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Do All States Have a State Income Tax?

Nicole Madison
By
Updated: May 16, 2024

In the United States, each state has the right to levy its own income tax. Some states choose to charge an income tax, while others do not. The states that do not charge state income tax are Alaska, Nevada, South Dakota, Washington, Texas, Wyoming, and Florida. All other states impose some sort of income tax. However, taxation amounts vary with each state.

In some states, income tax is not charged to individuals, but corporations are subject to state taxes; Alaska, is one example. However, this state does levy a corporate income tax. Likewise, Florida does not tax individuals, but does tax corporations. New Hampshire and Tennessee do charge a state income tax, but limit it to the taxation of interest and dividends.

The amount of income tax an individual is required to pay depends on where he or she lives. In 2006, Vermont had the highest state income tax, charging more than 9% to its residents. Illinois had the lowest in that same year, charging just 3%. While Illinois levies a flat-rate income tax, many states charge a progressive rate. This means individuals with higher incomes are taxed at a higher rate.

Typically, individuals are responsible for paying not just state income tax, but also federal taxes. The combination of both taxes can add up to quite a hefty sum. For example, if the maximum federal income tax is 35% and a person is required to pay 9% to the sate, he could have to pay up to 44% of his income in taxes. On the other hand, a person living in Texas would have to pay no more that 35%, as that state doesn’t have its own income tax. It is worth noting, however, that state income tax is deductible on the federal level.

Besides federal and state income tax, some cities also levy income taxes on their residents. For example, New York City residents are subject to state and city income tax, as well as federal income tax. This can add up to a considerable amount of taxation. However, some people live in places free of both city and state income tax, such as Miami, Florida, leaving them to pay at the federal level only.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Nicole Madison
By Nicole Madison
Nicole Madison's love for learning inspires her work as a SmartCapitalMind writer, where she focuses on topics like homeschooling, parenting, health, science, and business. Her passion for knowledge is evident in the well-researched and informative articles she authors. As a mother of four, Nicole balances work with quality family time activities such as reading, camping, and beach trips.
Discussion Comments
By icecream17 — On Jul 15, 2010

Sneakers41- Wow that’s a lot of taxes. Here in Florida we don’t have anything like that. No state income tax and definitely no city tax. The state relies primarily on a sales tax and the revenue derived from tourism.

The tourists of Florida really make it possible for the residents to enjoy such low taxes. If tourism were not a factor, I don’t know what the taxes would be like.

The low taxes also draw many celebrities to Florida. Money guru Suze Orman even owns property here in South Florida as well.

By sneakers41 — On Jul 15, 2010

Great article- I just want to explain that on top of the state income tax levied to New York State residents, those living in New York City are faced with an additional city tax.

The city charges married couples 2.9% of their income for those with a joint income of $21,600 or less and 3.5% of incomes higher than 21,600, but lower than $90,000. Those households earning beyond $90,000 pay 3.64% of their income in city taxes.

Unmarried individuals are subjected to the 2.9% tax if earned income is $12,000 or less. From over $12,000 up to $25,000 the tax rate rises to 3.53% and from incomes of over $25,000 to $50,000 the rate rises slightly to 3.59%. Lastly for incomes higher than $50,000, the tax rate rises to 3.6%.

This is only the city tax for New York City residents. People commuting into New York City for work are subjected to a commuter’s tax. Commuters must file an 1127 form and pay the same amount of city tax that a New York City resident does.

Nicole Madison
Nicole Madison
Nicole Madison's love for learning inspires her work as a SmartCapitalMind writer, where she focuses on topics like...
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