Everything you need to know about ranked-choice voting in one spot.Click to learn more!

Personal income tax

From Ballotpedia

This article does not receive scheduled updates. If you would like to help our coverage grow, considerdonating to Ballotpedia.Contact our team to suggest an update.


Budget Policy Logo on Ballotpedia.png
State tax policy
Personal income tax
Sales tax
Corporate income tax
Excise tax
Public Policy Logo-one line.png

Personal income tax is the tax levied by a state (or other government entity) on an individual's income. Of the 50 states and Washington, D.C., only seven do not levy a personal income tax. Tax rates vary significantly from state to state. Some use a flat rate to calculate the tax, but most often states use bracket systems that vary the rate according to the individual's income.[1]

Personal income taxes comprise roughly one-third of all tax revenue collected by states. Personal income tax revenue has become increasingly important to state revenues. In 1950, personal income tax comprised approximately 9.3 percent of all state tax revenue. By 1970, that share had increased to 19 percent. As of 2010, the share had expanded further still to 33.5 percent.[2]

How personal income tax is calculated

The United States utilizes a marginal tax rate system, under which different tax rates apply to different income brackets. Some mistakenly believe that a given tax rate applies to the entirety of an individual's income. This is not the case, however. Instead, rates apply toportions of taxable income. Investopedia explains the concept in the following example, which assumes taxable income of $32,050:[3][4]

“[T]he way the marginal tax system works, you pay different tax rates on different portions of your income. The first dollars you earn are taxed at the lowest rate, and the last dollars you earn are taxed at the highest rate. In this case, you paid a 10% tax on the first $9,075 you earned ($907.50). On the remaining $22,975 of income ($32,050 – $9,075), you were paying a 15% tax ($3.446.25). Your total tax was $4,353.75, not $5,400. While your marginal tax rate was 15%, your effective tax rate was lower, at 12% ($4,353.75/$36,000).[5]”
—Investopedia

Personal income tax rates

2017

Federal rates

The table below summarizes federal personal income tax rates for 2017.[6]

Federal personal income tax rates, 2017 (single filing status)
Taxable incomeTax rate
LowHigh
$0$9,32510%
$9,325$37,95015%
$37,950$91,90025%
$91,900$191,65028%
$191,650$416,70033%
$416,700$418,40035%
$418,400 and up39.60%
Note: For complete notes and annotations, please see the source below.
Source:Tax Foundation, "2017 Tax Brackets," November 10, 2016


Federal personal income tax rates, 2017 (married filing jointly)
Taxable incomeTax rate
LowHigh
$0$18,65010%
$18,650$75,90015%
$75,900$153,10025%
$153,100$233,35028%
$233,350$416,70033%
$416,700$470,70035%
$470,700 and up39.60%
Note: For complete notes and annotations, please see the source below.
Source:Tax Foundation, "2017 Tax Brackets," November 10, 2016


Federal personal income tax rates, 2017 (head of household)
Taxable incomeTax rate
LowHigh
$0$13,15010%
$13,150$50,80015%
$50,800$131,20025%
$131,200$212,50028%
$212,500$416,70033%
$416,700$444,50035%
$444,500 and up39.60%
Note: For complete notes and annotations, please see the source below.
Source:Tax Foundation, "2017 Tax Brackets," November 10, 2016

State rates

The table below lists the personal income tax rates for all 50 states. Of the 50 states (and Washington, D.C.), only seven do not collect a personal income tax. For the remaining states that do collect the tax, rates range significantly, as do bracket structures.[7]

Personal income tax rates, 2017
StateTax ratesNumber of bracketsBrackets
LowestHighestLowestHighest
Alabama2%5%3$500$3,001
AlaskaNo state income tax
Arizona2.59%4.54%5$10,179$152,668
Arkansas0.9%6.9%6$4,299$35,100
California1%12.3%9$8,015$537,498
Colorado4.63%1Flat rate
Connecticut3%6.99%7$10,000$500,000
Delaware0%6.6%7$2,000$60,001
FloridaNo state income tax
Georgia1%6%6$750$7,001
Hawaii1.4%8.25%9$2,400$48,000
Idaho1.6%7.4%7$1,454$10,905
Illinois3.75%1Flat rate
Indiana3.23%1Flat rate
Iowa0.36%8.98%9$1,573$70,785
Kansas2.7%4.6%2$15,000$15,000
Kentucky5%1Flat rate[8]
Louisiana2%6%3$12,500$50,001
Maine5.8%7.15%4$21,100$200,000
Maryland2%5.75%8$1,000$250,000
Massachusetts5.1%1Flat rate
Michigan4.25%1Flat rate
Minnesota5.35%9.85%4$25,390$156,911
Mississippi3%5%3$5,000$10,001
Missouri1.5%6%10$1,000$9,001
Montana1%6.9%7$2,900$17,600
Nebraska2.46%6.84%4$3,090$29,830
NevadaNo state income tax
New HampshireState Income Tax of 5% on Dividends and Interest Income Only
New Jersey1.4%8.97%6$20,000$500,000
New Mexico1.7%4.9%4$5,500$16,001
New York4%8.82%8$8,500$1,077,550
North Carolina5.499%1Flat rate
North Dakota1.1%2.9%5$37,950$413,350
Ohio0.495%4.997%9$5,250$208,500
Oklahoma0.5%5%6$1,000$7,200
Oregon5%9.9%4$3,400$125,000
Pennsylvania3.07%1Flat rate
Rhode Island3.75%5.99%3$61,300$139,400
South Carolina0%7%6$2,930$14,600
South DakotaNo state income tax
TennesseeState Income Tax of 6% on Dividends and Interest Income Only
TexasNo state income tax
Utah5%1Flat rate
Vermont3.55%8.95%5$37,950$416,700
Virginia2%5.75%4$3,000$17,001
WashingtonNo state income tax
West Virginia3%6.5%5$10,000$60,000
Wisconsin4%7.65%4$11,230$247,350
WyomingNo state income tax
Note: For complete notes and annotations, please see the source below.
Source:Tax Policy Center, "Individual State Income Tax Rates 2000-2017," accessed October 26, 2017

