The accuracy of the neural code depends on the relative embedding of signal and noise in the activity of neural populations. Despite a wealth of theoretical work on population codes, there are few empirical characterizations of the high-dimensional signal and noise subspaces. We studied the geometry of population codes in the rat auditory cortex across brain states along the activation-inactivation continuum, using sounds varying in difference and mean level across the ears. As the cortex becomes more activated, single-hemisphere populations go from preferring contralateral loud sounds to a symmetric preference across lateralizations and intensities, gain-modulation effectively disappears, and the signal and noise subspaces become approximately orthogonal to each other and to the direction corresponding to global activity modulations. Level-invariant decoding of sound lateralization also becomes possible in the active state. Our results provide an empirical foundation for the geometry and state-dependence of cortical population codes.