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.
Read more in our post here: http://www.michellesuniquejewelry.com/what-are-the-fees-for-a-tax-lawyer/