Individual Income Tax
Forty-three states impose a tax on the income of individuals, sometimes referred to as personal income tax. Tax rates vary widely, with the highest marginal rate being 13.3% in California. The income subject to tax varies by state. Some states impose the tax on Federal taxable income with minimal modifications, while others tax a measure bearing little resemblance to Federal taxable income.
The states imposing an income tax on individuals tax all taxable income (as defined in the state) of residents. Such residents are allowed a credit for taxes paid to other states. Most states tax income of nonresidents earned within the state. Such income includes wages for services within the state as well as income from a business with operations in the state. Where income is from multiple sources, formulary apportionment may be required for nonresidents. Generally, wages are apportioned based on the ratio days worked in the state to total days worked.
All states that impose an individual income tax allow most business deductions. However, many states impose different limits on certain deductions, especially depreciation of business assets. Most of the states allow non-business deductions in a manner similar to Federal rules. Few allow a deduction for state income taxes, though some states allow a deduction for local income taxes. Eight of the states allow a full or partial deduction for Federal income tax.
In addition, some states allow cities and/or counties to impose income taxes. Most Ohio cities and towns impose an income tax on individuals and corporations. By contrast, in New York only New York City and Yonkers impose a municipal income tax.
Read more about this topic: State Income Tax
Famous quotes containing the words individual, income and/or tax:
“The individual woman is required ... a thousand times a day to choose either to accept her appointed role and thereby rescue her good disposition out of the wreckage of her self-respect, or else follow an independent line of behavior and rescue her self-respect out of the wreckage of her good disposition.”
—Jeannette Rankin (1880–1973)
“We commonly say that the rich man can speak the truth, can afford honesty, can afford independence of opinion and action;—and that is the theory of nobility. But it is the rich man in a true sense, that is to say, not the man of large income and large expenditure, but solely the man whose outlay is less than his income and is steadily kept so.”
—Ralph Waldo Emerson (1803–1882)
“As a Tax-Paying Citizen of the United States I am entitled to a voice in Governmental affairs.... Having paid this unlawful Tax under written Protest for forty years, I am entitled to receive from the Treasury of “Uncle Sam” the full amount of both Principal and Interest.”
—Susan Pecker Fowler (1823–1911)