Income State Tax Rates
State income tax is collected by each state on salary, wages, tips, interest, dividends and other forms of income. The rate at which each state taxes income varies, with 7 states not collecting income tax at all: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Additionally, some states charge a county and city tax.
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Function
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State income taxes are used to fund education, roads, public buildings, and health and human services, and to implement state and local programs.
Types
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Of the 43 states that collect state income tax, 34 have a progressive income tax rate, meaning the more you earn, the more you pay, and 7 have a flat income tax rate where everyone is taxed the same.
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Considerations
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New York has a state and city tax, which can significantly affect the amount you pay in state income tax.
Misconceptions
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When considering a move, don't assume that a state that does not collect income tax will be easier on your pocketbook. Washington State, which does not have a state income tax, boasts one of the highest sales tax rates in the United States at 9 percent.
Fun Fact
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California has the highest state income tax at 10.3 percent, and Illinois has the lowest state income tax at 3 percent.
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