State Income Tax Rates and Brackets, 2022

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list of state income tax rates

One of the key questions people ask me all the time when I am writing their business plan is, “how much tax do I have to pay on my earnings.” In the U.S., there is no simple answer. US income tax rates vary by state, and each state has its own personal income tax rate, while some have none. (aa) Maine’s dependent personal exemption is structured as a tax credit and begins to phase out for taxpayers with income exceeding $200,000 (head of household) or $400,000 (married filing jointly). Any such amount will have a tax rate of 5 percent instead of 3 percent. Any such amount of Connecticut taxable income to which, as provided in the preceding sentence, the 3 percent tax rate does not apply shall be an amount to which the 5 percent tax rate shall apply.

  • Some states have agreements that allow workers to only file taxes where they live, regardless of where they work.
  • Because it is still available, these state-defined personal exemptions remain available in some states but are set to $0 in other states.
  • Surtaxes are typically enacted to fund a specific program or initiative, whereas revenue from broader-based taxes, like the individual income tax, typically cover a multitude of programs and services.
  • Just because government officials have lots of tax dollars at their disposal doesn’t mean that they’re spending them wisely.
  • State-local tax burdens of each of the 50 states’ residents as a share of income are clustered quite close to one another.
  • It is more cost-effective for states to focus on—and simplify—compliance for a reasonable number of sellers than to impose rules that have low compliance and are costly to administer.

Some states’ residents are paying the same share of their income to taxes now as they were three decades ago, but in other states, tax burdens have changed substantially over time. The tax burden in every state fluctuates as years pass for a variety of reasons, including changes in tax law, state economies, and population. Further, changes outside of a state can impact tax burdens as well. See Table 4 for historical trends in burdens by state (selected years).

Tax Resources

Individuals are also subject to a 10.3 percent tax on taxable income greater than $5 million but not more than $25 million. Any taxable income exceeding $25 million is subject to the top marginal rate of 10.9 percent. Last year was a historic year for income tax rate reductions, with more states reducing their individual income tax rates in a single year than the U.S. has seen since the years following the federal tax reform of 1986. In 2021 alone, 13 states enacted or implemented individual income tax rate reductions. Some of these rate reductions were effective starting January 1, 2022; some were retroactive to January 1, 2021; and others are scheduled to take effect in the future.

  • Since Arizona reached the final revenue target sooner than anticipated, the rate schedule converted directly from a two-bracket structure with rates of 2.55 and 2.98 percent to a flat rate of 2.5 percent, without the need for another year of a two-rate structure.
  • While the absence of state income tax can be appealing, it is important to consider the overall tax burden, as states may have higher property or sales taxes to offset the lack of income tax revenue.
  • Both companies produce multiple editions for simple to very complex tax returns, so be sure to carefully compare the features offered by each package.
  • The change will impact taxes filed in 2025.Also, you may pay federal taxes on a portion of your Social Security benefits, depending on your income.
  • Maine and Vermont have the largest shares of vacation homes in the country,[3] and they collect a sizeable fraction of their property tax revenue on those properties, mostly from residents of Connecticut, Massachusetts, and other New England states.

The Magnolia State now effectively exempts the first $5,000 of taxable income while assessing a 4 percent tax on the next $5,000 and a 5 percent tax on all taxable income above $5,000. In some states, a large number of brackets are clustered within a narrow income band. For example, Georgia’s taxpayers reach the state’s sixth and highest bracket at $7,000 in taxable income.

You may be eligible to Free File your 2023 income tax return!

Not just individual taxpayers, but businesses, too, pay income tax on their earnings. Corporate income tax rates differ from state to state and can have a significant effect on where businesses choose to set up shop. These taxes play a part in the overall ecosystem of a state’s economy. Nationally, average state-local tax burdens as a share of income have fallen slightly from 11.7 percent in 1977 to 11.2 percent in 2022, as the pandemic-era economy has yielded an increase in tax burdens to the highest level in decades.

  • By comparison, there are just seven federal income tax brackets.
  • From income to property to sales taxes — and all the other taxes in between — each state crafts a unique tax profile that can affect your wallet in different ways.
  • Determining which states have the worst sales tax burden depends on which city an individual resides.
  • In addition to the above, New Hampshire taxes interest and dividends at a rate of 5%.
  • A few states have zero state income tax rates or charge a flat rate without regard to earnings.

Texas has no individual income tax but ranks in the top ten when it comes to the highest property tax burdens. Forty-three states and the District of Columbia impose individual income taxes. Of those, 41 tax wage and salary income—in 11 of those states, including my state of Pennsylvania, one rate applies to all taxable income. Other states with a flat income tax include Arizona, Colorado, Idaho, Illinois, Indiana, Kentucky, Michigan, Mississippi, New Hampshire, North Carolina, Utah, and Washington.

Taxes In New York

(bb) The standard deduction is 15 percent of income with a minimum of $1,550 and a cap of $2,300 for single filers and married filing separately filers. The standard deduction is a minimum of state income tax rates $3,100 and capped at $4,650 for MFJ filers, head of household filers, and qualifying widows/ widowers. The minimum and maximum standard deduction amounts are adjusted annually for inflation.

Year 2021 shows the federal income tax system continues to be progressive as high-income taxpayers pay the highest average income tax rates. Average tax rates for all income groups remained lower in 2021, four years after the Tax Cuts and Jobs Act (TCJA), than they were in 2017 prior to the reform. The 2021 data also reflects changes in people’s incomes and in government policy during the coronavirus pandemic. Missouri’s individual income tax rates range from 2 percent to 4.95 percent for tax year 2023. If you live or work in St. Louis or Kansas City, you’ll also pay a 1 percent local income tax.The state’s eight tax brackets are below.