What Are State Income Taxes

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Which States Don’t Have Income Tax

Gov. Kemp signs $140 million GA income tax cut

Eight statesAlaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyominglevy no state income tax whatsoever. New Hampshire, which currently taxes investment income and interest but not earned wages, is set to join this list in 2027 once it phases out taxation on unearned income.

Notification Of Local Rate Change To Comptroller

Pursuant to Annotated Code of Maryland, Tax-General Article § 10-106, a county must provide notice of a county income tax rate change to the Comptroller on or before July 1 prior to the effective date of the rate change.

To give notice of a county income tax rate change, you must submit a certified copy of the County Council passed ordinance or bill on or before the deadline required by law.

You should mail your notice to:

You should also cc Andrew Schaufele and Wayne Green at:

Annapolis, MD 21404-1829

Resources for Local Governments Regarding Local Income Tax Requirements

  • Local Income Tax Distribution Archive – County by county and city by town distributions of local income tax. Also included in the distribution of local income tax revenue are comparisons of delinquent distributions and fiduciary distributions by county, and by municipality.
  • Local Income Tax Rate Changes – Instructions on how to notify the State of Maryland Comptroller’s Office of changes to local income tax rates by counties
  • Local Tax Rates: A chart depicting each county and the City of Baltimore’s local income tax rates.
  • Income Tax Summary Report Archive – This summary report is an analysis of Maryland resident and nonresident personal income tax returns filed for a given calendar year.

See the Legislative Summaries below and then choose the year of legislation.

State And Local Personal Property Taxes

Deductible personal property taxes are those based only on the value of personal property such as a boat or car. The tax must be charged to you on a yearly basis, even if it’s collected more than once a year or less than once a year.

Some taxes and fees you can’t deduct on Schedule A include federal income taxes, social security taxes, transfer taxes on the sale of property, homeowner’s association fees, estate and inheritance taxes, and service charges for water, sewer, or trash collection. Refer to the Instructions for Schedule A and Publication 17 for more taxes you can’t deduct.

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Working And Living In Different States

Most taxpayers live and work in a single state and file a resident state income tax return there. However, taxpayers who earn wages or income in one or more states other than where they live may be required to file state income tax returns in those states as wellunless, of course, a state is a no-income-tax state.

So, for example, if you are an actor living in Jersey City, N.J., and you work on Broadway in New York City, do TV or movies in Los Angeles, and book a regional theater gig in Chicago, then you are required to pay taxes in the states of New Jersey, New York, California, and Illinois.

Your tax home is the general area of your main place of business. If you spend most of your time working on Broadway, then your tax home would be New York. According to the IRS, to determine your main place of business, you must take into account the length of time you spend in the location, the degree of business activity occurring in the location, and the relative significance of the financial return from each location. However, the most important factor is the length of time that you spend in each location.

Depending upon the residency rules of the home state, expats may also still have a state filing requirement.

Total Tax Burden: 684%

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New Hampshire does not tax earned income but does tax dividends and interest. New Hampshires Senate passed legislation to phase out the investment income tax by 1% per year over five years, with full implementation by 2027. The state has no state sales tax but does levy excise taxes, including taxes on alcohol, and its average property tax rate of 1.86% of property values is the third highest in the country.

Even so, New Hampshires total tax burden is just 6.84%, according to WalletHub, ranking the state fifth in the nation. The state ranks fourth on the U.S. News & World Report list of Best States to Live In and 38th in the nation for affordability.

Although New Hampshire spent more on education than any other state on this list at $17,462 per pupil in 2019, its outlay was among the lowest in the northeastern region of the U.S. Additionally, in 2015 it earned a grade of D from the Education Law Center for its school funding distribution.

New Hampshire received a marginally better grade of C- for its infrastructure in 2017. At $9,589 per capita in 2014, its healthcare spending is the ninth highest in the nation.

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States With No Income Taxes

Just because you dont pay state income taxes doesnt mean you dont pay anything. Many of these states raise money in other ways, like sales taxes, property taxes and excise taxes on things like gasoline. But still, its a pretty sweet deal to be off the hook for income taxes.

New Hampshire is a little bit of a gray area. While it doesnt have an income tax on earned income, it does tax interest and dividend income at a rate of 5% on amounts over $2,400 a year .1 But good news: New Hampshire is phasing out the tax by 1% a year beginning in 2023.2

If you dont live in a state without income taxes or are planning to move to a new state, keep reading . . .

State Individual Income Tax Rates And Brackets

U.S. Census Bureau, 2020 State Government Tax Tables, Fiscal Year 2020,

See Jared Walczak, Inflation Adjusting State Tax Codes: A Primer, Tax Foundation, Oct. 29, 2019, .

S.B. 1828, 55th Leg., First Reg. Sess. , .

Howard Fischer, Court Rules Prop 208 Surcharge Can Stay For Now, Arizona Capitol Times, Aug. 19, 2021, .

