For example, Georgia’s taxpayers reach the state’s sixth and highest bracket at $7,000 in taxable income. In some states, a large number of brackets are clustered within a narrow income band. Top marginal rates range from Arizona’s 2.5 percent to California’s 13.3 percent. At the other end of the spectrum, Hawaii has 12 brackets. Kansas, for example, is one of several states imposing a three-bracket income tax system. Conversely, 30 states and the District of Columbia levy graduated-rate income taxes, with the number of brackets varying widely by state. Of those states taxing wages, eleven have single-rate tax structures, with one rate applying to all taxable income.

Seven states levy no individual income tax at all. New Hampshire exclusively taxes dividend and interest income while Washington only taxes capital gains income. Their prominence in public policy considerations is further enhanced by individuals being actively responsible for filing their income taxes, in contrast to the indirect payment of sales and excise taxes.įorty-three states levy individual income taxes. Individual income taxes are a major source of state government revenue, accounting for 40 percent of state tax collections. Subscribe to get insights from our trusted experts delivered straight to your inbox. Stay informed on the tax policies impacting you. Some states tie their standard deductions and personal exemptions to the federal tax code, while others set their own or offer none at all.

Some states double their single-filer bracket widths for married filers to avoid a “ marriage penalty.” Some states index tax brackets, exemptions, and deductions for inflation many others do not.

States’ approaches to income taxes vary in other details as well.

Hawaii has 12 brackets, the most in the country.

Of those states taxing wages, 11 have single-rate tax structures, with one rate applying to all taxable income.Forty-three states and the District of Columbia levy individual income taxes.Individual income taxes are a major source of state government revenue, accounting for 40 percent of state tax collections in fiscal year 2020, the latest year for which data are available.

States with flat income tax