There isn't one single answer as "highest taxes" depends on the type of tax, but California, Hawaii, and New York consistently rank high for state income taxes, while Hawaii often leads in overall tax burden, with Illinois sometimes topping combined state/local taxes, all alongside the federal tax system. High-income earners in these states face steep marginal rates (e.g., California's 13.3%).
High-Income Taxpayers Paid the Majority of Federal Income Taxes. In 2022, the bottom half of taxpayers earned 11.5 percent of total AGI and paid 3 percent of all federal individual income taxes. The top 1 percent earned 22.4 percent of total AGI and paid 40.4 percent of all federal income taxes.
The top 10 percent of income earners pay more than 60 percent of all federal taxes and 72 percent of income taxes, shares that have been increasing over time.
Elon has paid the single largest individual income tax in the history of the United States but he's the enemy. Elon has earned it. He has provided jobs and opportunities to tens of thousands of people. He made it legally.
States With the Highest Income Taxes
The states with the highest marginal tax rates include California, Hawaii, New York and the District of Columbia. Here are the states with the top 10 marginal tax rates in the U.S. in 2025: California (13.3%) Hawaii (11%)
Elon Musk paid $11 billion in taxes in 2021, because when you exercise stock options you're taxed on the gain. The median income tax paid in is $22000 per year per taxpayer. At $22,000, it would take 500,000 years to pay in what Elon paid in one year.
Before the Trump tax cuts (Tax Cuts and Jobs Act of 2017 - TCJA), individual income tax rates ranged from 10%, 15%, 25%, 28%, 33%, 35%, up to a top rate of 39.6%, with different income brackets for single and married filers, while the top corporate tax rate was 35%, significantly higher than the post-TCJA 21% rate. The TCJA maintained seven brackets but adjusted rates and income thresholds, alongside major changes to deductions, credits, and the corporate tax structure, notes this Tax Foundation article.
The IRS $600 rule refers to a change in reporting requirements for third-party payment apps (like Venmo, PayPal) for taxable income from goods and services, where platforms must send a Form 1099-K if you receive over $600 in a year, intended to capture gig economy/side hustle income, though delays and phased implementation have adjusted the timeline, with current rules for 2024 using a higher threshold ($5,000) before fully phasing to $600 for future years, but remember all taxable income, regardless of form, must always be reported.
Additional information: Bezos paid zero federal income taxes in both 2007 and 2011. From 2006 to 2018, when Bezos' wealth increased by $127 billion, he reported a total of $6.5 billion in income. He paid $1.4 billion in personal federal taxes, a true tax rate of 1.1%.
States with lowest income tax, excluding no income tax states
In some years, billionaires such as Jeff Bezos, Elon Musk and George Soros paid no federal income taxes at all. Billionaires avoid these taxes by taking out special ultra-low-interest loans available only to them and using their assets as collateral.
There are several ways to reduce tax bills and pay no taxes legally, and one of the easiest ways is to take full advantage of a self-employment tax deduction scheme. In the US, this deduction allows you to deduct a portion of your self-employed income from your taxable profit, provided there are allowable expenses.
Nine U.S. states levy no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Sales, property, and excise taxes can be higher in states with no income tax as a trade-off to fund important government services.
Nine U.S. states have 0% personal income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, though Washington does have a capital gains tax, and New Hampshire recently phased out its interest/dividend tax. These states offset the lost revenue through other taxes like sales or property taxes, meaning a lower income tax doesn't always mean a lower overall tax burden.
Unemployment compensation generally is taxable. Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.
In 2021, Elon Musk set a record by paying an estimated $10–11 billion in taxes—the largest single-year tax payment ever made by an individual. The staggering bill came after he exercised about 23 million Tesla stock options awarded back in 2012 that were nearing expiration.
Small businesses have a turnover of between 10 Million UGX and 150 Million UGX. They can have a number of employees between 5 to 49 employees. The taxpayer who falls under this criteria is referred to as a presumptive taxpayer.