Most individual U.S. states collect a state income tax in addition to federal income tax. In addition, some local governments impose an income tax, often based on state income tax calculations. Forty-three states and many localities in the United States impose an income tax on individuals. Forty-seven states and many localities impose a tax on the income of corporations.
State income tax is imposed at a fixed or graduated rate on the taxable income of individuals, corporations, and certain estates and trusts. The rates vary by state. Taxable income conforms closely to Federal taxable income in most states, with limited modifications. The states are prohibited from taxing income from Federal bonds or other obligations. Most do not tax Social Security benefits or interest income from obligations of that state. Several states require different lives and methods be used by businesses in computing the deduction for depreciation. Many states allow a standard deduction or some form of itemized deductions. States allow a variety of tax credits in computing tax.
Each state administers its own tax system. Many states also administer the tax return and collection process for localities within the state that impose income tax.
State income tax is allowed as a deduction in computing federal income tax, subject to limitations for individuals.
Read more about State Income Tax: Basic Principles, Individual Income Tax, Corporate Income Tax, History
Famous quotes containing the words state, income and/or tax:
“The real stumbling-block of totalitarian régimes is not the spiritual need of men for freedom of thought; it is men’s inability to stand the physical and nervous strain of a permanent state of excitement, except during a few years of their youth.”
—Simone Weil (1909–1943)
“The bread-winner must toil as in the fruitless effort of a troubled dream while the expenditure of an uneducated wife discounts the income in the lack of understanding to discern the broad possibilities of an intelligent economy.”
—Anna Eugenia Morgan (1845–1909)
“Change of fashion is the tax levied by the industry of the poor on the vanity of the rich.”
—Sébastien-Roch Nicolas De Chamfort (1741–1794)