Do Taxes Vary From State to State?

State Income Taxes Overview

  • State income tax is imposed on taxable income of individuals, corporations, and certain estates and trusts. Tax rates vary by state and entity.
  • Gross income includes all income earned or received.
  • States mainly collect income, sales, and property taxes.

State Income Tax Rates

  • 10 states have no income tax.
  • Other states use flat or progressive rates.

Taxation of Nonresident Income

  • Most states tax nonresident income earned there.
  • States cannot tax federal bond income.

State Sales Taxes

  • Sales taxes provide revenue for education, healthcare, and transportation.
  • Rates vary by state and county.
  • California has the highest rate.

Filing State Taxes

  • Process for tax preparation can vary from one state to another.
  • Rates range from flat percentages to graduated scales based on income.
  • Each state has its own set of tax forms and filing procedures.

Filing Taxes When You’ve Lived in Two Different States

  • States may have reciprocity agreements.
  • Each state has the right to receive tax between the two states.

State Taxes vs. Federal Taxes

  • Differences in what income is taxed and how money is collected.
  • Taxpayers should understand various levels of taxes to lower overall tax bill.

Interactive State Income Tax Overview

  • A total of seven states collect no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

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