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(jj) The phaseout range for the standard deduction, personal exemption, and dependency exemption is $217,050 to $241,850. For taxpayers with modified Federal AGI exceeding $241,850, no standard deduction, personal exemption, or dependency exemption is available. (ff) Montana filers’ standard deduction is 20 percent of AGI. For single taxpayers, the deduction must be between $2,140 and $4,830.

Arizona joined the growing list of states with a flat individual income tax structure, one year earlier than originally anticipated. 1828, tax triggers were established that set the state on a course to a 2.5 percent flat rate subject to reaching specified revenue targets. 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.

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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. Additionally, each state has different costs of living and public services that might balance out the tax savings. As of January 1, 2022, Mississippi has completed the phaseout of its 3 percent individual income tax brackets. The state has been slowly eliminating its lowest tax bracket by exempting $1,000 increments every year since 2018. 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.

• New York, Connecticut, New Jersey, and Pennsylvania round out the bottom five, all with rates between 14 and 15 percent.
• Gross income generally includes all income earned or received from whatever source with some exceptions.
• Single tax filers with taxable income up to $27,272 (double if filing jointly) would have been taxed at a rate of 2.55 percent.
• Further, changes outside of a state can impact tax burdens as well.
• This tax shifting across state borders arises from several factors, including our movement across state lines during work and leisure time and the interconnectedness of the national economy.

Rabushka makes it clear that Massachusetts and Connecticut actually levied these taxes regularly, while for the other colonies such levies happened much less often; South Carolina levied no direct taxes from 1704 through 1713, for example. Becker,[53] however, sees faculty taxes as routine parts of several colonies’ finances, including Pennsylvania. us state income tax rates The first state income tax, as the term is understood today in the United States, was passed by the State of Wisconsin in 1911 and came into effect in 1912. These include analogs to the federal Alternative Minimum Tax in 14 states,[4] as well as measures for corporations not based on income, such as capital stock taxes imposed by many states.

States with local income taxes in addition to state-level income tax

If you want to compare all of the state tax rates on one page, visit the list of state income taxes. For info on 2011 federal income tax and federal tax refunds, visit the federal income tax and federal tax refund pages. This is partially because more than half of business income in the United States is reported on individual tax returns. Relative to other OECD countries, the U.S. approach to taxing business income boosts the share of tax revenue from individual income taxes in the U.S. and reduces the share of corporate tax revenue. Compared to the OECD average, the United States relies significantly more on individual income taxes and property taxes.

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. Despite this, Maine and Vermont still rank 41st and 47th, respectively, in this study. Our current data are for tax year 2022, based on prior-year complete Census tax revenue data, quarterly tax data through the end of calendar year 2021, up-to-date national accounts data and economic forecasts, and adjustments for recently adopted tax policies.

Sources of U.S. Tax Revenue by Tax Type, 2022 Update

The same is true for states like North Dakota and Wyoming where, once this allocation is made, the aggregate tax burden falls from among the nation’s highest to the lowest. In other words, take all the tax deductions you can claim. Deductions can reduce your taxable income and could kick you to a lower bracket, which means you pay a lower tax rate.