State Income Tax
A tax levied by U.S. state governments on the income of residents and non-residents who earn income within the state.
What is State Income Tax?
State income tax is imposed by most U.S. states on the taxable income of individuals and corporations. Rates and structures vary widely: California uses a progressive scale reaching 13.3%, while other states apply a flat rate. As of 2024, nine states impose no broad-based personal income tax: Alaska, Florida, Nevada, New Hampshire (wages only), South Dakota, Tennessee, Texas, Washington (capital gains above a threshold only), and Wyoming. Most states use federal adjusted gross income (AGI) as the starting point, then apply state-specific adjustments, credits, and deductions.
Example
A California resident earning $120,000 in wages faces a state income tax rate of approximately 9.3% at that income level. After standard exemptions, they owe roughly $8,500 in state income tax in addition to their federal liability. A Texas resident earning the same amount pays zero state income tax, illustrating the wide variation across states.
Source: Tax Foundation — State Individual Income Tax Rates 2024