Personal exemptions

States that collect a personal income tax allow individuals to claim personal exemptions on income taxes each year. The personal exemption indicates that only a person's income above a certain level is subject to taxation.[9]

Exemptions work by reducing the amount of an individual's taxable income. Both state and federal taxes allow exemptions. The state exemptions as reported by the Tax Policy Center are reported in the chart below.[10]

Personal exemptions, 2015
StateSingleMarriedDependents
Alabama$1,500$3,000$500
AlaskaNo state income tax
Arizona$2,100$4,200$2,300
Arkansas$26$52$26
California$111$222$344
Colorado$4,050$8,100$4,050
Connecticut$14,500$24,000$00
Delaware$110$220$110
FloridaNo state income tax
Georgia$2,700$5,400$3,000
Hawaii$1,144$2,288$1,144
Idaho$4,050$8,100$4,050
Illinois$2,000$4,000$2,000
Indiana$1,000$2,000$2,500
Iowa$40$80$40
Kansas$2,250$4,500$2,250
Kentucky$20$40$20
Louisiana$4,500$9,000$1,000
Maine$4,050$8,100$4,050
Maryland$3,200$6,400$3,200
Massachusetts$4,400$8,800$1,000
Michigan$4,000$8,000$4,000
Minnesota$4,050$8,100$4,050
Mississippi$6,000$12,000$1,500
Missouri$2,100$4,200$1,200
Montana$2,400$4,800$2,400
Nebraska$132$264$132
NevadaNo state income tax
New HampshireState Income Tax of 5% on Dividends and Interest Income Only
New Jersey$1,000$2,000$1,500
New Mexico$4,050$8,100$4,050
New York$00$00$1,000
North Carolina$00$00$00
North Dakota$4,050$8,100$4,050
Ohio$2,250$4,500$2,250
Oklahoma$1,000$2,000$1,000
Oregon$197$394$197
PennsylvaniaNo exemptions$00$00
Rhode Island$3,900$7,800$3,900
South Carolina$4,050$8,100$4,050
South DakotaNo state income tax
TennesseeState Income Tax of 6% on Dividends and Interest Income Only
TexasNo state income tax
Utah6% tax credit6% tax credit6% tax credit
Vermont$4,050$8,100$4,050
Virginia$930$1,860$930
WashingtonNo state income tax
West Virginia$2,000$4,000$2,000
Wisconsin$700$1,400$700
WyomingNo state income tax
Note: For complete notes and annotations, please see the source below.
Source:Tax Policy Center, "Individual State Income Tax Rates 2000-2017," accessed October 26, 2017

See also

External links

Footnotes

  1. ↑Investopedia, "Income tax," accessed September 26, 2014
  2. ↑Brunori, D. (2011).State Tax Policy: A Political Perspective. Washington, D.C.: The Urban Institute Press
  3. ↑Investopedia, "Can moving to a higher tax bracket cause me to have a lower net income?" accessed November 13, 2014
  4. ↑Investing Answers, "Marginal Tax Rate," accessed November 13, 2014
  5. ↑Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
  6. ↑Tax Foundation, "2017 Tax Brackets," November 10, 2016
  7. ↑Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015
  8. ↑The Balance, "States With Flat Income Tax Rates for 2019," accessed December 1, 2019
  9. ↑Tax Policy Center, "What is the personal exemption?" accessed December 14, 2015
  10. ↑Internal Revenue Service, "3. Personal Exemptions and Dependents," accessed December 14, 2015
v • e
Budget policy
Budget backgroundBudget Policy Logo on Ballotpedia.png
State budget and finance pages
Tax policy background
State tax policy pages
Comparative analysis of state debt
Ballotpedia
Editorial Content
Josh Altic, Director of Content •Daniel Anderson, Associate Director of Elections & Data •Cory Eucalitto, Associate Director of Features •Ryan Byrne, Managing Editor of Ballot Measures •Mandy McConnell, Managing Editor of News •Doug Kronaizl, Managing Editor of Local Expansion •Abbey Smith, Managing Editor of Elections •Janie Valentine, Managing Editor of Law •Joel Williams, Managing Editor of Events •Joseph Greaney, Managing Editor of Policy •Andrew Bahl •Jaclyn Beran •Marielle Bricker •Joseph Brusgard •Emma Burlingame •Kelly Coyle •Jon Dunn •Victoria Edwards •Thomas Ellis •Nicole Fisher •Thomas Grobben •Brianna Hosea •Molly Kehoe •Tyler King •Glorie Martinez •Norm Leahy, Senior Editor •Nathan Maxwell •Jimmy McAllister •Brandon McCauley •Andrew McNair •Ellie Mikus •Mackenzie Murphy •Kaley Platek •Samantha Post •Adam Powell •Annelise Reinwald •Spencer Richardson •Victoria Rose •Briana Ryan •Myj Saintyl •Maddy Salucka •Emma Soukup •Alexis Thacker •Mina Vogel •Samuel Wonacott •Trenton Woodcox