This article is for employers and employees who need to understand state income tax (SIT) withholding in Gusto.
State income tax (SIT) is money we withhold from each employee’s paycheck and send to the state. We base this on the state where the employee works, and sometimes where they live. Other factors also affect the amount, like how often the company pays the employee and what benefits they have.
We withhold and pay state income tax on behalf of our customers.
Bonus payments are sometimes taxed at a higher rate
When a company runs an extra payroll:
State withholding tax defaults to the state’s “supplemental rate” if it has one (see table).
If not, we use our standard calculation method.
Federal withholding tax defaults to 22% (this is the federal supplemental rate).
If the bonus is over $1 million, the rate is higher.
Expand the sections to learn more. To search for words on this page, press CMD + F (Mac) or CTRL + F (Windows).
To understand our state income tax calculations, use the state’s withholding guide in the table to work through the full calculation yourself.
Some states use a flat rate for calculations, and others use more complex formulas:
Flat rate
States assign one or more tax rates. We multiply these rates by a team member’s taxable wages.
Determining which wages are taxable for a given tax may take more research.
Formulas (also called the Percentage Method or Exact Calculation)
States outline a formula and provide related tables for tax calculations.
We use the Percentage Method formula to calculate state income taxes unless only a flat rate applies.
We follow state rules using:
Where the employee works and lives
Tax info the employee entered in Gusto
State tax tables and formulas
Any extra withholding the employee requested
Pay schedule and gross wages
Marital status, benefits, and allowances
We use the Percentage Method formula to calculate state income taxes (SIT) unless only a flat rate applies.
Last updated May 6, 2025
State withholding guide
Method used to calculate SIT
(Formula or Flat)
Supplemental rate for bonus payments
(If available)
Formula
5%
Alaska
No state income tax
No state income tax
Flat
No supplemental rate
Formula
3.9%
Formula
6.6–10.23%
Flat
No supplemental rate
Formula
No supplemental rate
Formula
No supplemental rate
Formula
No supplemental rate
Florida
No state income tax
No state income tax
Flat
No supplemental rate
Formula
No supplemental rate
Flat
5.695%
Flat
No supplemental rate
Flat
3%
Formula
6%
Formula
5%
Flat
No supplemental rate
Flat
No supplemental rate
Formula
5%
Formula
No supplemental rate
Flat
No supplemental rate
Flat
No supplemental rate
Formula
6.25%
Flat
No supplemental rate
Formula
4.7%
Formula
5%
Formula
5%
Nevada
No state income tax
No state income tax
New Hampshire
No state income tax
No state income tax
Formula
No supplemental rate
Formula
5.9%
Formula
11.7%
Flat
4.35%
Formula
1.5%
Formula
For 2025: 3.5%
For 2026: 2.75%
Formula
4.75%
Formula
8%
Flat
No supplemental rate
Formula
5.99%
Formula
6.2%
South Dakota
No state income tax
No state income tax
Tennessee
No state income tax
No state income tax
Texas
No state income tax
No state income tax
Flat
No supplemental rate
-
6.6% for bonuses ≤$1M (this is 30% of the federal rate)
11.1% for bonuses >$1M
-
5.75%
Washington
No state income tax
No state income tax
Formula
2.2–4.82%
Formula
Depends on an employee’s gross salary—the supplemental percentage will be one of the following:
3.54%
4.65%
5.3%
7.65%
Wyoming
No state income tax
No state income tax
Employees can view their state tax settings in their Gusto profile at any time.
To view state tax info:
Go to My Profile.
Under Additional, click Taxes.
Scroll to the state. This shows:
Filing status
Withholding allowance
Any extra withholding amounts