Fann v. Arizona, 493 P.3d 246 .

H.B. 2838, 55th Leg., First Reg. Sess. .

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Total Tax Burden: 737%

Like many states with no income tax, South Dakota rakes in revenue through other forms of taxation, including taxes on cigarettes and alcohol. The home of the Lakota Sioux and the Black Hills has one of the highest sales tax rates in the country and above-average property tax rates. South Dakotas position as home to several major companies in the credit card industry, in addition to higher property and sales tax rates, helps to keep the states residents free from income tax, according to reporting by The Atlantic.

South Dakotans pay just 7.37% of their personal income in taxes, according to WalletHub, ranking the state eighth in terms of the total tax burden. The state ranks 14th in affordability and 15th on the U.S. News& World Report Best States lists.

South Dakota spent $8,933 per capita on healthcare in 2014, the 14th highest in the nation. Although it spent more money on education, at $10,139 per pupil in 2019, it spent less than any other neighboring Midwestern state. Additionally, it received a grade of F for its school funding distribution.

South Dakota hasnt received an official letter grade from the ASCE, though much of its infrastructure is notably deteriorated, with 17% of bridges rated structurally deficient and 90 dams considered to have high hazard potential.

About Tax Progressivity And Virginia’s Individual Income Tax

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A progressive tax is one in which the share of income paid in taxes rises along with income. Under a progressive tax, higher income filers pay a higher percentage of their income in taxes than lower income filers. Virginias individual income tax consists of four in-come brackets, with gradually higher rates assessed in each bracket. In recent years, more than four million individual income tax returns have been filed annually in Virginia. Revenue from the individual income tax is by far the largest source of state general fund revenue.

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Millions In State Tax Refunds Heading To Unclaimed Property If Taxpayers Dont Claim Themcontinue Reading

BATON ROUGE Louisiana taxpayers have until Oct. 6, 2022, to claim millions of dollars in state income tax refunds before they become unclaimed property.

The Louisiana Department of Revenue sent letters to 20,400 individual and business taxpayers advising them to claim their refunds before they are transferred by law to the Unclaimed Property Division of the state treasurers office. More than $36 million in unclaimed refunds is due for transfer if not claimed from LDR.

To claim a refund, complete and return to LDR the voucher in the Notice of Unclaimed Property letter dated Aug. 18, 2022. The department will issue paper checks to all taxpayers submitting completed vouchers by the Oct. 6 deadline.

Any refund not claimed by the deadline remains the property of the taxpayer, and can be retrieved from the Unclaimed Property Division.

Three Arrested On Charges Of Defrauding State Disaster Relief Programcontinue Reading

BATON ROUGE Three Louisiana residents face felony charges after allegedly defrauding a state program that offers sales tax refunds on personal property destroyed in a natural disaster.

Based on a Presidential declaration, citizens can apply for a refund of sales tax they paid on items lost during a declared disaster.

Starr Carbo, Johnnie Mae Ricard and Erica Williams, all of Westwego, are charged in connection with fraudulently preparing and submitting Natural Disaster Claim for Refund of State Sales Taxes Paid forms following Hurricane Ida in 2021.

Investigators with the Louisiana Department of Revenue say the three women, working for Global Tax Service, charged clients as much as $110 to prepare and submit the sales tax refund form using false information and inflating the value of the losses. The companys clients told investigators they had not provided the information that was submitted on their behalf.

Carbo, Ricard and Williams were booked into the East Baton Rouge Parish Prison on charges of Injuring Public Records, which can result in a sentence of up to five years and fines of up to $5,000.

LDR wants the citizens of Louisiana to know that the Natural Disaster Claim form is available for free on its website, revenue.louisiana.gov.

LDR is committed to preserving the funds available to those who qualify for this program and continues its investigation into disaster related fraud, said Secretary of Revenue Kevin Richard.

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Total Tax Burden: 510%

Alaska has no state income or sales tax. The total state and local tax burden on Alaskans, including income, property, sales, and excise taxes, is just 5.10% of personal income, the lowest of all 50 states.

All residents of Alaska receive an annual payment from the Alaska Permanent Fund Corp. made up of revenue and investment earnings from mineral lease rentals and royalties. The per citizen dividend payment for 2021 was $1,114.

The cost of living in Alaska is high, though, mostly due to the states remote location. Alaska also levies the second-highest beer tax of any state in the union at $1.07 per gallon, bested only by Tennessee. The state ranks 47 out of 50 in affordability and 45 out of 50 on the U.S. News & World Report list of Best States to Live In.

Alaska has one of the highest and fastest-rising healthcare costs of any state in the U.S. That said, at $11,064 per capita in 2014the most recent year the Centers for Medicare and Medicaid Services Office of the Actuary reported statisticsit also spent the most on healthcare, excluding the District of Columbia.

