Do all states have state income tax?

In the United States, each state has the right to collect its own income tax. Some states decide to charge income tax while others do not. States that do not charge income tax are Alaska, Nevada, South Dakota, Washington, Texas, Wyoming and Florida. All other countries impose some income tax. However, the amounts of taxation differ in individual countries.

In some countries, income tax is not charged to individuals, but corporations are subject to state taxes; Alaska is one of the examples. However, this state collects legal persons. Likewise, Florida fails to individual, but makes tax corporations. New Hampshire and Tennessee charge a state income tax, but limit it to interest and dividends.

The income tax amount that the individual must pay depends on where he lives. In 2006 Vermont had the highest state income tax and charged more than 9% to its people. Illinois had the lowest in the same year and charged only 3%. While Illinois collects a tax onJMU with a flat rate, many states charge a progressive rate. This means that individuals with higher incomes are taxed higher.

Individuals are usually responsible for paying not only income tax, but also federal taxes. The combination of both taxes can contribute to quite a hefty amount. For example, if the maximum federal income tax is 35% and the person is obliged to pay 9% per sate, he could pay up to 44% of his tax income. On the other hand, a person living in Texas should not pay more than 35%because this state does not have its own income tax. However, it is worth noting that the state income tax is deductible at the federal level.

In addition to federal and state income tax, some cities also collect income taxes on their inhabitants. For example, the inhabitants of New York City are subject to state and city income, as well as federal tax revenues. This can contribute to a considerable amount of taxation. SomeHowever, people live in places without a city income tax, such as Miami in Florida, and let them pay only at the federal level.