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:
“From this elevation, just on the skirts of the clouds, we could overlook the country, west and south, for a hundred miles. There it was, the State of Maine, which we had seen on the map, but not much like that,—immeasurable forest for the sun to shine on, the eastern stuff we hear of in Massachusetts. No clearing, no house. It did not look as if a solitary traveler had cut so much as a walking-stick there.”
—Henry David Thoreau (1817–1862)
“I had always been so much taken with the way all English people I knew always were going to see their lawyer. Even if they have no income and do not earn anything they always have a lawyer.”
—Gertrude Stein (1874–1946)
“I have no doubt that it was a principle they fought for, as much as our ancestors, and not to avoid a three-penny tax on their tea; and the results of this battle will be as important and memorable to those whom it concerns as those of the battle of Bunker Hill, at least.”
—Henry David Thoreau (1817–1862)