At $18,394 per pupil, it also spent the most on education of any state in the Western U.S. in 2019. In 2017, Alaskas infrastructure received a grade of C- from the American Society of Civil Engineers .

States With Progressive Income Taxes

Which States Have The Highest Income Tax Rates?

A progressive income tax means that as you earn more money, you pay a larger percentage in taxes. A range of income taxed at a specific rate is known as a tax bracket.

The remaining 32 states all have a progressive income tax, and they all do it differently. Some states, like Kansas, have three tax brackets based on your income, but California has 10 brackets and Hawaii has a dozen!4 It takes some math skills to figure out your tax liability in a 10-bracket system.

State income tax brackets range from 0.33% in Iowa for income less than $1,743 all the way up to 13.3% for income over $1 million in California.5

Many states include brackets within narrow income clusters, so you end up reaching the highest marginal rate pretty quickly as your income grows. A marginal rate is the tax rate you pay within each backet of you income. Its often more helpful to look at average tax rate because thats the average amount of taxes youll pay based on you income.

Since states have so many different tax brackets, its difficult to compare tax rates among the states to get an idea of what you might actually pay in taxes. But just to give you a ballpark figureif you earn an average income of about $70,000, youll likely pay about 4% to 6% in taxes in most states.

North Dakota has the lowest top marginal rate at 2.9%, and it kicks in once you make $445,000 .6

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Definition And Examples Of State Income Tax

State income tax is a tax on the amount of income earned in the state you live in. States use income tax to pay for government services including education, health care, transportation, corrections, and low-income assistance. It is set by state legislative bodies, which creates variances from state to state.

States vary widely in their approaches to income tax. Most states have graduated tax brackets, some levy a flat tax, some have no income tax, and one stateNew Hampshireonly taxes interest and dividend income. State income tax is withheld from an employees paycheck by their employer, then sent to the states department of revenue. Eight states have no income tax.

Nevada does not levy an income tax. Instead, the state generates revenue from other taxes, such as a sales and use tax and the gaming percentage fee tax, the two largest sources of revenue for the state. The state sales and use tax accounts for nearly 30% of the general fund, and the gaming tax accounts for just over 17%.

Us Income Tax Rates By State

We have summarized the US income tax rates for all 50 states showing what the respective rate is in each state. In addition to this, you can discover more details on the specific income tax you are required to pay in the state you live in. See the table at the bottom of this page.

The US income tax rates by state for 2021 vary depending on where you live.

Here is a list of nine states in the US that have no income tax:

In addition to the above, New Hampshire taxes interest and dividends at a rate of 5%. To see more information on how many states have no income tax, we have created a page specifically on this.

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States With Flat Tax Rates

Among the states that do have income taxes, many residents get a break because the highest rates don’t kick in until upper-income levels. But this isn’t the case in the 10 states that have flat tax rates as of 2021. The flat-tax states and their rates, from highest to lowest, can be seen in the table below.

State
None

States Without An Income Tax

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There are also eight states that dont impose an income tax at all. These are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. The lack of an income tax is not to say that the citizens of these states dont pay any tax to the stateresidents in each of these states have to pay a variety of other common state taxes including a sales tax, a gasoline tax, a cigarette tax and property taxes. According to data compiled by the Tax Foundation, however, residents of the states with no income tax consistently bear a lower total per capita tax burden than those who live in states that impose an income tax.

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Which State Has The Highest Income Tax

That depends on how much is earned. Some states impose a flat tax while others offer varying rates of taxation depending on the amount of income generated. In the 2021 tax year, the highest marginal income tax rate is 13.30% in California. However, that rate is only paid on income in excess of $1 million.

States With No Individual Income Tax

Nine U.S. states do not level a broad-based individual income tax. Some of these do tax certain forms of personal income:

  • Alaska no individual tax but has a state corporate income tax. Alaska has no state sales tax, but lets local governments collect their own sales taxes. Alaska has an annual Permanent Fund Dividend, derived from oil revenues, for all citizens living in Alaska after one calendar year, except for some convicted of criminal offenses.
  • Florida no individual income tax but has a 5.5% corporate income tax. The state once had a tax on “intangible personal property” held on the first day of the year , but it was abolished at the start of 2007.
  • Nevada no individual or corporate income tax. Nevada gets most of its revenue from sales taxes as well as taxes on the gambling and mining industries.
  • New Hampshire has an Interest and Dividends Tax of 5% , and a Business Profits Tax of 8.5%. New Hampshire has no sales tax.
  • South Dakota no individual income tax but has a state franchise income tax on financial institutions.
  • Tennessee has no individual income tax. In 2014 voters approved an amendment to the state constitution prohibiting state or local governments from levying any income tax. Prior to January 1, 2021 Tennessee had the “Hall income tax“, a tax on certain interest and dividend income from investments.
  • Wyoming no individual or corporate income taxes.
  • Recommended Reading: State Income Tax By States

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