth will continue to shift, with “tax-friendly” and “tax-heavy” states moving further apart in their approach to fiscal equity.
FAQs
Q1: Which state has the absolute highest tax for millionaires in 2025?
California holds the highest effective marginal rate, reaching up to 14.3% when the 13.3% top bracket is combined with the 1% Mental Health Services Act tax for income over $1 million.15
Q2: Are there states with no income tax at all?
Yes, several states do not levy a personal income tax, including Florida, Texas, Nevada, Wyoming, South Dakota, Alaska, and Tennessee.16 Washington also has no tax on earned wages, though it taxes certain capital gains.17
Q3: What is a “Millionaire Surtax”?
A surtax is an additional tax added on top of the standard state income tax rate once a taxpayer’s income exceeds a specific threshold (usually $1 million).18 Massachusetts is a primary example, adding a 4% surtax to its base 5% rate.19
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