Income Tax Rates By State

There are many states in the US that impose a state income tax, and there are seven that do not: Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska. Tennessee and New Hampshire only tax interest income and stock dividends, and these states raise most of their revenue through other methods of taxation, such as increased sales tax. In May 2009, both Hawaii and Oregon had the highest state income taxes, at 11%. Of all the states that levy an income tax, the lowest rate is had by Illinois, with a flat 3% tax. Most states that have income taxes have them of a progressive nature, where the rates rise commensurate with income. For instance, taxation on a single Californian begins at 1% if they make $6,622, and rises up to over nine percent if they make over $44,800. Back in 2005, California added a 1% surcharge on incomes exceeding $1 million, equaling a marginal tax rate of 10.3%.

The state income taxes are assessed on top of the federal government’s income tax, with a maximum of 35% in Washington, Texas and Florida. Vermont has a tax of up to 44.5% of income, and California has the dubious distinction of a 45.3% maximum tax. These two taxation levels are accompanied by payroll taxes, such as contributions to Medicare and Social Security. However, those high figures don’t reflect that some local and state taxes (including the state income tax) are a federal tax deduction. An AMT (alternative minimum tax) itemization won’t offer much in savings, and those not affected by the AMT are effectively subsidized for a portion of the state income tax. However, the subsidy only affects those whose deductions exceed the standard, meaning that mostly middle-class taxpayers are eligible. Check this site for more help.

In addition to federal and state income taxes, plus payroll deductions, some states in America allow their counties and cities to assess additional income taxes. For instance, New York City has a city tax of a maximum of 3.648%, in addition to a state tax of 6.85% and the federal income tax. The maximum tax rate in New York City, with all income taxes, accounted for, is 45.498%, or roughly one and a third times the amount of federal-tax-only cities like Dallas, Miami, Houston and Seattle. Income tax rates vary widely by state, and if you are at all unsure, it’s best to consult a tax professional or an accountant.

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What are the Fees for a Tax Lawyer

Tax lawyers are very useful in solving tax issues, and bringing tax relief to millions. The costs incurred with the hiring of a tax lawyer can vary widely from one place to another, and can also rise and fall depending on the chosen lawyer’s expertise and experience. If a particular lawyer has been in practice for years and has a long list of satisfied clients, their fees will almost certainly be higher than a newer attorney. If you have a tax attorney on retainer, the fee may be a couple of hundred to a few thousand dollars per month, depending on what the lawyer does for you. A typical tax lawyer charges a consultation fee of between $75 and $250, but there are some others too who work following the ‘No Win, No Free’ agreement. The preliminary consultation determines the customer’s needs and the amount of retainer needed. After the taxpayer reads over the retainer agreement, payment is made. Tax lawyers can charge hourly, on retainer, or on a contingency basis, where the attorney gets between 25% and 40% of the settlement amount.

An hourly fee is best for both lawyer and client because the other fee schedules often result in the lawyer ending up with more money than the client. However, hourly fees rack up fast- most cases average out at about $30,000-$50,000 in costs. The time an attorney spend isn’t just spent in the courtroom- there are countless hours spent in preparation for a case. Hourly fees can depend on factors such as the reputation of the client, the case’s complexity, the lawyer’s experience, and the area in which the client needs assistance. Hourly fees are often negotiable, and can be decided by the client having a frank discussion with the attorney regarding their requirements.

Some law firms and some independently practicing tax lawyers will charge a retainer fee, otherwise known as a flat fee. The retainer fee is not refundable under any circumstances. In a situation where a flat fee is charged, a single larger payment is made, and repeating payments are no longer necessary. Contingency fees can be applied in some situations, and the contingency fee is a payment made to the attorney for services rendered. The contingency fee is usually expressed as a portion of the recovery amount, and can range from one-quarter to almost half of the total, but averages about 33%. If the tax lawyer wins the case for their client, the IRS most often pays the attorney fees, and the client owes nothing out of pocket.

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